Legislature(1999 - 2000)

04/12/2000 09:07 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                          MINUTES                                                                                             
                 SENATE FINANCE COMMITTEE                                                                                     
                      April 12, 2000                                                                                          
                          6:11 PM                                                                                             
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-00 # 85, Side A and Side B                                                                                                  
                                                                                                                                
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair   John   Torgerson    convened   the   meeting   at                                                                    
approximately 6:11 PM.                                                                                                          
                                                                                                                                
PRESENT Co-Chair  John Torgerson, Senator Al  Adams, Senator                                                                
Lyda  Green,  Senator  Pete   Kelly,  Senator  Loren  Leman,                                                                    
Senator Randy Phillips, Senator Gary Wilken                                                                                     
                                                                                                                                
Also  Attending:  SENATOR  ROBIN TAYLOR;  DARRYL  HARGRAVES,                                                                  
Executive    Director,    Alaska    Council    for    School                                                                    
Administrators;  EDDY  JEANS,  Manager, School  Finance  and                                                                    
Facilities Section,  Education Support  Services, Department                                                                    
of Education and Early  Development; KEITH LAUFER, Financial                                                                    
and  Legal Affairs  Manager,  Alaska Industrial  Development                                                                    
and Export  Authority, Department of Community  and Economic                                                                    
Development; ELMER  LINDSTROM, Special Assistant,  Office of                                                                    
the Commissioner, Department of  Health and Social Services;                                                                    
BOB LOEFFLER, Director, Division  of Mining, Land and Water,                                                                    
Department of Natural Resources;                                                                                                
                                                                                                                                
Attending  via Teleconference:  From Kenai:  PATRICK HICKEY;                                                                  
KARL  KIRCHER,  Kenai   Peninsula  Fisherman's  Association;                                                                    
SANDY  UMLAUT, President,  Ugashik Set-netting  Association;                                                                    
PAUL SHADURA; From Kodiak: DAVE  JONES, Director of Finance,                                                                    
Kodiak  School District;  From Petersburg:  ELIZABETH BACOM,                                                                    
President, Petersburg School Board;  From Homer: DAN CHALUP,                                                                    
Representative, Katchemak Bay Salmon Producers Co-op;                                                                           
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 290-PUBLIC SCHOOL FUNDING & EXPENDITURES                                                                                     
                                                                                                                                
The  Committee heard  from the  Department of  Education and                                                                    
Early   Development,   adopted   a   committee   substitute,                                                                    
considered amendments,  but adopted  none, and  reported the                                                                    
bill from Committee.                                                                                                            
                                                                                                                                
SB 248-AIDEA: BONDS & RURAL DEVELOPMENT                                                                                         
                                                                                                                                
The Committee  heard from the Alaska  Industrial Development                                                                    
and Export Authority. The bill was held in Committee.                                                                           
                                                                                                                                
SB 254-HEIRLOOM MARRIAGE CERTIFICATES                                                                                           
                                                                                                                                
The  Committee  heard  from the  Department  of  Health  and                                                                    
Social Services and the bill moved from Committee.                                                                              
                                                                                                                                
SB 257-DEPT NAT RES ADMIN APPEALS/ OIL & GAS                                                                                    
                                                                                                                                
The  Committee   heard  from   the  Department   of  Natural                                                                    
Resources and the bill moved from Committee.                                                                                    
                                                                                                                                
SB 259-CRIMES: REPRESENTATIONS/I.D./COMPUTERS                                                                                   
                                                                                                                                
Without further debate, the bill moved from Committee.                                                                          
                                                                                                                                
SB 283-NAT RES.REVENUE: FISH/TIMBER/LAND                                                                                        
                                                                                                                                
The  Committee   heard  from   the  Department   of  Natural                                                                    
Resources and  members of  the public.  The bill  moved from                                                                    
Committee.                                                                                                                      
                                                                                                                                
     SENATE BILL NO. 290                                                                                                        
     "An Act relating to state funding for transportation                                                                       
     of public school students; and providing for an                                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
PATRICK HICKEY  testified via  teleconference from  Kenai to                                                                    
address Amendment  #1, increasing the minimum  percentage of                                                                    
school  operating expenses  to 80  percent from  70 percent,                                                                    
which was not offered. He  requested that the Committee give                                                                    
the   Association   of   School   District   Officials   the                                                                    
opportunity   to  divide   the   "section  400"   accounting                                                                    
component    to   reflect    the   shared    classroom   and                                                                    
administrative duties of school principals.                                                                                     
                                                                                                                                
DAVE  JONES, Director  of  Finance,  Kodiak School  District                                                                    
testified  via teleconference  from  Kodiak  to address  his                                                                    
concerns with  the fifty-fifty  clause for  reimbursement of                                                                    
increased  pupil transportation  costs. He  said the  Kodiak                                                                    
School District  was a  good example of  why this  would not                                                                    
work.  He  spoke about  the  minimum  wage required  to  pay                                                                    
school bus  drivers. He stressed  the only way  the district                                                                    
could  cover the  costs  would  be to  take  money from  the                                                                    
classroom,  which would  be contrary  to the  intent of  the                                                                    
formula funding program. He  described the school district's                                                                    
efforts along with other  districts to encourage competition                                                                    
to bring the costs down.                                                                                                        
                                                                                                                                
ELIZABETH   BACOM,  President,   Petersburg  School   Board,                                                                    
testified  via  teleconference  from  Petersburg  about  her                                                                    
understanding that this legislation  would apply to the Cost                                                                    
of   Living   Allowance   (COLA)  portion   of   the   pupil                                                                    
transportation  contracts.  She  spoke of  the  hardship  of                                                                    
declining funding  due to declining enrollment  and how this                                                                    
additional  funding reduction  would force  the district  to                                                                    
take money from the classrooms.                                                                                                 
                                                                                                                                
DARRYL  HARGRAVES, Executive  Director,  Alaska Council  for                                                                    
School Administrators  testified in Juneau about  the matter                                                                    
of fairness across  the state. He remarked that  most of the                                                                    
Committee  members represented  large  school districts  and                                                                    
that  other  smaller  communities  would  have  difficulties                                                                    
meeting  the matching  fund requirements.  He stressed  that                                                                    
the bus driver contracts  were strictly negotiated following                                                                    
many  requirements imposed  by  the Board  of Education.  He                                                                    
talked  about  the complexities  of  the  contracts and  the                                                                    
required routes.                                                                                                                
                                                                                                                                
SENATOR  ROBIN TAYLOR  thanked the  Committee for  including                                                                    
Section 3 in the bill. [Description forthcoming.]                                                                               
                                                                                                                                
