Legislature(2017 - 2018)ADAMS ROOM 519
04/16/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB411 | |
| SB78 | |
| SB215 | |
| SB15 | |
| SB92 | |
| HB260 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 411 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 15 | TELECONFERENCED | |
| += | SB 78 | TELECONFERENCED | |
| += | SB 215 | TELECONFERENCED | |
| += | SB 92 | TELECONFERENCED | |
| += | HB 260 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 16, 2018
1:33 p.m.
1:33:28 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:33 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Representative Paul Seaton, Sponsor; Peter Fellman, Staff,
Senator Click Bishop; Alexei Painter, Analyst, Legislative
Finance Division; Ken Alper, Director, Tax Division,
Department of Revenue; Sara Race, Director, Permanent Fund,
Department of Revenue; Jordan Shilling, Staff, Senator John
Coghill; Senator Gary Stevens, Sponsor; Tim Lamkin, Staff,
Senator Gary Stevens; Senator Peter Micciche, Sponsor;
Rachel Hanke, Staff, Senator Peter Micciche; Carl Uchytil,
President Alaska Association of Harbormasters;
Representative Dan Saddler, Sponsor;
PRESENT VIA TELECONFERENCE
Richard Ruggiero, Consultant, In3Energy; Christina
Ruggiero, In3Energy, Houston; David Gibbs, EMS Manager,
Fairbanks North Star Borough; Rachel Lord, Alaska
Association of Harbormasters and Port Administrators,
Homer; Bryan Hawkins, Harbor Master, City of Homer, Homer;
Matt Donohoe, Self, Sitka; Rick Gease, Executive Director,
Kenai River Sport Fishing Association, Soldatna; Mark
Richards, Resident Hunters of Alaska, Fairbanks; Samantha
Weinstein, Southeast Alaska Guides Organization, Juneau;
SUMMARY
HB 260 FISH & GAME LICENSES;ELECTRONIC FORM
CSHB 260 (FIN) was REPORTED out of committee with
a "do pass" recommendation and with a previously
published zero fiscal note: FN1 (DFG).
HB 411 OIL & GAS PRODUCTION TAX;PAYMENTS;CREDITS
HB 411 was HEARD and HELD in committee for
further consideration.
CSSB 15 (FIN)
E-CIGS/TOBACCO/NICOTINE & MINORS; SALES
HCSCSSB 15 (L&C) was REPORTED out of committee
with a "do pass" recommendation and with two
previously published fiscal notes: one zero
impact note: FN6 (GOV - Combined); and one fiscal
impact note: FN7 (CED).
CSSB 78 (FIN)
PERM FUND DIVIDEND CONTRIBUTIONS/LOTTERY
HCSCSSB 78 (FIN) REPORTED out of committee with
four "do pass" recommendations, four "do not
pass" recommendations, and three "no
recommendation" recommendations and with five new
fiscal notes: three fiscal impact notes by the
Department of Revenue; one indeterminate fiscal
note by the Department of Education and Early
Development; and one zero fiscal note by the
Department of Law.
CSSB 92(FIN)am
VESSELS: REGISTRATION/TITLES; DERELICTS
SB 92 was HEARD and HELD in committee for further
consideration.
SB 215 ENHANCED 911:MULTI-LINE TELEPHONE SYSTEMS
SB 215 was REPORTED out of committee with a "do
pass" recommendation and with a previously
published zero fiscal note: FN1 (CED).
Co-Chair Foster reviewed the meeting agenda. He indicated
that the committee would take up the bills from the
previous meeting. However, the committee would
HOUSE BILL NO. 411
"An Act relating to the oil and gas production tax,
tax payments, and credits; and providing for an
effective date."
1:34:30 PM
RICHARD RUGGIERO, CONSULTANT, IN3ENERGY (via
teleconference), introduced the PowerPoint presentation:
"HB411: Tax Bracket Analysis, House Finance, April 16,
2018."(copy on file)
1:35:04 PM
CHRISTINA RUGGIERO, IN3ENERGY, HOUSTON (via
teleconference), turned to Slide 3:
INDICATIVE RUNS
HOW TO VIEW THE RESULTS
The following plots showing indicative results from
changes to the brackets for HB411 should be viewed to
understand the approximate magnitude of any changes as
well as the direction (positive or negative) from such
changes. The absolute $ change in state take should
not be used as an exact value.
Ms. Ruggiero advanced to Slide 4, "HB 411 IN3NERGY MODEL":
Per Barrel Model
? Simplistic per barrel model, taking into account key
fiscal structure metrics to reflect the direction and
magnitude of results
? Can compare the Status Quo tax structure with HB411
(stepped progressivity) and ACES (continuous
progressivity) ? The primary inputs assumptions below
are taken from the DOR case presented to HFIN on April
10, 2018
Model Inputs:
Non-GVR Daily Production (mmbls/d) 526.6
GVR Daily Production (mmbbls/d) 50
Transport and Shipping ($/bbl) 8.87
Transportation & Shipping Multiplier 100%
Capex ($/bbl) 9.21 Flat
Opex ($/bbl) 14.13 Flat
Cost Multiplier 100%
Tax Rate (Status Quo) 35%
GVR Reduction 20%
GVR per Barrel Credit ($/bbl) 5
Royalty 12.50%
State Corp Income Tax 6.25%
Federal Corp Income Tax 35% Yes
Hard Floor No
? "Multiplier" fields are used to apply a fixed
increase or decrease to costs at all prices
? Capex and Opex can be run either as flat cost values
across all prices, or, if selected, then can be varied
to move proportionally with price increase and
decreases
1:37:40 PM
Ms. Ruggiero continued to Slide 5, "Key Considerations":
Scenario Analysis Simulating Reality
? In the real world, Capex and Opex values per barrel
increase and
decrease with oil price
? For the purposes of this model, if cost Variance is
selected, then:
? Price and costs change together
? Costs are assumed to change at 80% of the change in
oil price
(If the prices increases 100% then cost increase 80%)
? Costs can be further multiplied from the state wide
average DOR values to
simulate the large legacy fields (multiplier less than
100%) or potential new
North Slope fields (multiplier greater than 100%)
1:38:12 PM
Ms. Ruggiero reviewed Slide 6, "Scenario Analysis Cases":
HB 411 With Varied Costs and Tax Brackets
? There are 4 cases of different tax bracket setups,
detailed in the tables below
? Each case has 4 runs labeled A-D
? A: Costs FLAT, Costs at 100%
? B: Costs VARIED, Costs at 100%
? C: Costs VARIED, Costs at 50%
? D: Costs VARIED, Costs at 150%
Ms. Ruggiero explained that the bottom of the slide
contained four cases of tax brackets. The first was HB 411
as written, the next three were created with varying tax
bases and steps. She noted that cases 2 through 4 were
intended to show variability and were not intended as
recommendations. She explained that as the presentation
went on, cases contained 4 runs labeled a through D.
