Legislature(2015 - 2016)SENATE FINANCE 532
03/18/2015 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearing: Fisherman's Fund Advisory Board | |
| Confirmation Hearing: State Assessment Review Board | |
| Confirmation Hearing: Fisherman's Fund Advisory Board | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE FINANCE COMMITTEE
March 18, 2015
2:07 p.m.
2:07:26 PM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 2:07 p.m.
MEMBERS PRESENT
Senator Anna MacKinnon, Co-Chair
Senator Peter Micciche, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Donny Olson
MEMBERS ABSENT
Senator Pete Kelly, Co-Chair
Senator Lyman Hoffman
PRESENT VIA TELECONFERENCE
William Roberts, Kodiak; Steve Van Sant, Palmer; Donald
Stiles, Nome.
SUMMARY
CONFIRMATION HEARINGS:
FISHERMAN'S FUND ADVISORY BOARD
STATE ASSESSMENT REVIEW BOARD
^CONFIRMATION HEARING: FISHERMAN'S FUND ADVISORY BOARD
2:08:23 PM
Co-Chair MacKinnon stated that the Fishery's Fund Advisory
and Appeals Council was located in AS 23.35.010. The
council was composed of the commissioner of Department of
Labor and Workforce Development (DLWD) or a person
designated by the commissioner, and five members appointed
by the governor for overlapping five-year terms. The
governor shall appoint one member from each of the
following districts: District 5, areas north of New
Hammond, including the Kuskokwim, Yukon, Kotzebue, and
Arctic. The duties of the commissioner and council include
that there shall be a review all denials and benefits made
by the persons responsible for the administration of the
fund, and make an initial determination regarding the
claims for the benefits under AS 23.35.140.
Vice-Chair Micciche remarked that the nominee's resume
seemed very uninformative. He felt that there should be
more information for a confirmation hearing.
Co-Chair MacKinnon stated that the nominee was currently
online from Nome. She wondered if Mr. Styles had any
information regarding his nomination.
2:10:17 PM
AT EASE
2:11:00 PM
RECONVENED
2:11:15 PM
Co-Chair MacKinnon stated that the she hold the discussion
at a later time.
^CONFIRMATION HEARING: STATE ASSESSMENT REVIEW BOARD
2:12:01 PM
Co-Chair MacKinnon explained that the State Assessment and
Review Board was located in AS 43.56.040. The State
Assessment Review Board was created within the department.
The board consisted of five persons appointed by the
governor to serve at the pleasure of the governor, each of
whom must be knowledgeable of assessment procedures. The
department shall assess property for the tax levy under AS
43.56.010(b) and AS 29.45.080 on the property used or
committed by contract or other agreement for the use for
the pipeline transportation of gas or unrefined oil, or for
the production of gas or unrefined oil at its full and true
value as of January 1 of the assessment year. Taxable
property used or committed by contract or other agreement
for the pipeline transportation of gas or unrefined oil, or
for production of gas or refined oil to be transported by
the pipeline.
Co-Chair MacKinnon requested opening comments from Mr.
Roberts for the committee's consideration.
2:13:06 PM
WILLIAM ROBERTS, KODIAK (via teleconference), shared that
he was a resident of Alaska for 39 years, and was a Navy
veteran. He had worked on assessment and appraisals for
approximately 32 years. He was currently the assessor for
the Kodiak Island Borough. He shared that he had worked on
fee assessments for approximately 22 years, which included
various properties including residential, commercial, and
industrial properties. He felt that he was qualified for
review work on the board, and he would be fair and
equitable. He remarked that he did not have an interest in
the taxes from the oil companies, because Kodiak was mostly
a fishing community.
Co-Chair MacKinnon queried the role of the State Assessment
and Review Board in assessing Alaska's oil and gas
property. Mr. Roberts replied that the role would be to
review the assessment that would be delivered by the State
Assessors, and probably the appraisals from those people
who may disagree with the assessment. It was the board's
job to review the appraisals and assessments to ensure
proper methodology; ensure the data was proper; and to
ensure that the value conclusions were reasonable based on
the data and methodology.