Senator Wilken  moved to  adopt CS SB  290, 1-LS1555\N  as a                                                                    
workdraft.                                                                                                                      
                                                                                                                                
Co-Chair Torgerson objected for an explanation.                                                                                 
                                                                                                                                
Senator Wilken detailed the changes  made to the bill in the                                                                    
committee substitute as follows.                                                                                                
                                                                                                                                
     Section 2 - provides that school district pupil                                                                            
     transportation costs eligible for state reimbursement                                                                      
     are subject for following adjustments:                                                                                     
          (1) sets the funding level received by the school                                                                     
     district for student transportation in FY 01 is                                                                            
     considered the limit for future reimbursement.                                                                             
          (2) stipulates that costs resulting from new                                                                          
     school facilities, increased enrollment or imposed by                                                                      
     state   or   federal   law  are   excluded   from   the                                                                    
     reimbursement calculation                                                                                                  
          (3) allows the reimbursement limit to increase                                                                        
     each  fiscal  year by  four  percent  or the  Anchorage                                                                    
     Consumer Price Index (CPU), whichever is less.                                                                             
          (4) sets out the pupil transportation cost excess                                                                     
    of the limit, shall be reimbursable by 50 percent.                                                                          
                                                                                                                                
     Section  3  -  addresses  the 70-30  percent  split  of                                                                    
     operating versus  administrative expenditure  issue. It                                                                    
     clarifies   the   definition   of   the   instructional                                                                    
     component  for the  purpose of  determining the  school                                                                    
     district's operating  budget's minimum  expenditure for                                                                    
     instruction. It  sets out that expenditures  for school                                                                    
     administration,  principals,  assistant  principals  or                                                                    
     other assistants  employed to  supervise administrative                                                                    
     operations   of  a   school  bay   not  be   considered                                                                    
     instructional expenditures.                                                                                                
                                                                                                                                
     Section 4  - lowers the Average  Daily Membership (ADM)                                                                    
     threshold  upon which  a school  district  can count  a                                                                    
     facility as a separate school from 750 to 450.                                                                             
                                                                                                                                
     Sections 5 and 6 - set out the effective dates                                                                             
                                                                                                                                
Senator Phillips  asked which communities are  allowed under                                                                    
the provisions of Section 4.                                                                                                    
                                                                                                                                
EDDY JEANS, Manager, School  Finance and Facilities Section,                                                                    
Education  Support  Services,  Department of  Education  and                                                                    
Early Development,  answered that  Section 4 would  apply to                                                                    
Delta  Junction/Greely,   Petersburg  and   Wrangell  school                                                                    
districts.                                                                                                                      
                                                                                                                                
Senator  Phillips  asked  if the  legislature  was  not  the                                                                    
"assembly" for delta junction                                                                                                   
                                                                                                                                
Mr. Jeans  responded that he  believed in essence,  that was                                                                    
correct.                                                                                                                        
                                                                                                                                
Senator Phillips  asked why the legislature  could therefore                                                                    
not  mandate  that community  to  form  its own  borough  by                                                                    
making school funding a contingency.                                                                                            
                                                                                                                                
Mr.   Jeans   responded   that  AS   14.17.905.   Facilities                                                                    
Constituting a School., applies  to school districts whether                                                                    
they  are a  municipality  or a  Rural Education  Attendance                                                                    
Area  (REAA). He  stated  that Section  4  of the  committee                                                                    
substitute  therefore establishes  a  threshold  of how  the                                                                    
department can  determine how  communities can  make school-                                                                    
size adjustments.                                                                                                               
                                                                                                                                
Senator  Phillips   repeated  his   question  of   what  was                                                                    
preventing the legislature from  mandating Delta Junction to                                                                    
form a borough.                                                                                                                 
                                                                                                                                
Co-Chair  Torgerson said  Mr. Jeans  was not  the person  to                                                                    
address  that  question.  Co-Chair Torgerson  stressed  that                                                                    
certainly  the   legislature  had   the  power   to  mandate                                                                    
boroughs.                                                                                                                       
                                                                                                                                
Senator Phillips  said he had  concerns with  Petersburg and                                                                    
Wrangell  paying for  the services  and  Delta Junction  not                                                                    
paying.                                                                                                                         
                                                                                                                                
Co-Chair Torgerson remarked he  had concerns with the entire                                                                    
Section 4.                                                                                                                      
                                                                                                                                
Co-Chair  Parnell  asked  if Delta  Junction/Greely  is  the                                                                    
first unorganized area that would  qualify for funding under                                                                    
this section.                                                                                                                   
                                                                                                                                
Mr.  Jeans replied  there were  other REAA  communities that                                                                    
would be affected by the Section 4 clause.                                                                                      
                                                                                                                                
Co-Chair  Parnell  commented that  this  was  a much  bigger                                                                    
issue than just this one school.                                                                                                
                                                                                                                                
Senator  Adams  addressed the  language  in  Section 2  (4),                                                                    
"only  50 percent  of these  costs  reimbursable under  this                                                                    
section that are  in excess of the sum  calculated under (1)                                                                    
- (3)  of this  subsection shall be  reimbursed to  a school                                                                    
district." He  asked if this  bill increased the  "floor" of                                                                    
pupil  transportation by  reviewing  the CPI,  which is  not                                                                    
used in  the foundation  formula. He wanted  to know  if the                                                                    
differences had been calculated.                                                                                                
                                                                                                                                
Senator   Wilken  answered   that  figures   had  not   been                                                                    
calculated.                                                                                                                     
                                                                                                                                
Senator  Adams   asked  if  therefore  the   increases  were                                                                    
unknown.                                                                                                                        
                                                                                                                                
Senator Wilken  replied that the  floor would be  the amount                                                                    
set in  the FY 00  budget, which may  change with the  FY 01                                                                    
budget if the requested $5 million increase is funded.                                                                          
                                                                                                                                
Senator Adams wanted  to see the figures  because he thought                                                                    
the costs could be higher.                                                                                                      
                                                                                                                                
Senator  Adams then  asked  if Section  3  applies to  rural                                                                    
districts where some principals not  only run the school but                                                                    
also teach courses.                                                                                                             
                                                                                                                                
Senator  Wilken   shared  that   there  is  a   formula  the                                                                    
department can  use for small  school districts  to classify                                                                    
the  principal  as  a  working  teacher.  However,  he  said                                                                    
schools with  more than  50 students  would not  qualify for                                                                    
this  consideration because  the principal  or assistant  is                                                                    
responsible for managing the school.                                                                                            
                                                                                                                                