Ms. Ruggiero presented Slide 8, "Comparison of all case 1
runs" (Ms. Ruggiero clarified a typo in the title should
read case 4, and not 1). She highlighted the case 4
brackets and runs A through D: A was the flat price, B was
the varied price, C was a 50 percent reduction in cost, and
D was a 150 percent increase in cost. She pointed out to
the committee that case B reflected that at roughly $30 per
barrel the minimum tax would start; case D showed $85
dollars per barrel. The same tax brackets could yield
varying results under different cost parameters.
Mr. Ruggiero added that at very high prices, depending on
cost structure, a significant difference could be seen. He
stressed the importance of showing the cost variability.
1:44:45 PM
Representative Guttenberg asked whether there would be
slides that showed the current tax regime as compared to HB
411.
Mr. Ruggiero responded in the affirmative.
Co-Chair Seaton expressed appreciation for the information
surrounding variability based on cost.
1:46:25 PM
Mr. Ruggiero scrolled to Slide 9, "1.A Status Quo v. HB411
as written." The slide contained Department of Revenue
inputs, HB 411 brackets, costs flat, and costs 100 percent.
The green bars represented the change in state take at
varying per barrel prices. The two tables reflected gross
value reduction (GVR) and non-GVR numbers.
1:48:36 PM
Co-Chair Seaton asked Mr. Ruggiero to explain the green
bars. He wondered about the effective tax rate.
Mr. Ruggiero replied that the yellow and blue lines were
the effective tax rates and were read off the percentages
on the left of the table. The green bars were the change in
state take and were read off the right scale in millions.
1:49:28 PM
Mr. Ruggiero detailed Slide 10, "1.B Status Quo v. HB411 as
written." The slide contained Department of Revenue inputs,
HB 411 brackets, Costs varied, costs 100 percent. He
explained that the difference on this slide form Slide 9
was the varied cost with the change in oil price. He
pointed out that a lower tax take occurred at higher costs,
as represented by the green bars in each table. He stated
that the slide reflected the varying the cost using state
averages.
1:51:34 PM
Co-Chair Seaton queried the language "cost varies at 100
percent". He understood that this meant if the price of oil
went up 10 percent, then the cost went up 10 percent, and
if the price of oil doubled then the costs would double.
Mr. Ruggiero referred to Slide 5. He noted that
historically the equation changed the cost 80 percent of
the oil price. Starting at a base rate of $60 per barrel,
if the price of oil went up to $120, a 100 percent
increase, costs would increase 80 percent. If oil prices
went down to $30 per barrel, the costs would go down 40
percent. The costs move 80 percent of whatever the movement
was in the oil price.
1:53:01 PM
Ms. Ruggiero added that the label where it said "cost 100
percent" meant that the base case was the same as DOR and
where the label at the end of the subtitles on each slide
indicating "cost 50 percent" or "cost 100 percent" meant
that the base case had decreased by 50 percent or increased
to 150 percent.
Co-Chair Seaton understood that in all cases the cost
variation was 80 percent of the price change.
Ms. Ruggiero responded in the affirmative.
Representative Ortiz asked about the factors surrounding
cost going up as the price per barrel went up.
Mr. Ruggiero responded that that was the way it had always
happened. He said that as labor rose with inflation, when
oil priced plummeted labor costs decreased. He said that
when energy costs rose, things became more expensive. He
provided the example that steel became more expensive to
make and deliver. He relayed that high prices contributed
to long wait times for fracking units to frack shale wells.
He related that energy itself played into a lot of the
materials needed in the oil patch, when those prices went
up it disrupted the supply and demand of services and
equipment. This resulted in service prices and the cost of
doing business rising with a 3 to 6-month lag, with a 30-
day delay when the oil price decreased. He said that these
factors were not related to taxes or progressivity.
1:56:04 PM
Mr. Ruggiero returned to Slide 10. He noted that the table
in the upper left represented the standard rates in HB 411.
He also pointed to where the non-GVR curve fell widened at
the peak. He said that at the upper end the numbers fell
beneath the current status quo, resulting in a loss at
upper prices.
1:56:55 PM
Mr. Ruggiero moved to Slide 11: "1C. Status Quo v. HB411 as
Written." The slide reflected DOR inputs, HB 411 brackets,
costs varied, and costs 50 percent. He explained that the
model reflected a dramatic difference at all prices up to
$120 per barrel. He said that the state would see more
revenue from HB 411 than from the status quo because of the
lower cost structure. The higher PTV per barrel, starting
off at a 25 percent tax, as compared to the 5 or 6 percent
under the status quo, would generate additional tax revenue
to the state and tax liability to industry.
1:58:52 PM
Mr. Ruggiero continued to Slide 12: "1D. Status Quo v.
HB411 as written." The slide showed DOR inputs, HB 411
brackets, costs varies, and cost 150 percent." He pointed
out the $64 total cost base at the $63 per barrel price. He
said that any price below the $60 per barrel price,
producers were paying the 4 percent gross minimum tax out
of pocket. He stated that the crossover point did not occur
until $110 per barrel. At 80 percent of the growth in the
oil price, upper tax brackets remained flat until $140 per
barrel. Costs moved up as the price moved up but the PTV
did not move as quickly. He said that the additional charts
in the presentation (Slides 13 through 24) included the
same four charts of cases A, B, C, D, against the different
representative sets of brackets. He relayed that when cost
was considered in accordance to what was actually happening
in the oil patch, the representation of what a specific
bill would do was different that what had been observed in
the past.
