Legislature(2011 - 2012)SENATE FINANCE 532
04/05/2011 10:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Bryan D. Butcher | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 5, 2011
10:04 a.m.
10:04:21 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 10:04 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lesil McGuire, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Commissioner Bryan Butcher, Department of Revenue.
PRESENT VIA TELECONFERENCE
SUMMARY
^Confirmation Hearing: Bryan D. Butcher
10:04:25 AM
Co-Chair Stedman stated that the confirmation hearing for
Commissioner of Department of Revenue (DOR).
COMMISSIONER BRYAN BUTCHER, DEPARTMENT OF REVENUE,
introduced himself. He stated that his grandfather arrived
in Alaska after the depression and practiced in Anchorage
as an attorney. He recalled that his grandfather was
appointed as a judge by Governor Hickel. He wondered why
his grandfather left his successful practice to be a judge,
but his grandfather informed him that taking care of other
people was more important than taking care of himself. He
pointed out that he had two children. He noted that he
built a house for his parents with the help of his father.
He stated that he had experience working with the finance
committees and the capital budget. He mentioned his work
with Alaska Housing Finance Committee (AHFC). He commented
on his work for the American Heart Association tobacco tax.
10:09:12 AM
Commissioner Butcher commented on his work with AHFC and
the positive aspects of the job. He chaired the DOR
transition team under Governor Palin. He mentioned his work
with applicants during the Alaska Gasline Inducement Act
(AGIA) process. He worked as a special assistant on
economic development issues for Governor Parnell. He served
as the head of Governor Parnell's transition team. The
transition team led to the position as Commissioner. He
expressed comfort in his current position, which combined
both his passion for finance and public service.
10:11:33 AM
Co-Chair Stedman mentioned the single point state audit for
the various municipalities. The DOR received several
deficient ratings regarding the oil and gas industry. He
believed that an acceleration of the audits was valid. He
wondered about the timeframe that the audits would be
addressed.
Commissioner Butcher stated that he was also concerned
about the audit. He pointed out the difficulty in hiring
auditors. He believed that the situation had improved. The
fourth position for master auditor had yet to be filled. He
noted that the tax division director left one month ago. He
pointed out the lack of a data base as another issue. He
relayed that the first PPT audits were completed and the
audit division believed that the transition from gross to
net and the progression should move more quickly with the
change.
10:14:39 AM
Co-Chair Stedman explained that the committee contemplated
adding $34,700,000 to the capital budget that would
accelerate the department's ability to upgrade technology
and software. He asked about the effect the money would
have on the department's ability to address the deficiency.
Commissioner Butcher responded that a couple of years would
be necessary for implementation of the system. He believed
that the system would speed up the work of the audit
division and provide quicker turn around for committee
requests.
10:15:53 AM
Senator Thomas asked about the Knik Arm Bridge and Toll
Authority (KABATA) and SB 80. He mentioned a transportation
committee meeting and support from the KABATA board. He
asked if Commissioner Butcher would advocate that the board
offer an amendment to clarify the situation for the public.
Commissioner Butcher stated yes. He noted that he was
working with the KABATA board to create amendment language.
Senator McGuire asked about SB 85 and a recent discussion
in the Resources Committee. She mentioned the notion of
competitiveness review and a board established to assess
the state's competitiveness from an oil and gas perspective
annually. She wondered about his vision regarding his role
with the new board.
Commissioner Butcher stated that he would try to enlighten
the world about Alaska and the oil tax issue.
10:19:10 AM
Senator McGuire asked about recent discussions about the
state's $15 billion of savings in the Constitutional Budget
Reserve (CBR) and the Statutory Budget Reserve (SBR). She
wondered how the state should move forward with an
investment strategy for the savings.
Commissioner Butcher replied that he had discussions with
the Co-Chair regarding the issue. He noted positive
investment with the Permanent Fund. He expressed interest
in a diversified portfolio.
Co-Chair Stedman discussed the current structure in DOR
where the commissioner had responsibility regarding the
allocation of funds in the CBR and SBR. He noted that the
Permanent Fund, at $10 billion, was the largest sovereign
fund in the country. He asked how the commissioner
envisioned the management process of the very large funds.
10:22:31 AM
Commissioner Butcher wished to initiate a more formal
process regarding communication with the investment
managers and the Deputy Commissioner for treasury. He
wished for additional information about those very
important funds.