Senator  Adams  spoke  of fair  and  equitable  funding  for                                                                    
students. He  noted Amendment #2  of the  previous committee                                                                    
substitute and  Amendment #6 for  the current  version, both                                                                    
of  which  he  sponsored.  These  amendments  he  explained,                                                                    
address the  issue that rural school  districts receive only                                                                    
60 cents  on the dollar.  He referred to the  McDowell study                                                                    
that   showed  teachers   in  rural   districts  were   paid                                                                    
differently because of their high  cost of living. He wanted                                                                    
the Committee to consider                                                                                                       
                                                                                                                                
Senator Wilken replied that he  had not considered the first                                                                    
amendment when  drafting this  committee substitute  and had                                                                    
only just seen the second.                                                                                                      
                                                                                                                                
Co-Chair Torgerson  asked if  the department  had calculated                                                                    
the impact of Section 4 on the fiscal note.                                                                                     
                                                                                                                                
Mr.   Jeans  had   and  said   the  added   cost  would   be                                                                    
approximately  $1,009,800.  He  noted  that  the  department                                                                    
would be opposed to the  changes in the committee substitute                                                                    
because  of  the  requirement  of  SB  36  to  evaluate  the                                                                    
effectiveness  of   that  bill   and  report  back   to  the                                                                    
legislature with  recommendations in 2001.  Constant changes                                                                    
to SB 36 would make the assessments difficult, he asserted.                                                                     
                                                                                                                                
Senator Adams asked  what the cost would be  of the proposed                                                                    
Amendment #6  to "stop  the eroding  floor" and  whether the                                                                    
department supports or opposes that amendment.                                                                                  
                                                                                                                                
Mr. Jeans  replied that the  erosion of the floor  went from                                                                    
approximately $17 million  in FY 99 to $15  million in 2000.                                                                    
The overall fiscal impact, he  said would be the $15 million                                                                    
on  the floor  at this  time. He  said it  would be  hard to                                                                    
project  how long  it would  take  for that  full amount  to                                                                    
erode.                                                                                                                          
                                                                                                                                
In response to the question  on the department's position on                                                                    
the amendment, Mr. Jeans repeated  that the department would                                                                    
be opposed to any changes  to the foundation funding formula                                                                    
as set by SB 36.                                                                                                                
                                                                                                                                
Senator  Adams objected  to the  adoption  of the  committee                                                                    
substitute on two points. The  first is the unknown costs of                                                                    
Section 2, and  the second is the absence  of the provisions                                                                    
of Amendment #6.                                                                                                                
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Green, Senator Donley, Senator Leman,                                                                         
Senator Wilken, Co-Chair Parnell,                                                                                               
                                                                                                                                
OPPOSED: Senator P. Kelly, Senator Phillips, Senator Adams,                                                                     
and Co-Chair Torgerson                                                                                                          
                                                                                                                                
The motion PASSED (5-4)                                                                                                         
                                                                                                                                
The  committee  substitute  version  "N" was  adopted  as  a                                                                    
workdraft.                                                                                                                      
                                                                                                                                
                                                                                                                                
Co-Chair Torgerson established  that the proposed amendments                                                                    
#1 through #  4 were to a different version  of the bill and                                                                    
would not be offered. [Copies on file.]                                                                                         
                                                                                                                                
AT EASE                                                                                                                         
                                                                                                                                
Amendment  #5:  This  amendment deletes,  "principals"  from                                                                    
page  2 line  21 of  the committee  substitute. The  amended                                                                    
language in Section 3 reads as follows.                                                                                         
                                                                                                                                
          (1) "instructional component" means [INCLUDES]                                                                      
     expenditures  for  teachers  and  [FOR]  pupil  support                                                                    
     services, but does not  include expenditures for school                                                                  
     administration  or for  assistant principals,  or other                                                                  
     assistants    employed     to    generally    supervise                                                                  
     administrative operations of a school;                                                                                   
                                                                                                                                
          New Text Underlined [DELETED TEXT BRACKETED]                                                                        
                                                                                                                                
Senator  Green   moved  for  adoption.   Co-Chair  Torgerson                                                                    
objected.                                                                                                                       
                                                                                                                                
Senator  Green spoke  to earlier  discussions regarding  the                                                                    
need for classroom supervisors to  provide assessment on the                                                                    
teacher performance  in the classroom. She  stressed that if                                                                    
a principal  position was removed  she thought  the progress                                                                    
of  improved performance  would go  backward. While  she did                                                                    
not think 100  percent of the principal salary  should go to                                                                    
instruction, she thought  that the portion of  time spent on                                                                    
instructional duties should be accounted for accordingly.                                                                       
                                                                                                                                
Co-Chair Torgerson replied  this was the reason  for the 70-                                                                    
30 rule.  He stated that  this provision changed  the intent                                                                    
back to the  original SB 36 rather than the  recent Board of                                                                    
Education  regulation. He  warned  that  if the  percentages                                                                    
were  constantly  changed,  the  board would  be  unable  to                                                                    
provide  adequate  assessments  of the  foundation  formula-                                                                    
funding program.                                                                                                                
                                                                                                                                
Senator  Wilken  explained  that  there  are  two  conflicts                                                                    
occurring at once.  First, he said was the  placement of the                                                                    
principal in  the organizational structure of  the school as                                                                    
a  manager.  However,  he  shared,   the  issue  before  the                                                                    
Committee is how the principal  position is accounted for in                                                                    
the  expenditures of  the school  district.  He stated  that                                                                    
only the  accounting component is changed.  He stressed that                                                                    
in  order to  follow  the 70-30  requirement the  procedures                                                                    
need to remain constant.                                                                                                        
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Green                                                                                                         
                                                                                                                                
OPPOSED: Senator P. Kelly, Senator Wilken, Senator                                                                              
Phillips, Senator Donley, Senator Leman, Senator Adams, Co-                                                                     
Chair Parnell, Co-Chair Torgerson                                                                                               
                                                                                                                                
The motion FAILED (1-8)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment  #6: This  amendment  deletes "transportation  of"                                                                    
from the title on page 1  line 1. The amended language reads                                                                    
as follows.                                                                                                                     
                                                                                                                                
     "An  Act relating  to state  funding for  public school                                                                    
     students; relating to a  minimum amount of expenditures                                                                    
     by  school districts  for instruction;  determining the                                                                    
     facilities  constituting  a   school  for  purposes  of                                                                    
     public school  funding; and providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
The amendment  also inserts  a new bill  section on  page 3,                                                                    
following line 8 with an effective  date of July 1, 2000, to                                                                    
read as follows.                                                                                                                
                                                                                                                                
     "Sec. 5. AS 14.18.490(d) is repealed."                                                                                     
                                                                                                                                
Senator  Adams   moved  for  adoption.   Co-Chair  Torgerson                                                                    
objected.                                                                                                                       
                                                                                                                                