2:02:31 PM
Representative Grenn asked Mr. Ruggiero whether had been
asked to create all the scenarios.
Mr. Ruggiero responded that the models had been generated
independently by IN3NERGY, without any preconceptions and
for informational purposed only.
2:03:31 PM
Co-Chair Seaton also provide an answer to Representative
Grenn's earlier question surrounding problems in HB 411 and
changes that could be made to appeal to industry. He said
that a previous presentation had suggested that the state
should tax at a lower rate, at the low end of prices, then
increase the percentage take at the higher end. He noted
that the models had been requested by the committee for
informational purposes.
2:05:10 PM
Representative Wilson thought industry testifiers had
thought the tax was a bad idea. She wondered whether any of
the scenarios would entice production.
Mr. Ruggiero responded that some of the scenarios with low
base rates could serve to help the economics with earlier
cashflow to a new project. He felt that the particulars of
each project would need to be examined in order to make
that determination.
Representative Wilson asked whether HB 411 contained
scenarios that would please industry.
Mr. Ruggiero requested clarification in the question.
Representative Wilson tried again. She relayed that Mr.
Ruggiero had stated that a couple of scenarios would
incentivize industry. She wondered which scenarios under HB
411 would incentivize industry.
Mr. Ruggiero referred to Slide 6. He pointed to cases 1
through 4 on the bottom half of the slide. He relayed that
the first showed HB 411 as it stood, starting with a 25
percent base. He moved to case 3, which he said would
potentially generate more income for the operator of a more
expensive, new field. He said that case 3 would be more
favorable than case 1.
2:08:14 PM
Representative Wilson asked how 3 compared to the current
oil regime.
Co-Chair Seaton directed members to refer to Slide 17.
Mr. Ruggiero added that Slide 18 reflected usable
information as well. He said that there were several things
that came into play, but if an operator way paying a lower
tax rate in the early years of a project, it would benefit
the company in the long run.
2:10:27 PM
Representative Wilson pointed to the blue line on Slides 17
and 18 and surmised that under HB 411 the state would be
would be taking more and not less.
Mr. Ruggiero agreed. He referred to Slide 20.
Representative Wilson asked to stay on Slides 17 and 18 and
repeated her question.
Mr. Ruggiero thought her original question pertained to the
status quo on HB 411, and not the status quo under SB 21.
He said that HB 411, relative to the status quo, when the
blue line was above the yellow line, and the green bars
above zero, HB 411 took more tax than the current tax
structure.
2:13:00 PM
Representative Wilson restated her question. She asked how
taking more money would incentivize more production.
Mr. Ruggiero replied that the question was rhetorical. He
reiterated that the intent of the information he provided
had been to show a way do structure things differently to
help oil flow down the pipeline. He felt that staring at a
5 percent base was better than starting at a 25 percent
base.
Representative Wilson understood he was saying HB 411 was
bad and that the scenario on Slide 19 was less bad but that
neither incentivized production.
Mr. Ruggiero responded that HB 411, as proposed, would
cause a tax increase for industry.
Representative Wilson surmised that the bill would not
incentivize production.
Mr. Ruggiero responded, "Likely not."
Representative Ortiz asked for clarification on the
acronyms CAPEX and OPEX.
Mr. Ruggiero explained that CAPEX was short for capital
expenditures and OPEX was short for operating expenditures.
He added that in Alaska system, for petroleum tax purposes,
they were treated indifferently in that they both could be
expensed and deducted as spent. Other systems operated
differently.
Representative Guttenberg asked whether the state built in
CAPEX and OPEX or if there were qualifying exams for those
expenses.
Mr. Ruggiero replied that Alaska had rules with respect to
which costs could be deducted. He said that the first step
was to identify whether the cost could be deducted, and the
second step was to determine how. Alaska had a series of
tests to determine which costs could be deducted and which
could not.
Representative Guttenberg asked whether there were any
existing regimes that had a tax structure void of a
consideration for CAPEX or OPEX.
Mr. Ruggiero responded that anyone that had a gross tax-
based system were indifferent to OPEX and CAPEX, a net
system always incorporated those expenses.
2:17:41 PM
Co-Chair Seaton thanked Mr. Ruggiero for the presentation.
Co-Chair Seaton relayed that the amendments to HB 411 were
due Thursday, April 19, 2018 at 5:00 PM.
HB 411 was HEARD and HELD in committee for further
consideration.
2:18:50 PM
AT EASE
2:26:03 PM
RECONVENED
CS FOR SENATE BILL NO. 78(FIN)
"An Act creating the education endowment fund and the
dividend raffle fund; authorizing donations from the
permanent fund dividend for educational purposes and
to enter the permanent fund dividend raffle; relating
to transfers from the dividend raffle fund and the
education endowment fund; relating to the duties of
the Department of Revenue; relating to the definition
of 'gambling'; and providing for an effective date."
2:26:13 PM
Co-Chair Seaton invited Mr. Fellman to the table.
2:26:39 PM
PETER FELLMAN, STAFF, SENATOR CLICK BISHOP, noted that he
had no comments.
2:27:11 PM
Representative Guttenberg announced that he would not be
offering Amendment 1.
2:27:34 PM
Vice-Chair Gara MOVED to ADOPT Amendment 2, 30-LS0534\Y.8
(Martin, 4/12/18) (copy on file):
Page 1, following line 6:
Insert a new bill section to read:
"* Section 1. The uncodified law of the State of
Alaska is amended by adding a new section to
read:
LEGISLATIVE INTENT. It is the intent of the
legislature that the funds generated by the
permanent fund dividend raffle created in this
Act be used to supplement and not to supplant
state aid provided by the public school funding
formula under AS 14.17.410."
Page 1, line 7:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly. 14
Page 5, line 5, following "appropriation":
Insert "; money transferred under this paragraph
to the public education fund may be used in
addition to the state aid to districts calculated
under AS 14.l 7.410(b)(l)"
Page 5, line 31, following "AS 14.17.300.":
Insert "Money transferred under this subsection
to the public education fund may be used in
addition to the state aid to districts calculated
under AS 14.l 7.410(b)(l)."