Co-Chair MacKinnon wondered if there was an inherent
conflict between the state, producers, and municipalities
with regard to assessments. Mr. Roberts responded that the
industry may feel that their tax rates were too high. He
shared that the he received many calls from various
businesses to decrease their assessment fees. He understood
why those entities would want lower rates and taxes, as
that was how businesses functioned. He felt that it was the
job of the review board to not be swayed by unreasonable
information.
Co-Chair MacKinnon wondered how a board member would
balance the conflicts. She felt that some municipalities me
decide to challenge an assessment based on the need in
their communities versus the actual value of the property.
Mr. Roberts responded that it was his job to evaluate the
assessed value from the assessor. The board must look at
the assessment as if the assessment was correct, until the
burden of proof was shifted by the individual who had
issued a repeal. He stressed that the law stated that the
assessment was correct, until proven wrong.
Co-Chair MacKinnon queried Mr. Roberts' goals on the board.
Mr. Roberts replied that he hoped to be fair and
reasonable.
Co-Chair MacKinnon wondered if Mr. Roberts had any
recommendations or proposed changes to the current
assessment process, and if he was familiar with the current
process. Mr. Roberts responded that he was somewhat
familiar with the process. He had reviewed some past
committee findings. He felt that there was current sound
assessment methodology.
Co-Chair MacKinnon announced that the board issued
determinations the losing parties' appeals to courts,
rather than the Office of Administrative Hearings. She
remarked that it was the only judicial process that did not
go to the Office of Administrative Hearings. She wondered
if that practice should continue, or should the Department
of Revenue (DOR) remove itself from the assessment process.
Mr. Roberts responded that a disagreement with the
assessment allowed for an appeal to the board. He furthered
that a disagreement with the board's findings allowed for a
court finding. He felt that it was a proper process.
Co-Chair MacKinnon surmised that there was no recommended
change. Mr. Roberts agreed.
Vice-Chair Micciche queried the most important components
of oil and gas property assessment. Mr. Roberts replied
that the typical assessment of oil and gas property was
done based on depreciation. He stressed that the most
important component was considering what would occur in the
future, in particular the amount of oil that would be in
TAPS. He stated that the superior court had already stated
what was believed to be the reserves in the North Slope
area.
2:20:14 PM
Vice-Chair Micciche wondered what proportionate was applied
like throughput and potential increased investment that
would affect pipeline valuations. Mr. Roberts responded
that the state assessor would take the factors into
consideration in the assessments. He shared that there was
a presentation from the state assessor, and he felt that
the considerations were thorough. He stressed that it was
his job to evaluate the state assessor's determination to
consider whether it reflected a fair market reflection.
Vice-Chair Micciche noted that there were challenges which
had increased the value of TAPS over time. He wondered what
kind of independent review was conducted on the results.
Mr. Roberts replied that it was not his job to prove the
valuation of the assessor. The statute was written to
assume that the assessor was assumed to be correct until
the burden was proof was applied to prove incorrectness. He
shared that oil companies and municipalities would often
provide their own experts, so it was the responsibility of
the board to determine if the same data was used by the
state assessor. He stressed that it was his duty to
determine whether a value was reasonable.
Co-Chair MacKinnon remarked that TAPS had aged, so noted
that there would be depreciation. She noted that throughput
was decreased, so she queried the components of determining
the value of TAPS. Mr. Roberts replied that the components
would be based on the economic benefit of TAPS.
Co-Chair MacKinnon encouraged an examination of the price
per barrel of oil when determining an assessed property
valuation.
Vice-Chair Micciche wondered if the cost approach was the
proper strategy, when looking at aging infrastructure that
was not fully utilized. Mr. Roberts responded that the cost
approach for a unique property like TAPS is incomparable.
Vice-Chair Micciche understood that it was a careful
relationship between the property owner and the sovereign.
He stated that it was the company's responsibility to keep
costs down, and it was the state's responsibility to
collect the highest and most fair tax. He looked at the
appeals and rulings on the 2006 assessments, and wondered
if there may be some methodology that may reduce the
constant friction between the property owner and the state.
Mr. Roberts did not believe the friction would be
alleviated. He stated that the sales approach would not
apply. The income approach would not work, because there
may be an issue of discounted cash flow.
2:27:32 PM
Senator Bishop wondered if the education portion of his
resume had an education requirement to keep current
certification. Mr. Roberts replied that 28 hours of
continuing education was required. He stated that 300 hours
was required, and biannual education was required to
maintain the license.