Senator  Adams expressed  that all  students, regardless  of                                                                    
where they live, should receive  the same amount of funding.                                                                    
He stressed this is the worst kind of discrimination.                                                                           
                                                                                                                                
AT EASE 6:43 PM / 6:47 PM                                                                                                       
                                                                                                                                
Senator  Wilken  made  a  statement  about  Senator  Adams's                                                                    
comments regarding  the color of  one's skin  that disturbed                                                                    
him. He  said the intent of  SB 36 was to  instill fairness.                                                                    
He  listed   the  several  rural  districts   that  actually                                                                    
benefited  from the  formula funding  formula. He  suggested                                                                    
that removing  this floor would cause  the funding mechanism                                                                    
to revert back to the previously flawed formula.                                                                                
                                                                                                                                
Senator  Adams  responded  the  school  districts  cited  by                                                                    
Senator Wilken  were short-funded  beforehand and  were only                                                                    
now starting  to receive fair  funding. He asserted  that if                                                                    
Senator Wilken's  explanation was so good,  then the figures                                                                    
should  be  reversed and  urban  schools  should receive  60                                                                    
cents  on the  dollar  and rural  schools  receive the  full                                                                    
dollar.                                                                                                                         
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Adams                                                                                                         
                                                                                                                                
OPPOSED: Senator Phillips, Senator Green, Senator Donley,                                                                       
Senator Leman, Senator Wilken, Co-Chair Parnell, Co-Chair                                                                       
Torgerson                                                                                                                       
                                                                                                                                
ABSENT: Senator P. Kelly                                                                                                        
                                                                                                                                
The motion FAILED (7-1-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Senator  Green commented  that she  appreciated the  efforts                                                                    
that  went  into this  legislation.  However  she needed  to                                                                    
understand the impact  on those districts that  did not have                                                                    
an  opportunity to  renegotiate  their pupil  transportation                                                                    
contracts  before  the floor  was  set.  She referred  to  a                                                                    
survey that  showed those that had  negotiated new contracts                                                                    
had  an  advantage of  several  million  dollars over  those                                                                    
districts that had not yet renegotiated.                                                                                        
                                                                                                                                
Co-Chair   Torgerson  commented   that  the   new  committee                                                                    
substitute negated  all the 50-50  efforts since  it allowed                                                                    
for multiple adjustments. He noted  that about the only item                                                                    
not accounted for was the COLA.                                                                                                 
                                                                                                                                
Senator  Green did  not understand  it that  way. She  would                                                                    
prefer  to  be  a  district that  had  already  renegotiated                                                                    
rather than one that had not yet done so.                                                                                       
                                                                                                                                
Co-Chair  Torgerson  stated  that   the  costs  of  the  new                                                                    
contracts would not  be known, but if the total  were for $7                                                                    
million, the state would be required to pay the $7 million.                                                                     
                                                                                                                                
Senator  Donley  wanted to  see  progress  made towards  the                                                                    
charter  school problem,  but he  noted he  did not  have an                                                                    
amendment drafted to address this issue.                                                                                        
                                                                                                                                
Senator  Adams restated  his request  for calculations  from                                                                    
the department.                                                                                                                 
                                                                                                                                
Mr. Jeans  responded that  to calculate  that would  be very                                                                    
difficult and  listed reasons why.  He was able to  say that                                                                    
the  COLA increases  in Anchorage  had been  less than  four                                                                    
percent  since   1982.  This  would  make   Senator  Green's                                                                    
concerns mute, he stated.                                                                                                       
                                                                                                                                
Senator Adams asked if the  witness could tell the Committee                                                                    
if the  cost would be  higher or lower than  the Committee's                                                                    
calculation of $5 million.                                                                                                      
                                                                                                                                
Mr.  Jeans  could not  predict  exactly  what the  increases                                                                    
would  be  but  that  all  current  contracts  contain  COLA                                                                    
provisions. He  noted that the  Railbelt area  districts had                                                                    
issued Requests for Proposal (RFP),  which he thought, would                                                                    
bring down the costs by encouraging outside competition.                                                                        
                                                                                                                                
Senator Adams asked if that would  be the case only if there                                                                    
was outside competition.                                                                                                        
                                                                                                                                
Mr. Jeans affirmed.                                                                                                             
                                                                                                                                
Senator Adams  addressed Senator Green's concerns  about the                                                                    
effective  dates   of  contracts.   He  asked   if  expiring                                                                    
contracts would  be taken care  of because of  the staggered                                                                    
effective dates of Sections 5 and 6.                                                                                            
                                                                                                                                
Mr. Jeans  responded that Section  6 establishes FY 01  as a                                                                    
base year  that any  increases will  be measured.  If fiscal                                                                    
note of over  $1 million accompanied the bill,  he said, the                                                                    
entire  pupil transportation  would be  fully funded  at the                                                                    
Department of Education and  Early Development's request and                                                                    
that would establish the base line for the future.                                                                              
                                                                                                                                
Senator  Green asked  if  Mr. Jeans  could  assure her  that                                                                    
those districts  that have not yet  renegotiated their pupil                                                                    
transportation contract would not be at a detriment.                                                                            
                                                                                                                                
Mr. Jeans answered that was  correct, provided the Anchorage                                                                    
COLA  did not  exceed  four  percent over  the  term of  the                                                                    
contract. If did  go above four, he  explained, the increase                                                                    
would be split 50-50 between the district and the state.                                                                        
                                                                                                                                
Co-Chair  Torgerson clarified  the  COLA would  be the  only                                                                    
expense  reimbursable under  normal contract  provisions and                                                                    
that increased enrollment would not be impacted.                                                                                
                                                                                                                                
Mr. Jeans stated that in  his understanding of the committee                                                                    
substitute's  language FY  00 would  be  established as  the                                                                    
base  year.  He  continued  that   if  a  district  required                                                                    
additional  routes  or  added  a  new  school  or  increased                                                                    
student population  would increase  the base  and set  a new                                                                    
threshold  for the  following years.  He qualified  that, if                                                                    
this were not the case, he needed to know.                                                                                      
                                                                                                                                
Co-Chair  Torgerson   assured  the  witness  that   was  the                                                                    
Committee's intent.                                                                                                             
                                                                                                                                
Senator Green  spoke of the  efforts made by  some districts                                                                    
to  combine   their  contracts   with  other   districts  to                                                                    
encourage competitive bidding. She  would contend that after                                                                    
one or  two years, the  state would  be back to  having only                                                                    
one  provider. She  did  not think  this  was a  competitive                                                                    
arena  and  therefore, this  approach  was  not a  long-term                                                                    
solution.                                                                                                                       
                                                                                                                                