Representative Wilson OBJECTED for discussion.
Vice-Chair Gara explained the amendment. He said that the
intent was that the legislature could supplement education
funding with the proceeds.
Representative Wilson expressed appreciation for the
amendment.
Representative Wilson WITHDREW her OBJECTION.
Co-Chair Seaton clarified that the amendment was version
Y.9.
There being NO OBJECTION, Amendment 2 was ADOPTED.
2:30:51 PM
AT EASE
2:32:19 PM
RECONVENED
ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
reviewed the fiscal notes. He explained that the fiscal
note was under the additional foundation funding allocation
under K-12 school districts in the Department of Education
and Early Development (DEED) but would impact several areas
of the state budget. He furthered that none of the impacts
would be felt in FY 19, so the division felt that, rather
than creating fiscal notes for allocation that had yet to
exist, allocations had been incorporated into one fiscal
note. The following items outline the budget actions
associated with the legislation. Other than the two
Department of Revenue fiscal notes which request (1) $10.0
GF/PR (Permanent Fund Dividend Division) in FY 19 for
programming changes to set up the database; and (2) $25.0
GF/PR (Tax Division) in FY 19 for program promotion, the
remaining budget items would occur in FY 20 or subsequent
fiscal years:
1. Flow to the Department of Education and Early
Development - FY 21
50 percent of dividend contributions shall be
appropriated to the Department of Education and Early
Development (using the new Raffle fund code which will
be created in FY 20 as grants supplementing the
foundation formula.
2. (new) Education Endowment Fund - FY 20
Using the new Raffle fund code, 25 percent of dividend
contribution will flow to the new Education Endowment
Fund. Eventually, an additional Endowment fund code
will need to be created for funding that comes out of
the Endowment Fund as overflow payments to the Public
Education Fund. There is no fiscal note because there
is no money anticipated during the first five years of
the program.
3. (new) Dividend Raffle Prize Fund - FY 20
25 percent of the dividend contribution will flow to
the Dividend Raffle Fund using the new raffle fund
code. There will be a new Prize fund code for
management of the Raffle funds plus any overflow to
the Education Endowment Fund. Prizes will be paid
without further appropriation.
4. Programming costs for DOR/PFD Dividend Division -
FY 19
(see DOR/Permanent Fund Division fiscal note) - $10.0
GF/PR is required in FY 19 for DOR to program their
database in time for 2019 PFD applications (which will
be paid out in FY 20).
5. Manage endowment - DOR/Taxation and Treasury - FY
20
(see DOR/Treasury Division fiscal note) - The current
fiscal note estimates management costs ranging from
$4.4 in FY 20 up to $26.3 in FY 24. This will be paid
for using the new Prize fund code.
2:36:01 PM
Representative Wilson pointed to the DOR note, OMB
component 2476, and DOR note, OMB component 981, which
reflected program receipts. She noted that there were no
program receipts, and she asked whether the intent had been
to show that DOR would provide the funds and then the money
would be paid back as the program made money.
Mr. Fellman replied that that was his understanding.
Representative Wilson thought that the department would
unlikely have and additional $35,000 to fund the initial
payouts. She surmised that the funds would be undesignated
general fund (UGF) dollars initially, which would be
returned as designated general funds (DGF).
Mr. Fellman responded that initially, pre-program dollars
were supposed to be spent for advertisement. He said that
he had pointed out that the language in the fiscal note
should be changed.
Representative Wilson directed committee attention to
fiscal note OMB # 2476, Page 2:
For FY 19, the Department of Revenue intends to
provide $25,000 in raffle proceeds to the Department
of Education and Early Development. DEED will use the
funds to inform Alaskans of the existence of the
raffle and that a large portion of their ticket
purchases goes to directly support education programs.
Mr. Fellman deferred to Mr. Alper to respond. He understood
that the appropriation was to cover the first year of
advertising.
2:38:53 PM
KEN ALPER, DIRECTOR, TAX DIVISION, DEPARTMENT OF REVENUE,
said that the note had been written to relay that a small
fraction of money that came into the fund would be used for
marketing. He stated that how to fund that advertising in
year 1 had been recently discussed. He related that he did
not precisely know how the first year of the program would
fund advertising.
Representative Wilson explained that her issue was with the
fund code. She expressed curiosity that the intent was that
the money be paid back with designated general funds, when
no fund currently existed. She understood that the state
would be paid back out of the first $35,000 raised in the
fund.
Mr. Painter believed the fiscal note should indicate UGF if
there were no DGF to spend. He recommended amending the
note.
Representative Wilson wanted additional clarification in
the note in the form of intent language.
2:41:44 PM
Representative Guttenberg referred to the DEED note, OMB
component 3112. He asked whether one-fifth of the fund was
the total of prizes distributed.
Mr. Fellman replied that the one-fifth represented one-
fifth of the money in the fund.
Representative Guttenberg expressed concern that only one-
fifth of the total fund went out in prizes.
Mr. Fellman responded that one-fifth was 20 percent. He did
not believe the chart attached to the note reflected the
current CS. He stated that the other 80 percent would stay
in the fund for education. He said that if the fund
exceeded $300 million by a $1 million, the $300 million
would be where the prized were drawn from and the
additional $1 million would go directly into the Education
Endowment Fund.
Mr. Alper stated that currently the profits of charitable
gaming in the state, predominately pull-tabs and bingo, was
approximately $350 million, of which 10 percent passed
through to eventual recipients as charitable donation. He
said that a great bulk of the difference was distributed in
prizes and used to pay costs to operate the games.
2:45:50 PM
Vice-Chair Gara wondered if it would be proper to meld what
Representative Wilson and Mr. Painter stated into a
conceptual amendment that clarified intent.
Vice-Chair Gara MOVED to ADOPT Conceptual Amendment 3 to
amend fiscal note OMB component 2476, to change the the
$25,000 to UGF, and to state in the analysis that it was
the intent of the legislature that the funds be repaid in
the future out of raffle proceeds.
Representative Wilson OBJECTED.