Senator Bishop asked for more information regarding the
membership with the International Right-of-Way Association.
Mr. Roberts replied that the right-of-way appraisals were
slightly different when acquiring land from people that do
not want to submit their land. He shared that he took some
courses with the association, and conducted some appraisals
in the state. The members were certified.
2:29:47 PM
STEVE VAN SANT, PALMER (via teleconference), outlined his
experience in the appraisal and assessment business. He was
currently retired, but was in the appraisal and assessment
business in Alaska for 46. He had worked as the state
assessor, which was different than the state petroleum
assessor. The state assessor worked on the property values
of the state, for mostly educational purposes. He had
taught courses for the International Association of
Assessing Officers; instructor for the International Right-
of-Way Association; and presented courses for the Alaska
Association of Assessing Officers.
Co-Chair MacKinnon queried the role of the review board in
the assessment of oil and gas property. Mr. Van Sant echoed
the remarks of Mr. Roberts. The board would review the
appraisal by the state petroleum assessor. The major
appeals were related to TAPS, and there were some appeals
with drilling rigs. The greatest issue with the TAPS
appraisal, was the value based on the various proven
reserves.
Co-Chair MacKinnon remarked that, until 2007, the board
gave preference to the DOR assessment. The cost of the
transportation as a deductible expense became important
when the state adjusted to a net profit system. The change
increased the friction between the producers and the
municipalities. She queried more information about that
conflict between the three entities. Mr. Van Sant replied
that he could not speak specifically to the transportation
costs. The valuation in the 2006 assessment repeal, when
the owners advocated the cost approach, which paid for the
transportation costs. The problem was that the shippers and
owners of the oil were often the same entity. He stressed
that the conflict could not be resolved. The cost approach
did not pay for the cost of shipping. He remarked that
depreciation was determined with regards to the proven
reserves, so the economic factors were the most important
factors in the valuation.
Co-Chair MacKinnon asked if Mr. Van Sant desired any
changes or specific goals for the board. Mr. Van Sant
responded that timing was difficult for the board. The time
frame for the board to consider the valuation and appeal
was limited. He added that he would like to see the owners
and state to determine the proven reserves in the North
Slope.
Vice-Chair Micciche wondered why there was no defined term
for the board. Mr. Van Sant replied that it was difficult
to find qualified and confident individuals to sit on the
board.
Vice-Chair Micciche asked if Mr. Van Sant worked
independently or whether he worked for the state. Mr. Van
Sant replied that the board did not act independently in
determining an evaluation. He stressed that there would be
a burden of proof for the state.
Vice-Chair Micciche thanked Mr. Van Sant for his 30 years
of service.
Vice-Chair Micciche MOVED to ADVANCE the names: William
Roberts and Steve Van Sant to a joint session for
consideration. There being NO OBJECTION, it was so ordered.
^CONFIRMATION HEARING: FISHERMAN'S FUND ADVISORY BOARD
2:41:41 PM
DONALD STILES, NOME (via teleconference), outlined his
credentials. He was a commercial fisherman since 1975, with
the exception of a few years of military service. He
currently served on the Board of Directors for the Norton
Sound Economic Development Corporation, and served with the
Fisherman's Repeals and Advisory Committee.
Vice-Chair Micciche wondered if this would be the first
term on the council. Mr. Stiles replied that it would be
his second term.
Vice-Chair Micciche queried the essential duties on the
council, and the reason for continued council membership.
Mr. Stiles responded that some duties included reviewing
injury claims. He wanted to continue to volunteer and
participate in the process.
Co-Chair MacKinnon ADVANCED the name of Donald Stiles to a
joint session for consideration. There being NO OBJECTION,
it was so ordered.
Co-Chair MacKinnon announced the following day's agenda.
ADJOURNMENT
2:45:21 PM
The meeting was adjourned at 2:45 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 031815 Fisherman's Fund Advisory and Appeals Council Confirmation Resumes.pdf |
SFIN 3/18/2015 1:30:00 PM |
Confirmations 2015 |
| 031815 State Assessment Review Board Confirmation Resumes.pdf |
SFIN 3/18/2015 1:30:00 PM |
Confirmations 2015 |