Mr. Jeans agreed  that could be the result, but  that by not                                                                    
making  the step  forward, the  state was  locking into  the                                                                    
existing contractors. He relayed  that in conversations with                                                                    
Outside contractors, he  was told they could  not break into                                                                    
the  Alaska  market with  the  small  routes. Therefore,  he                                                                    
stated,  aligning  these  contracts makes  the  market  more                                                                    
appealing to competitors.                                                                                                       
                                                                                                                                
                                                                                                                                
Tape: SFC - 00 #85, Side B    7:03 PM                                                                                           
                                                                                                                                
                                                                                                                                
Mr.  Jeans continued  that contracts  must  consist of  more                                                                    
than 100 busses  in order to make it  worthwhile for Outside                                                                    
providers to enter the market.                                                                                                  
                                                                                                                                
Senator Green gave  a scenario of high  oil prices resulting                                                                    
in  high fuel  prices to  operate  the busses  and asked  if                                                                    
those  increased costs  were included  in the  price of  the                                                                    
contracts                                                                                                                       
                                                                                                                                
Mr. Jeans answered that was his interpretation as well.                                                                         
                                                                                                                                
Senator Wilken moved to report CS SB 290, 1-LS1555\N from                                                                       
Committee  with  forthcoming  Department  of  Education  and                                                                    
Early Development fiscal note.                                                                                                  
                                                                                                                                
Senator Green objected.                                                                                                         
                                                                                                                                
Co-Chair Torgerson  objected saying that while  he would not                                                                    
prevent the bill  from reporting out of  Committee, he could                                                                    
not support Section  4. He stressed that he  could not agree                                                                    
to  a  million-dollar  increase   to  the  operating  budget                                                                    
already agreed upon by the legislature.                                                                                         
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Wilken, Senator P. Kelly, Senator                                                                             
Phillips, Senator Donley, and Co-Chair Parnell                                                                                  
                                                                                                                                
OPPOSED: Senator Adams, Senator Green, and Co-Chair                                                                             
Torgerson                                                                                                                       
                                                                                                                                
ABSENT: Senator Leman                                                                                                           
                                                                                                                                
The motion PASSED (5-3-1)                                                                                                       
                                                                                                                                
The bill was MOVED from Committee.                                                                                              
                                                                                                                                
     SENATE BILL NO. 248                                                                                                        
     "An Act  relating to  the financing  authority, payment                                                                    
     in  lieu  of  tax  agreements, and  tax  exemption  for                                                                    
     assets   and   projects   of  the   Alaska   Industrial                                                                    
     Development and Export  Authority; relating to renaming                                                                    
     and  contingently   repealing  the   rural  development                                                                    
     initiative fund within the  Department of Community and                                                                    
     Economic  Development,   and  establishing   the  rural                                                                    
     development   initiative   fund   within   the   Alaska                                                                    
     Industrial  Development   and  Export   Authority;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
KEITH LAUFER,  Financial and  Legal Affairs  Manager, Alaska                                                                    
Industrial   Development  and   Export  Authority   (AIDEA),                                                                    
Department  of Community  and Economic  Development referred                                                                    
to the sectional analysis of the bill. [Copy on file.]                                                                          
                                                                                                                                
Mr. Laufer  stated that the legislation  has three elements.                                                                    
The  first,  he  said  extends  the  AIDEA  general  bonding                                                                    
authority  that would  otherwise  sunset July  1, 2000.  The                                                                    
second  element  of the  bill,  he  explained transfers  the                                                                    
Rural Development Initiative Fund  Loan program to AIDEA. He                                                                    
relayed  that  the third  element  is  technical changes  to                                                                    
provisions in  existing law dealing with  tax exemptions and                                                                    
payment  in   lieu  of  tax  agreements   related  to  AIDEA                                                                    
development finance projects.                                                                                                   
                                                                                                                                
With regard to the bonding  sunset, Mr. Laufer asserted that                                                                    
AIDEA has been  subject to these sunsets for  many years. He                                                                    
said  the current  sunset would  prevent AIDEA  from issuing                                                                    
all  bonds other  than refunding  bonds  regardless of  size                                                                    
without  specific  legislative  approval.  Specifically,  he                                                                    
pointed  out, the  sunset would  prevent  issuing bonds  for                                                                    
less than  $10 million for development  finance projects. He                                                                    
noted  that bonds  over $10  million, currently  and in  the                                                                    
future   under  this   legislation,   to  require   specific                                                                    
legislative approval.                                                                                                           
                                                                                                                                
Mr.  Laufer continued  that the  sunset  would also  prevent                                                                    
AIDEA from issuing conduit revenue  bonds. He explained that                                                                    
these are  the bonds that AIDEA  can issue and which  do not                                                                    
obligate either  AIDEA's credit or  the credit of  the State                                                                    
Of Alaska but provide  qualified projects with low-cost tax-                                                                    
exempt financing.                                                                                                               
                                                                                                                                
Mr.  Laufer stated  that the  bill would  extend the  sunset                                                                    
provision  to July  2003  and make  clear  that the  conduit                                                                    
revenue bonds are not subject to the sunset.                                                                                    
                                                                                                                                
Mr.  Laufer  then  addressed  the   transfer  of  the  Rural                                                                    
Development Initiative Fund (RDIF).  That program, he stated                                                                    
would  formally   move  from   the  former   Department  and                                                                    
Community and  Regional Affairs to  AIDEA. He  explained the                                                                    
program  makes  loans  under   $200,000  to  businesses  and                                                                    
communities  with   populations  of  less  than   5,000.  He                                                                    
expressed that  AIDEA has long  supported this  program that                                                                    
also  advances AIDEA's  mission.  He spoke  of past  actions                                                                    
where  the  legislature  has authorized  AIDEA  to  purchase                                                                    
these loans and directed the  proceeds from the loans to re-                                                                    
capitalize  the   initiative  fund.   He  stated   that  the                                                                    
relocation of  this program would  allow it to  become self-                                                                    
sustaining  without   the  need  for   periodic  legislative                                                                    
appropriations. He  noted that AIDEA would  continue to work                                                                    
with the  Department of  Community and  Economic Development                                                                    
to administer the program.                                                                                                      
                                                                                                                                
Mr.  Laufer  stated  that  this   bill  anticipates  that  a                                                                    
separate  appropriation  will  also pass  that  would  allow                                                                    
AIDEA to purchase  the existing RDIF loan  portfolio and the                                                                    
other assets in the fund.                                                                                                       
                                                                                                                                