Representative Wilson thought the same amendment should be
made to fiscal note OMB component 981.
Vice-Chair Gara agreed. He said that he would move a
separate amendment for OMB component 981.
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, Conceptual Amendment 3 was
ADOPTED.
Vice-Chair Gara MOVED to ADOPT Conceptual Amendment 4 to
amend fiscal note OMB component 9816, to change the $10,000
to UGF, and to state in the analysis that it was the intent
of the legislature that the funds be repaid in the future
out of raffle proceeds.
There being NO OBJECTION, it was so ordered.
Representative Kawasaki was uncertain that he would support
the bill on the floor but would not stop it from moving
forward from committee. He expounded on his reasoning. He
expressed concern that non-profits would lose funds from
the Pick-Click-Give program.
2:51:48 PM
Representative Grenn would be objecting to moving the bill
from committee. He echoed Representative Kawasaki's
concerns that non-profits would lose funding.
Representative Wilson praised the innovative nature of the
bill. She thought that it was clear where the money would
be distributed. She expressed 100 percent support.
2:57:19 PM
Representative Guttenberg categorized the legislation as a
"gaming bill disguised as educational funding." He thought
that the assumptions built into the bill were random and
arbitrary. He felt that a more comprehensive analysis of
the repercussions of the legislation should be executed. He
thought that gambling was disproportionately detrimental to
the poor. He expressed opposition to the bill.
3:00:17 PM
Co-Chair Seaton was in support of the bill. He spoke of
suggested tax credits to industry members that made
significant contributions to education. He felt that the
inducement was more significant than the potential payout.
He thought that the supplemental funding would be
beneficial to all districts in the state.
3:02:30 PM
Representative Grenn thought if the bill was about
education and not gambling, the proceeds would be given to
schools.
3:02:59 PM
Representative Grenn asked where in the application, on the
website, would be the option to purchase the raffle
tickets.
SARA RACE, DIRECTOR, PERMANENT FUND, DEPARTMENT OF REVENUE,
responded that the this was currently unknown but that
there was a new application under development that broke
out voluntary options for directing funds.
Representative Grenn asked whether the items would be
listed on the same page.
Ms. Race replied in the affirmative.
Representative Grenn asked who would oversee advertising.
Ms. Race thought that DOR would advertise in partnership
with the Permanent Fund.
3:04:32 PM
Representative Grenn was uncomfortable with the logistical
unknowns.
3:04:46 PM
Vice-Chair Gara respected the various views of committee
members on the bill. He believed that the legislation
should be debated on the floor. He supported moving the
bill from committee.
3:07:05 PM
Representative Pruitt supported moving the bill out of
committee. He echoed concerns mentioned by other committee
members. He felt that the bill should be voted on the
floor.
3:08:29 PM
Representative Ortiz wondered how the raffle option would
be clearly separated from the Pick-Click-Give option.
Mr. Fellman felt that the options that were already
available. He believed that the option would be clearly
delineated on the alienation. He stressed that assumptions
were hard to make but that sometimes chances had to be
taken.
Ms. Race added if an individual was selecting many options
that they wanted to voluntarily give to, making sure that
there was a clear understanding of payment priority was a
consideration.
Representative Ortiz asked whether it would possible to
require clicking a button that took the applicant to a
separate donation page for the raffle option.
Ms. Race responded that it was possible and had been
considered during the application redesign process.
3:12:12 PM
Representative Kawasaki wondered about an analysis of the
economic repercussion of the lottery money not filtering
through the economy by other means or regular spending.
Mr. Fellman responded that many businesses advertise PFD
specials. He said that it was hard to tell how people would
spend their dividends, but that the money would filter down
eventually. He noted that there were already 15 different
variations of raffles in the state, generating $388 million
yearly. He could not say whether an evaluation of those
fund had been conducted.
Representative Kawasaki cautioned that there could be a
negative impact on Pick-Click-Give recipients, as well as
less PFD money circulating in the state economy.
Mr. Fellman argued that at least 75 percent would go
directly into savings or education. He contended that at
least 50 percent of the raffle funds would go back into the
economy.
3:16:22 PM
Co-Chair Seaton MOVED to report HCSCSSB 78(FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
Representative Grenn OBJECTED.
Representative Wilson asked clarifying questions about the
fiscal notes.
Co-Chair Foster suggested calling them forthcoming fiscal
notes.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Pruitt, Thompson, Tilton, Wilson, Gara,
Kawasaki, Foster, Seaton
OPPOSED: Grenn, Guttenberg
The MOTION to report the bill from committee PASSED (9/2).
HCSCSSB 78 (FIN) REPORTED out of committee with four "do
pass" recommendations, four "do not pass" recommendations,
and three "no recommendation" recommendations and with five
new fiscal notes: three fiscal impact notes by the
Department of Revenue; one indeterminate fiscal note by the
Department of Education and Early Development; and one zero
fiscal note by the Department of Law.
3:18:24 PM
AT EASE
3:21:15 PM
RECONVENED
SENATE BILL NO. 215
"An Act relating to multi-line telephone systems."
3:21:31 PM
Co-Chair Seaton noted that the committee had been in the
middle of consideration on Amendment 1 during at the end of
the morning meeting.
Representative Tilton MOVED to ADOPT Amendment 1, 30-
LS1455\D.1 (Nauman, 4/11/18) (copy on file).
Representative Kawasaki OBJECTED for discussion.
Representative Tilton addressed the amendment. She WITHDREW
Amendment 1.
3:24:10 PM
Representative Wilson asked about the multi-line telephone
system. She explained her understanding.
Representative Grenn deferred to staff for the definition.
JORDAN SHILLING, STAFF, SENATOR JOHN COGHILL, explained
that multi-lines telephone lines were defined of Page 4 of
the legislation.
3:27:17 PM
DAVID GIBBS, EMS MANAGER, FAIRBANKS NORTH STAR BOROUGH (via
teleconference), clarified that the type of telephone line
that Representative Wilson was referring to was called
"Key" telephone systems that would not require additional
costs to small businesses.
Representative Wilson asked if upgrades to a Key telephone
system would fall under new requirements.