Co-Chair Stedman pointed out that the process was more
important than the results. He noted concern that formal
quarterly meetings or minutes were absent during the last
few years. Documentation to support decisions was also
absent. He expressed discomfort with the lack of formal
process as the funds were so substantial. He requested a
timeframe for formalizing the process.
10:25:14 AM
Commissioner Butcher agreed. He relayed discussions with
Jerry Burnett regarding specific quarterly meetings. He
understood the importance of communication between the
executive branch and the legislature.
Co-Chair Hoffman asked for commitment to a written record
regarding investment decisions and the process.
Commissioner Butcher committed to documents resulting from
the meetings.
Co-Chair Stedman believed that minutes would prove helpful.
Documentation of the process of decision making was
extremely important.
10:27:09 AM
Senator Olson expressed concern regarding Commissioner
Butcher's lack of experience with the private sector.
Commissioner Butcher agreed that the majority of the work
he has done is with the public sector. He argued that AHFC
opperates similarly to the private sector.
Senator Olson asked if he has ever fired anyone.
10:29:40 AM
Senator Ellis stated concern regarding conflicts //.
Co-Chair Stedman CBR and sBR.
Commissioner Butcher answered that he shared the interest
and concern. He understood that he must look at the past
and he knew he was not informed enough to answer the
question.
Senator Ellis requested sharing of the conclusions with the
committee when he has it. He sked about the fee level for
the //. He expressed interest in the changes in the //.
10:32:05 AM
Commissioner Butcher active and passive managers.
Co-Chair Stedman agreed that the long term management was
of concern to the committee.
Senator Thomas asked about the position as the // and the
gas line. The governor stated that the focus was AGIA. The
economy of the state of Alaska. He wondered the thoughts
about a potential report stating that the money is not
ample for the //. We have now allowed the when another deal
is struck for gas projects.
10:35:20 AM
Commissioner Butcher expressed interest in his history with
the objective view of Alaska's situation. He hoped for a
consensus led view at the end of the process. Even with all
of the gas shale, some companies saw //. He hoped for
additional information to come forward on July 1. He
transitioned to the position at the time that two important
studies were completed.
10:37:57 AM
Senator Thomas appreciated the answer. He wished to
movement on the subject as opposed to waiting for the
perfect situation to arise. The state must make decisions.
He thought it realistic to look closely at the project. He
mentioned that the multibillion dollar plant.
10:39:46 AM
Commissioner Butcher commented that the world is changing
quickly He stated that the likely hit was for flipping of
the //. Closing of the Nikiski plant.
Co-Chair Hoffman expressed further concern regarding the
delay of the audits. He staed that the new structure. Oil
companies never overpay their taxes. Same under PPT and
ACES. He believed that the disputed taxes go into the CBR.
I fthe taxes are pursued earlier and will go to the SBR.
Potentially not receiving all of the taxes due to the
state.
Commissioner Butcher did not have a response. Audit
division expects things to move more quickly now. He
offered to provide an update by the beginning of next
legislative session.
10:43:14 AM
Co-Chair Stedman asked about the economist position. He
found it difficult to deal with the oil and gas issues. He
was not able to call on an economist from the Department of
Revenue. He stated that he was not convinced that the lack
of ability to fill the position was not political
maneuvering. He asked to know the timeframe.
Commissioner Butcher stated that the last master auditor
position will be easier to fill than the economist
position. No qualified applicants given the pay of the
position. He agreed that a Chief economist was a valuable
position.
10:45:53 AM
Co-Chair Stedman recalled that the last economist stated
that he was gagged by the administration. Ever since the
position has not been filled. Change the payment structure
to enable filling the position. He expressed concern about
a mistake calculable in the billions of dollars. After five
years, the position should be filled.
Commissioner Butcher agreed to fill the position. He
pointed out that he wants to get that done.
10:47:39 AM
Senator Thomas recalled about lawsuits and for every money
spent the collection is $10.
Commissioner Butcher recalled discussion with the
department about the pay back of the money.
10:48:56 AM
AT EASE
10:49:29 AM
RECONVENED
Co-Chair Stedman concluded the meeting.
ADJOURNMENT
The meeting was adjourned at 10:50 AM.
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