Mr.  Laufer   continued  that   the  bill   makes  technical                                                                    
amendments  to  the  tax  exemption  provisions  related  to                                                                    
AIDEA-owned  projects.  Under  existing  law,  he  explained                                                                    
AIDEA's ownership of these projects  is tax-exempt and local                                                                    
jurisdictions are  permitted to exempt users  of AIDEA-owned                                                                    
development  projects from  property  tax or  to enter  into                                                                    
payment  in  lieu of  tax  agreements  with those  projects.                                                                    
Unfortunately, he shared these statutes  are not clear as to                                                                    
the mechanism  which are to  be used for the  tax exemption.                                                                    
He detailed  two specific problems  the bill  address; pilot                                                                    
agreements  and  clarification  to allow  municipalities  to                                                                    
grant tax exemptions.                                                                                                           
                                                                                                                                
Co-Chair Torgerson asked about the RDIF.                                                                                        
                                                                                                                                
Mr.  Laufer described  that due  to complicated  language in                                                                    
the  transfer provision  of  the bill,  there  could be  two                                                                    
funds. However,  he assured  that once  the purchase  of the                                                                    
fund's assets  is authorized  and consummated,  the existing                                                                    
program is  repealed and is  combined into the  new program.                                                                    
This language, he pointed out  is contained in Section 10 of                                                                    
the bill.                                                                                                                       
                                                                                                                                
Co-Chair Torgerson  wanted to  know if  the language  in the                                                                    
transfer is exactly the same as the existing language.                                                                          
                                                                                                                                
Mr.  Laufer  replied  that  the  new  language  mirrors  the                                                                    
existing language  with the  exception of  technical changes                                                                    
to allow the fund to  comply with AIDEA's assets. He assured                                                                    
there are no changes to the program.                                                                                            
                                                                                                                                
Senator Phillips  asked who asked  for this  legislation and                                                                    
why. He  commented that his  constituency would like  to see                                                                    
the state sell AIDEA.                                                                                                           
                                                                                                                                
Mr. Laufer answered  the bill was requested  by the governor                                                                    
with   the  primary   intent  to   extend  AIDEA's   bonding                                                                    
authority. He  added that the  RDIF transfer is  included to                                                                    
avoid  the need  for  future  legislative appropriations  to                                                                    
capitalize the fund.                                                                                                            
                                                                                                                                
Senator Phillips  wanted to know who  requested the governor                                                                    
sponsor this bill.                                                                                                              
                                                                                                                                
Mr. Laufer  shared that  AIDEA and  the department  had been                                                                    
discussing this matter for "some time."                                                                                         
                                                                                                                                
Senator Donley  asked the  criteria for  the RDIF  loans. He                                                                    
noted  that  AIDEA's charter  requires  it  to practice  due                                                                    
diligence to get  repayment of its loans. He  wanted to know                                                                    
if the rural loans were  subject to the same requirement and                                                                    
what action AIDEA  planned to take if a number  of the loans                                                                    
began  to default.  He voiced  his skepticism  of many  loan                                                                    
programs  trying to  become independent  from state  funding                                                                    
and  instead become  part of  the AIDEA  program. He  stated                                                                    
that by becoming  part of AIDEA, the programs  are no longer                                                                    
subject to legislative scrutiny but  that the funds used for                                                                    
the loans could  instead be deposited into  the general fund                                                                    
as AIDEA dividends.                                                                                                             
                                                                                                                                
Mr. Laufer responded that AIDEA  has already been purchasing                                                                    
the RDIF  loan portfolios and therefore  has experience with                                                                    
these loans.  He stated that  the default rates are  not out                                                                    
of line  with what is  expected in a typical  loan portfolio                                                                    
that  AIDEA would  manage. He  stressed that  the loans  are                                                                    
required  to  go through  a  similar  process, as  would  be                                                                    
required  in  typical  AIDEA  programs.  He  detailed  these                                                                    
requirements.                                                                                                                   
                                                                                                                                
Senator Donley  asked if there  was a maximum  dollar amount                                                                    
AIDEA could put into the RDIF program.                                                                                          
                                                                                                                                
Mr. Laufer  answered that  there is not  a maximum  and that                                                                    
approximately $1  million would  be a significant  amount to                                                                    
make it the fund a truly  revolving loan program.  He shared                                                                    
that the  current problem  is that  once the  department has                                                                    
loaned the  money, there is  insufficient money  returned on                                                                    
an annual basis  to fund any new loans. AIDEA  would be able                                                                    
to  operate  the  fund  as  a  revolving  loan  program,  he                                                                    
assured.                                                                                                                        
                                                                                                                                
Co-Chair   Torgerson  asked   if   AIDEA   would  oppose   a                                                                    
legislative imposed  cap of  $2 million  as the  amount that                                                                    
could be given to the RDIF.                                                                                                     
                                                                                                                                
Mr. Laufer did not think so.                                                                                                    
                                                                                                                                
Co-Chair  Torgerson asked  for an  explanation of  Section 7                                                                    
asking  for  authorization  to make  loans  to  a  political                                                                    
subdivision  and   if  AIDEA  is   making  loans   to  local                                                                    
governments.                                                                                                                    
                                                                                                                                
Mr.  Laufer clarified  that is  not the  case, but  that the                                                                    
provision  refers to  the ability  of  users of  AIDEA-owned                                                                    
projects to enter into payment  in lieu of tax agreements to                                                                    
build  the  subdivisions. He  stated  that  the language  is                                                                    
detailed  to   make  sure  it   is  clear  that   the  local                                                                    
subdivisions and  the users  of the  project may  enter into                                                                    
the tax agreements.                                                                                                             
                                                                                                                                
Co-Chair  Torgerson noted  the  bill would  not be  reported                                                                    
from  the Committee  at this  hearing, saying  he wanted  to                                                                    
consider  setting  a  maximum amount  that  AIDEA  would  be                                                                    
allowed to deposit into the RDIF.                                                                                               
                                                                                                                                
Senator Green  referred to the  language on page 4,  line 27                                                                    
"community with a  population of 5,000 or  less". She wanted                                                                    
to know  how many  communities fit  this description  in the                                                                    
state.                                                                                                                          
                                                                                                                                
Mr. Laufer did not have that information.                                                                                       
                                                                                                                                
Co-Chair Torgerson ordered the bill HELD in Committee.                                                                          
                                                                                                                                
     COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 254(HES)                                                                          
     "An Act relating to heirloom certificates of                                                                               
     marriage."                                                                                                                 
                                                                                                                                
                                                                                                                                
This  was the  second hearing  for this  bill in  the Senate                                                                    
Finance Committee.                                                                                                              
                                                                                                                                