Mr. Gibbs responded that the only system that would result
in addition expense to small business would be the PBX
system, which would require the purchase of a system
telephone switch and was generally reserved for very large
corporations.
Co-Chair Seaton clarified what the committee was trying to
establish a definition for "multi-line phone system". He
asked if one phone, with two lines, was considered a multi-
line phone system.
3:30:03 PM
Mr. Gibbs answered that a business with a two-phone line
system would be so small that the location associated with
either line would be accurate; ensuring that correct
address information was provided when signing up for
service would not cause additional cost.
Representative Thompson understood that if he called 911
from his office in the Capitol, the call would be
identified as coming from room 500 in the building;
however, if the building had a switchboard system (one
number for all offices) the physical address of where the
call was coming form would be undetermined.
3:31:39 PM
Mr. Gibbs responded that regarding the switchboard,
essentially a key telephone system, would need to be
updated to reflect the location of the call.
3:32:41 PM
Representative Wilson maintained confusion about the
definitions of the various systems.
3:33:31 PM
Vice-Chair Gara reviewed the previously published fiscal
note #1 from the Department of Commerce and Community
Development.
Representative Wilson spoke to Page 2 of the note:
The bill mandates that an operator of a multi-line
system that does not allow for direct 911 dialing and
is not required by ordinance to install enhances 911,
posts a prominent notice instructing callers how to
reach 911.
She wondered how many businesses would be affected by the
mandate and how the post-able notices would be distributed.
Mr. Schilling relayed that the structure of the
notifications was in the bill on Page 4, line 4:
(d) The operator of a multi-line telephone system that
is not required by ordinance to comply with this
section and that does not allow for direct 911 dialing
shall post, in a visible place not more than five feet
from each telephone that is connected to the multi-
line telephone system, a notice that
(1) states that 911 services cannot be accessed by
dialing 911 directly 9 on the telephone;
(2) indicates how a caller may access 911 services
through the telephone;
(3) is printed in contrasting colors in a bold font
not smaller than 16 points;
(4) includes the following information, as
applicable, about the location of the telephone:
(A) the street address and business name;
(B) the office, unit, or building number;
(C) the room number or equivalent designation.
3:35:24 PM
Representative Wilson understood that businesses would be
responsible for creating and posting the signage.
Mr. Shilling replied in the affirmative.
3:35:51 PM
Vice-Chair Gara MOVED to report SB 215 out of Committee
with individual recommendations and the accompanying fiscal
note.
There being NO OBJECTION, it was so ordered.
SB 215 was REPORTED out of committee with a "do pass"
recommendation and with a previously published zero fiscal
note: FN1 (CED).
3:36:49 PM
AT EASE
3:38:22 PM
RECONVENED
CS FOR SENATE BILL NO. 15(FIN)
"An Act relating to possession of an electronic
smoking product or a product containing nicotine by a
minor and to selling or giving a product containing
nicotine or an electronic smoking product to a minor;
relating to business license endorsements to sell
cigarettes, cigars, tobacco, products containing
tobacco, electronic smoking products, or products
containing nicotine; and relating to citations for
certain offenses concerning tobacco, products
containing nicotine, or electronic smoking products."
3:38:35 PM
SENATOR GARY STEVENS, SPONSOR, introduced himself.
TIM LAMKIN, STAFF, SENATOR GARY STEVENS, introduced
himself.
Senator Stevens explained that more young Alaskans were
becoming addicted to smoking due, in part, to electronic
cigarettes (e-cigarettes).
3:40:28 PM
AT EASE
3:43:48 PM
RECONVENED
Representative Wilson MOVED to ADOPT Amendment 1.
Page 5, lines 13-14:
Delete "or any other substance intended for human
consumption"
Page 5, lines 23-24:
Delete "chemical substances that may cause an
adverse effect on human health"
Insert "nicotine"
Representative Grenn OBJECTED.
Representative Wilson explained the amendment. She said
that the intent was to exclude products that did not
contain nicotine.
Representative Wilson WITHDREW Amendment 1.
Vice-Chair Gara reviewed the fiscal notes for SB 15.
3:46:43 PM
Vice-Chair Gara MOVED to report HCSCSSB 15 (L&C) out of
Committee with individual recommendations and the
accompanying fiscal notes.
Representative Wilson OBJECTED.
3:47:58 PM
AT EASE
3:48:17 PM
RECONVENED
A roll call vote was taken on the motion.
IN FAVOR: Pruitt, Thompson, Tilton, Gara, Grenn,
Guttenberg, Seaton
OPPOSED: Wilson
Representative Kawasaki, Representative Ortiz, and
Representative Foster were absent from the vote.
The MOTION to report HCSCSSB 15 (L&C) PASSED(7/1).
HCSSB 15 (L&C) was REPORTED out of committee with a "do
pass" recommendation and with two previously published
fiscal notes: one zero impact note: FN6 (GOV - Combined);
and one fiscal impact note: FN7 (CED).
3:49:14 PM
AT EASE
3:52:35 PM
RECONVENED
CS FOR SENATE BILL NO. 92(FIN) am
"An Act relating to abandoned and derelict vessels;
relating to the registration of vessels; relating to
certificates of title for vessels; relating to the
duties of the Department of Administration; relating
to the duties of the Department of Natural Resources;
establishing the derelict vessel prevention program;
establishing the derelict vessel prevention program
fund; relating to the authority of certain persons to
enforce laws relating to derelict vessels; and
providing for an effective date."
Co-Chair Foster relayed the legislation had been heard on
March 28th. He said that the meeting would offer a
reintroduction of the legislation, including reopening
public testimony.
3:53:10 PM
SENATOR PETER MICCICHE, SPONSOR, relayed that the bill was
about personal responsibility. He stressed that the bill
was unrelated to property taxes. He quoted the Sponsor
Statement:
A report titled Trends and Opportunities in the Alaska
Maritime Industrial Support Sector (2014) noted "By
2025, the Alaska fleet will include roughly 3,100
vessels between 28' and 59' that are more than 45
years old...
He shared that he personally owned 6 vessels, one of which
was aging. He lamented that abandoned boats could be a
danger to other vessels. He said that the bill provided an
avenue for the state or municipalities to remove the
derelict vessels from the water before they sink. He said
that the management of the vessels early will save the
state money.
3:56:17 PM
RACHEL HANKE, STAFF, SENATOR PETER MICCICHE, reviewed the
changes in the committee substitute. She said that Section
4 exempted vessels 24 feel and under and created a
mechanism for lack of adequate proof of ownership. The
increase in registration fees had been removed. Section 6
reflected the removal of an increase in registration fees.
She said that the original definition of "barge" had been
retained in Section 7. Article 3, in exiting AS 30.30,
which dealt with vessels abandoned on the business premises
of persons engaged in a repair business, had been repealed.
RACHEL LORD, ALASKA ASSOCIATION OF HARBORMASTERS AND PORT
ADMINISTRATORS, HOMER (via teleconference), expressed
support for the legislation. She revealed that she was
available for questions.
Representative Wilson requested clarification on which
boats would be charged registration fees.
Senator Micciche responded that there was no change in the
current bill for a vessel that was 24 feet or under, except
at the choice of the owner. He said that a documented
vessel (minimum of 5 gross tons and above) would increase
in registration fee cost by $8, per year. Undocumented
vessels above 24 feet would see an increase of a one-time
titling fee.
3:59:59 PM
Representative Wilson asked whether all boating fees would
go into the fund.
Ms. Hanke responded that the barge registration fee, boat
title, and duplicate boat title fees, would be distributed
in the program fund.
Representative Wilson asked about the fees non-commercial
vessels under 24 feet. She wondered where those
registration fees were allocated.
Ms. Ranke relayed that all titling and fees would go to the
derelict vessel program fund.
Representative Wilson asked whether funds would be diverted
from the Kids Don't Float program.
Ms. Hanke stated that the bill would not affect the fund
for boater safety programs.
Representative Wilson expressed confusion.
Ms. Hanke explained that the registration fees were
separate from the title fees. Title fees would go to the
program.
4:02:03 PM
Co-Chair Seaton queried the difference in the definition of
"barge" and the term "flat-bottomed" as the descriptor. He
wondered about vessels that had had their engines removed
and were now barges for all intents and purposes.
Senator Micciche deferred to Rachel Lord.
4:03:26 PM
Ms. Lord reported that the definition had been an ongoing
issue. She relayed that task force discussions had
highlighted a significant number of abandoned barges. She
thought the definition had been intended to capture the
barge fleet that was not currently captured under
registration provisions.
Co-Chair Seaton asked about the no title mechanism for
harbor master work.
Ms. Lord replied that the titling provisions introduced
under the bill were valuable as another piece in defining
ownership. She thought that concerns had not been raised
about the mechanism.
Senator Micciche responded that the intent had been to
avoid any bonding issues.
Co-Chair Seaton asked whether the sponsor had any concerns
about a person registering a vessel without applying for a
title.
Senator Micciche thought that the issue would resolve
itself.
4:08:59 PM
Co-Chair Foster OPENED public testimony.
CARL UCHYTIL, PRESIDENT ALASKA ASSOCIATION OF
HARBORMASTERS, testified on behalf of the 43 harbors in
Alaska. He offered support for the legislation.
Co-Chair Seaton asked Mr. Uchytil whether he had any
suggestions regarding the definition of a barge.
Mr. Uchytil deferred to Ms. Lord. He did not have a
solution to a description of a barge.
4:12:04 PM
Co-Chair Seaton asked whether harbormasters had a position
on the repeal of Article 3.
Mr. Uchytil indicated that the harbormasters did not have a
stance on the issue.
4:12:56 PM
BRYAN HAWKINS, HARBOR MASTER, CITY OF HOMER, HOMER (via
teleconference), reported he the vice president of the
Alaska Association of Harbormasters. He voiced support for
the legislation.
4:13:51 PM
MATT DONOHOE, SELF, SITKA (via teleconference), expressed
dissatisfaction with some portion of the bill on Page 2,
lines 28-29. He reported not being able to be in the harbor
in Sitka without boat registration or a documented vessel.
He asked why the state would not recognize the
documentation from the United States Government but would
recognize a documented foreign vessel. Next, he mentioned
language on Page 3. He was unclear about the meaning of
"operated". Vessels are not always operating when sitting
on the dock. He noted that fishermen would be unhappy about
duplication requirements.
4:18:36 PM
Co-Chair Foster CLOSED public testimony.
4:18:48 PM
Representative Wilson asked the sponsor to respond to the
testifier's questions.
4:19:07 PM
Senator Micciche explained if a vessel was documented then
it had to be registered in order to establish ownership.
The registration system would contain a record of
ownership. He stated that Line 18 of the bill was already
in existing law.
Representative Wilson asked whether there was duplication
of registration and titling efforts in the legislation.
Senator Micciche replied no. He believed that identifying
ownership and dealing with derelict vessels in a timely
manner would be of benefit to the state.
Co-Chair Seaton asked about the elimination of Article 3.
Ms. Hanke responded that Article 3 had been repealed
because when the legislation was crafted it had been
intended for use by the state and municipalities. she
deferred to Ms. Lord.
4:23:41 PM
Ms. Lord explained that Article 3 had implied that a
private business was held to similar legal standards as a
public entity, which was not the case, and had led the
taskforce to determine that the removal was justified.
Co-Chair Seaton commented that private businesses had
voiced concern that not having a statutory mechanism made
the legalities vague.
Ms. Lord added that the Harbormasters Association had been
a member of the taskforce that crafted the legislation and
that the sitting members on the force had been from state
and federal agencies, local municipalities, as well as
tribal representation.
4:26:57 PM
Representative Guttenberg asked for the definition of
"water of the state".
Senator Micciche thought it was anywhere within 3 miles of
mean highwater. He thought that "state waters" could be
anywhere that a derelict vessel could become a problem.
Representative Guttenberg thought that all rivers outside
of saltwater would be exempt from the legislation.
Senator Micciche responded that all rivers would be
included in the legislation. He added that "Steamboat Slew"
was the number one freshwater target for the bill.