Co-Chair  Torgerson  announced  that   he  had  had  earlier                                                                    
concerns with  the fiscal note and  requested the department                                                                    
to recalculate the cost to implement the legislation.                                                                           
                                                                                                                                
ELMER   LINDSTROM,   Special   Assistant,  Office   of   the                                                                    
Commissioner,  Department  of  Health  and  Social  Services                                                                    
noted the $12,000  reduction made to the  fiscal note. [Copy                                                                    
on file.]                                                                                                                       
                                                                                                                                
Senator  Phillips   asked  if  this  program   adds  another                                                                    
position to government. While he  thought this program would                                                                    
be  nice to  have,  he did  not consider  it  a function  of                                                                    
government.                                                                                                                     
                                                                                                                                
Senator Adams offered a motion  to report from Committee, CS                                                                    
SB 254  (HES) with $55,400  fiscal note from  the Department                                                                    
of Health and Social Services. Senator Phillips objected.                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Leman, Senator Adams, Senator Wilken,                                                                         
Senator P. Kelly, and Co-Chair Torgerson                                                                                        
                                                                                                                                
OPPOSED: Senator Green, Senator Phillips                                                                                        
                                                                                                                                
ABSENT: Senator Donley, Co-Chair Parnell                                                                                        
                                                                                                                                
The motion PASSED (5-2-2)                                                                                                       
                                                                                                                                
The bill was MOVED from Committee.                                                                                              
                                                                                                                                
AT EASE to 7:29 PM                                                                                                              
                                                                                                                                
     SENATE BILL NO. 257                                                                                                        
     "An  Act relating  to notice  requirements for  certain                                                                    
     final findings  concerning the disposal of  an interest                                                                    
     in state  land or resources  for oil and  gas; relating                                                                    
     to   administrative    appeals   and    petitions   for                                                                    
     reconsideration  of  decisions  of  the  Department  of                                                                    
     Natural  Resources;  and  providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
BOB LOEFFLER, Director, Division  of Mining, Land and Water,                                                                    
Department  of Natural  Resources, explained  the bill  does                                                                    
two  things,  creates  a uniform  appeals  process  for  the                                                                    
Department  of  Natural  Resources  and  corrects  a  notice                                                                    
problem for the Division of Oil and Gas.                                                                                        
                                                                                                                                
Mr. Loeffler  explained the problems that  precipitated this                                                                    
bill. He  stated that  for a  variety of  reasons, different                                                                    
laws have  been passed  over several  years, and  because of                                                                    
the  way  they  interact,  there is  a  variety  of  appeals                                                                    
processes  within  the  department.   He  noted  that  these                                                                    
different processes follow different  schedules with 15 - 30                                                                    
days allowed to file an  appeal. The different processes, he                                                                    
added  require  different  channels  and  opportunities  for                                                                    
appeals.  He remarked  that this  causes  confusion for  the                                                                    
public and  for department staff.  He stated that  this bill                                                                    
establishes there is only one  appeal process, one appeal to                                                                    
the commissioner and the next appeal made in court.                                                                             
                                                                                                                                
Mr. Loeffler  continued with the second  problem relating to                                                                    
notices  for lease  sales stating  that there  are currently                                                                    
three notices.  He detailed these  notices. As a  result, he                                                                    
said the  public is  confused and  there is  additional cost                                                                    
for publishing the multiple notices.                                                                                            
                                                                                                                                
Co-Chair  Torgerson asked  why  this bill  does  not have  a                                                                    
negative fiscal note.                                                                                                           
                                                                                                                                
Mr. Loeffler responded that the  Division of Oil and Gas has                                                                    
a higher  workload this year, and  the intent is to  use the                                                                    
small  cost savings  from this  legislation to  pay for  the                                                                    
other   operations.  The   savings   anticipated  by   other                                                                    
divisions,  he said  are spread  between many  employees and                                                                    
would be difficult  to identify. He stated  that because the                                                                    
department  had a  $750,000  budget  reduction, "we're  just                                                                    
struggling to keep up."                                                                                                         
                                                                                                                                
Co-Chair Torgerson  asked if the  fiscal note  therefore has                                                                    
nothing  to   do  with   the  bill   but  rather   with  the                                                                    
department's  desire to  save money  to  be spent  elsewhere                                                                    
within the department.                                                                                                          
                                                                                                                                
Mr. Loeffler  repeated that the  savings would  be difficult                                                                    
to calculate.                                                                                                                   
                                                                                                                                
Senator Leman asked how much  the department spends annually                                                                    
on public notices.                                                                                                              
                                                                                                                                
Mr. Loeffler did not know the  entire cost but knew that the                                                                    
intermediate notice is  a few thousand dollars  for each oil                                                                    
and gas lease  sale. He noted that the  department offers "a                                                                    
few" of these sales each year.                                                                                                  
                                                                                                                                
Senator Leman  was interested in  reducing costs  and stated                                                                    
that if this bill could  allow the department to save money,                                                                    
he  supported it.  He suggested  a  conceptual amendment  to                                                                    
remove the appeals  process from the bill  and maintain only                                                                    
the public notice portion.                                                                                                      
                                                                                                                                
Co-Chair  Torgerson  wanted  the amendment  offered  on  the                                                                    
Senate floor.                                                                                                                   
                                                                                                                                
Co-Chair Parnell pointed  out that the Committee  has in its                                                                    
possession, another bill that contains this language.                                                                           
                                                                                                                                
Co-Chair Parnell offered a motion  to report from Committee,                                                                    
SB 257,  1-GS2046.A with accompanying zero  fiscal note from                                                                    
the Department of Natural Resources.                                                                                            
                                                                                                                                
Without objection, the bill MOVED from Committee.                                                                               
                                                                                                                                
     COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 259(JUD)                                                                          
     "An  Act relating  to crimes  and offenses  relating to                                                                    
     aural  representations,   recordings,  access  devices,                                                                    
     identification    documents,    impersonation,    false                                                                    
     reports, and computers; and  providing for an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the  fifth hearing  for  this bill  in the  Senate                                                                    
Finance  Committee.   At  the   last  hearing,   a  proposed                                                                    
committee substitute, 1-LS1284\M was  before the members but                                                                    
not adopted.                                                                                                                    
                                                                                                                                
Senator Green asked which version  contains the more complex                                                                    
language.                                                                                                                       
                                                                                                                                
It was established that Version "M" would not be adopted.                                                                       
                                                                                                                                
Co-Chair Parnell offered a motion  to report from Committee,                                                                    
CS SB 259 (JUD),  1-LS1284\K with accompanying Department of                                                                    
Administration $84,700 fiscal note  and Department of Public                                                                    
Safety $22,800 fiscal note.                                                                                                     
                                                                                                                                