Co-Chair Foster set the amendment deadline for 5 pm,
Tuesday, April 17, 2018.
Representative Thompson expressed concern that the bill
might not make it through the legislative process in 2018.
Co-Chair Foster reported that Co-Chair Seaton was willing
to move the deadline for amendments to tomorrow morning in
order to expedite the process.
SB 92 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 260
"An Act relating to electronic possession of certain
licenses, tags, and identification cards issued by the
Department of Fish and Game; and providing for an
effective date."
4:31:12 PM
REPRESENTATIVE DAN SADDLER, SPONSOR, read the sponsor
statement:
Smart phones have become an indispensable part of
modern Alaska life. They provide users with
inexpensive, convenient and reliable information and
services, including communications, navigation,
scheduling, research, photography, and entertainment.
There is almost no aspect of life that smartphones
don't make easier and better.
HB 260 seeks to leverage modern communications
technology to enhance the timeless pleasures of
traditional Alaskan activities of hunting, fishing,
and trapping, by allowing state licenses for these
activities to be displayed on digital devices, as well
as in paper form. In addition, it seeks to provide a
peace officer examining an electronic device
displaying a license with immunity from liability for
damage to the device resulting from the inspection.
State law currently requires outdoorsmen and women to
carry paper licenses while enjoying licensed
activities. But as anyone who's ever tumbled into a
stream while landing a king salmon or sat in the rain
in a duck blind knows, paper licenses can be damaged
or lost at the worst possible time. And while a person
might misplace their wallet, their smartphone is
almost always within arm's reach. But for those
circumstances when a person fails to have a license in
actual possession, HB 260 turns the citation issued by
a peace officer into a "fix-it ticket," whereby a
person can nullify any violation for failure to have a
license in actual possession, by presenting a valid
license within 30 days.
Alaskans have been authorized since 2013 to display
secure proof of insurance on a digital device, and the
benefits of extending that capability to outdoors
recreational licenses are clear. They would:
• Make it easier and more convenient for hunters,
fishers and trappers to obtain and carry required
licenses
• Help entice new participants in these activities,
by lowering one barrier to entry
• Make Alaska a more attractive tourist destination
by making it easier for visitors to get licenses
• Improve compliance with state fish and wildlife
management laws, by making it easier for
enforcement officials to verify users are legal
• Save money for the state and private license
vendors, by reducing or eliminating printing
costs
• Enhance licensing security with harder-to-
counterfeit digital licenses
HB 260 also lays the foundation for smartphone-based
"apps" that will eventually let ADF&G deliver timely
information on local regulations, opening dates and
times, and hazards to users; while letting outdoorsman
reciprocate by sending back real-time data on harvest
effort and success. Until then, the advantages of
digital licenses are significant enough to warrant
swift passage of HB 260.
4:34:51 PM
Co-Chair Foster relayed the list of available testifiers
online.
4:35:22 PM
Co-Chair Foster OPENED public testimony.
4:35:53 PM
RICK GEASE, EXECUTIVE DIRECTOR, KENAI RIVER SPORT FISHING
ASSOCIATION, SOLDATNA (via teleconference), relayed that
the Kenai River Sport Fishing Association fully supported
HB 260. He thought it was consistent with being able to
make application online. He suggested incorporating an
electronic harvest card in the future.
4:37:17 PM
Co-Chair Seaton asked how the fisheries or hunts that
required recording of catch would be designed for use on a
phone.
Mr. Gease responded that if an electronic harvest card that
allowed anglers to report on their phones while in the
field were authorized now, the department could develop the
application.
Representative Saddler offered that currently capture was
recorded on the back of the paper license. He said that
under the legislation a form would need to be printed and
filled out to record the capture of king salmon. However,
the Board of Fish had recently decided that regulation
would be changed so that a record of harvest of a
specifically managed species would not have to be written
in ink. He thought it was the next obvious step.
4:40:05 PM
MARK RICHARDS, RESIDENT HUNTERS OF ALASKA, FAIRBANKS (via
teleconference), fully supported HB 260. He told a story of
one of the members of Resident Hunters of Alaska. He
thought the bill was a great idea. He believed the
department and the Alaska State Troopers would support it
also.
4:41:18 PM
SAMANTHA WEINSTEIN, SOUTHEAST ALASKA GUIDES ORGANIZATION,
JUNEAU (via teleconference), spoke in support of the
legislation. She read a prepared statement (copy on file).
4:42:34 PM
Co-Chair Foster CLOSED public testimony.
4:43:39 PM
Representative Pruitt MOVED to ADOPT Conceptual Amendment
1:
Page 2, Line 8
Delete "any"
Following "device":
Insert ", except that a peace officer may be liable
for civil damages that are the result of the peace
officer's intentional misconduct"
Representative Wilson OBJECTED for the purpose of
discussion.
Representative Pruitt explained the amendment.
There being NO OBJECTION, it was so ordered.
Representative Wilson MOVED to ADOPT Conceptual Amendment
2:
Page 2, Line 2
Delete "in"
Following "produces"
Insert ", to an office of the arresting or citing agency,
not later than 90 days after the issuance of the citation,
a license previously issued to the person that was valid at
the time of the offense."
Representative Pruitt OBJECTED for the purpose of
discussion.
Representative Wilson explained the amendment.
Representative Pruitt WITHDREW his OBJECTION.
There being NO OBJECTION, it was so ordered.
Vice-Chair Gara reviewed the fiscal note.
4:49:04 PM
Co-Chair Seaton MOVED to report CSHB 260 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 260 (FIN) was REPORTED out of committee with a "do
pass" recommendation and with a previously published zero
fiscal note: FN1 (DFG).
Co-Chair Foster discussed housekeeping.
ADJOURNMENT
4:52:31 PM
The meeting was adjourned at 4:52 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| IN3NERGY_HFIN HB411_04162018.pdf |
HFIN 4/16/2018 1:30:00 PM |
HB 411 |
| SB 15 Amendment #1 Wilson.pdf |
HFIN 4/16/2018 1:30:00 PM |
SB 15 |
| HB 260 Conceptual Amendment #1.pdf |
HFIN 4/16/2018 1:30:00 PM |
HB 260 |