There was no objection and the bill MOVED from Committee.                                                                       
                                                                                                                                
     COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 283(RES)                                                                          
     "An  Act establishing  the shore  fisheries development                                                                    
     lease program account and  the timber receipts account;                                                                    
     relating  to the  accounting for  and appropriation  of                                                                    
     revenue  from  the  state land  disposal  program,  the                                                                    
     shore  fisheries  development  lease program,  and  the                                                                    
     state  timber disposal  program; and  providing for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
BOB LOEFFLER, Director, Division  of Mining, Land and Water,                                                                    
Department  of Natural  Resources  testified  that the  bill                                                                    
provides for a  land disposal income fund  for similar shore                                                                    
fisheries  and for  timber harvests.  He detailed  that this                                                                    
bill provides a  separate accounting system for  a land sale                                                                    
program  to   allow  the  legislature  and   the  public  to                                                                    
understand  the benefits  and the  physical consequences  of                                                                    
the land sales.                                                                                                                 
                                                                                                                                
Mr. Loeffler  continued that the  bill promotes  the concept                                                                    
that state  land sale programs  should return  revenues, not                                                                    
only  for the  sake  of  more land  sales,  but should  also                                                                    
provide a return to the state.  While he did not think these                                                                    
land  sales would  close the  state's budget  gap, he  noted                                                                    
they would provide  revenue above the amount  needed to fund                                                                    
a stable land disposal program.                                                                                                 
                                                                                                                                
Mr. Loeffler  detailed that the  bill allows  the department                                                                    
to use the  income from past and present sales  to fund more                                                                    
land  disposals  up  to  $5   million,  with  the  remaining                                                                    
revenues going to the general fund.                                                                                             
                                                                                                                                
Mr.  Loeffler  addressed  the fiscal  note,  which  he  said                                                                    
contain  the concepts  discussed  during hearings  on SB  6,                                                                    
another  lands  disposal  legislation.  The  amount  of  the                                                                    
fiscal note, he  said is enough to "jump  start" the program                                                                    
and to keep up with new acreage in future years.                                                                                
                                                                                                                                
Mr.  Loeffler spoke  to the  fisheries program,  saying this                                                                    
bill provides a  similar fund in the state  treasury for the                                                                    
shore   fisheries  program.   This  program,   he  explained                                                                    
currently  generates  $360,000  for  1,200  shore  fisheries                                                                    
leases and this  bill would allow a portion  of that revenue                                                                    
be used to fund the program.                                                                                                    
                                                                                                                                
DAN CHALUP,  Representative, Katchemak Bay  Salmon Producers                                                                    
Co-op, testified  via teleconference  from Homer  in support                                                                    
of Section  3 of  the legislation. His  organization thought                                                                    
that a  portion of the  proceeds should go into  the program                                                                    
to protect  it from any  further budget reductions  from the                                                                    
Department of Natural Resources.                                                                                                
                                                                                                                                
KARL  KIRCHER,  Kenai   Peninsula  Fisherman's  Association,                                                                    
testified  via teleconference  from  Kenai in  favor of  the                                                                    
bill  and referred  to written  testimony  submitted to  the                                                                    
Committee.  [Copies  not  provided.] He  also  gave  details                                                                    
about the  organization; its purpose and  the existing shore                                                                    
lease problems.                                                                                                                 
                                                                                                                                
SANDY  UMLAUT, President,  Ugashik Set-netting  Association,                                                                    
testified   via   teleconference   from  Kenai   about   the                                                                    
organization and  to request that  members of  the Committee                                                                    
vote in favor of this bill.  She stated that this bill would                                                                    
continue to provide stability for the set-net industry.                                                                         
                                                                                                                                
PAUL SHADURA,  member of a  family that  set-nets, testified                                                                    
via teleconference  from Kenai telling about  the successful                                                                    
fishing areas. His family supported the bill.                                                                                   
                                                                                                                                
Co-Chair  Torgerson asked  if new  staff would  be hired  to                                                                    
implement the legislation.                                                                                                      
                                                                                                                                
Mr. Loeffler  said approximately eight people  would run the                                                                    
program. He noted that  three title-search positions already                                                                    
existed and would be staffed  by employees whose funding was                                                                    
eliminated in  the operating budget.  He qualified  that two                                                                    
new  positions  would  be needed  for  the  shore  fisheries                                                                    
portion of the  program to offset staff  reductions from the                                                                    
previous year.                                                                                                                  
                                                                                                                                
Senator Phillips  asked how  the legislature  should explain                                                                    
to the public that the state  is adding new positions to the                                                                    
government.                                                                                                                     
                                                                                                                                
Mr. Loeffler said the division  would contract out functions                                                                    
as best  as it can,  but cautioned that  in order to  have a                                                                    
stable lands disposal system, staff are needed.                                                                                 
                                                                                                                                
Senator Phillips  contended that would not  stop people from                                                                    
complaining.                                                                                                                    
                                                                                                                                
Co-Chair Torgerson asked about  the increase of 55,000 acres                                                                    
up from the earlier 50,000.                                                                                                     
                                                                                                                                
Mr. Loeffler referred to discussions  regarding SB 6 and the                                                                    
five scenarios  provided. He detailed that  55,000 acres was                                                                    
one of  those scenarios, which is  made up of 50,000  of re-                                                                    
offered, previously distributed parcels  and 5,000 in remote                                                                    
sales  and   subdivisions.  He   explained  how   the  funds                                                                    
allocated would be used to implement the lands disposal.                                                                        
                                                                                                                                
Co-Chair  Torgerson commented  that  he would  not hold  the                                                                    
bill, but the warned that  the performance measures would be                                                                    
scrutinized  thoroughly. He  did not  have problem  with the                                                                    
additional funding for positions.                                                                                               
                                                                                                                                
Senator  Leman   stated  that  he  holds   a  set-net  shore                                                                    
fisheries lease. He  attested that the personal  cost to him                                                                    
would be the same whether or not this bill passes.                                                                              
                                                                                                                                
Senator Adams  offered a motion  to move from  Committee, CS                                                                    
SB 283  (RES) with  two accompanying  fiscal notes  from the                                                                    
Department of Natural Resources,  Division of Minerals, Land                                                                    
and Water. One fiscal note  is $1,014,300 for the Land Sales                                                                    
and Municipal  Entitlements component  and the  other fiscal                                                                    
note is $200,000 for the Claims, Permits and Leases                                                                             
component.                                                                                                                      
                                                                                                                                
Without objection, the bill MOVED from Committee.                                                                               
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ADJOURNED                                                                                                                   
                                                                                                                                
Senator Torgerson adjourned the meeting at 7:55 PM.                                                                             

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