Legislature(2019 - 2020)SENATE FINANCE 532

03/12/2020 09:00 AM FINANCE

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Audio Topic
09:04:38 AM Start
09:06:24 AM Confirmation of Governor's Appointee: Lucinda Mahoney, Commissioner, Department of Revenue
09:46:00 AM SB150
10:11:05 AM SB55
10:23:25 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation of Governor's Appointees: TELECONFERENCED
Lucinda Mahoney, Revenue Commissioner
+ SB 150 INTENSIVE MGMT SURCHARGE/REPEAL TERM DATE TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
+= SB 55 TEMP. APPOINTMENTS TO COURT OF APPEALS TELECONFERENCED
Heard & Held
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 12, 2020                                                                                            
                         9:04 a.m.                                                                                              
                                                                                                                                
9:04:38 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:04 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Natasha von Imhof, Co-Chair                                                                                             
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Click Bishop                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Donny Olson                                                                                                             
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Josh  Revak,   Sponsor;  Dustin  Elsberry,  Intern,                                                                    
Senator  Josh Revak;  Ron Somerville,  Territorial Sportsmen                                                                    
Inc.,  Juneau; Doug  Vincent-Lang, Commissioner,  Department                                                                    
of  Fish  and  Game;  Jasmin Martin,  Staff,  Senator  David                                                                    
Wilson; Nancy Meade, General Counsel, Alaska Court System.                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Lucinda Mahoney,  Appointee, Department of  Revenue, Juneau;                                                                    
Thor  Stacey,   Alaska  Professional   Hunters  Association,                                                                    
Fairbanks;  Rod  Amo,  Executive  Director,  Alaska  Outdoor                                                                    
Council, Fairbanks.                                                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 55     TEMP. APPOINTMENTS TO COURT OF APPEALS                                                                                
                                                                                                                                
          SB 55 was HEARD and HELD in committee for further                                                                     
          consideration.                                                                                                        
                                                                                                                                
SB 150    INTENSIVE MGMT SURCHARGE/REPEAL TERM DATE                                                                             
                                                                                                                                
          SB 150 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
                                                                                                                                
^CONFIRMATION  OF  GOVERNOR'S  APPOINTEE:  LUCINDA  MAHONEY,                                                                  
COMMISSIONER, DEPARTMENT OF REVENUE                                                                                           
                                                                                                                                
9:06:24 AM                                                                                                                    
                                                                                                                                
LUCINDA  MAHONEY, APPOINTEE,  DEPARTMENT OF  REVENUE, JUNEAU                                                                    
(via teleconference),  stated that  she was  sick, otherwise                                                                    
she would be  at the meeting in person.  She highlighted her                                                                    
resume, education, and work history.                                                                                            
                                                                                                                                
9:12:20 AM                                                                                                                    
                                                                                                                                
Acting  Commissioner Mahoney  continued  to highlighted  her                                                                    
qualifications. She remarked that  the Great Recession began                                                                    
at the end  of 2008, and the revenues  were decreasing while                                                                    
expenditures were  increasing. She stressed that  action was                                                                    
immediately needed  in order to maintain  a balanced budget.                                                                    
She stated that  she was in a group to  develop a long-range                                                                    
fiscal plan. She  explained that there was  an evaluation of                                                                    
multiple  revenue  sources  and scenarios  with  expenditure                                                                    
reductions. She remarked that the  plan was implemented, and                                                                    
the plan was revised over the years.                                                                                            
                                                                                                                                
9:15:14 AM                                                                                                                    
                                                                                                                                
Acting  Commissioner Mahoney  continued with  her testimony.                                                                    
She explained  some personal issues  that affected  her most                                                                    
recent employment.                                                                                                              
                                                                                                                                
Co-Chair Stedman recalled a discussion  about some issues of                                                                    
concern. He  looked at page  5 of the  current Comprehensive                                                                    
Annual Financial Report (June 30, 2019):                                                                                        
                                                                                                                                
     We are  unable to  obtain sufficient  appropriate audit                                                                    
     evidence  to  provide  assurances  over  tax  revenues,                                                                    
     because  the  Department  of Revenue  (DOR)  management                                                                    
     denied auditors sufficient access  to the Department of                                                                    
     Revenue's   oil   and   gas  production   tax   related                                                                    
     settlement  appeal files  during the  audit field  work                                                                    
     period.  The files  were needed  to  verify the  proper                                                                    
     usage  of  oil and  gas  production  tax credits  in  a                                                                    
     settlement   of   oil   and   gas   production   taxes.                                                                    
     Consequently,  we  were  unable  to  determine  whether                                                                    
     adjustments    to   tax    amounts   were    necessary.                                                                    
     Additionally,  we  were  unable  to  obtain  sufficient                                                                    
     appropriate  audit   evidence  due  to   Department  of                                                                    
     Revenue's  refusal  to provide  written  representation                                                                    
     over   the   financial    statement   preparation   and                                                                    
     presentation  of the  tax revenue  accounts in  written                                                                    
     representation of  the completeness of  the information                                                                    
     provided to the auditors.                                                                                                  
                                                                                                                                
Co-Chair  Stedman  stressed  that the  auditor's  could  not                                                                    
reference  the  complete  information,   and  he  asked  for                                                                    
comment and position on that issue.                                                                                             
                                                                                                                                
9:21:45 AM                                                                                                                    
                                                                                                                                
Acting   Commissioner   Mahoney   replied   that   she   had                                                                    
communicated with  her department to better  understand that                                                                    
issue.  She  stressed that  the  audit  occurred before  her                                                                    
tenure. She explained  that her position on  audits was that                                                                    
that there  should be a  standard of full  transparency. She                                                                    
remarked that  there were  some confidential  documents that                                                                    
were eventually  given to  the auditor,  and there  may have                                                                    
been some  finding issues related  to that. She  pointed out                                                                    
that  there was  attorney-client  privileged documents  that                                                                    
the department was unable to provide.                                                                                           
                                                                                                                                
Co-Chair  Stedman  remarked  that   the  auditors  were  the                                                                    
legislative and  state auditors, so it  was very concerning.                                                                    
He remarked  that there needed  to be  a "clean up"  of that                                                                    
issue, so the legislature could  have full confidence in the                                                                    
accuracy of the  DOR data. She surmised that  those types of                                                                    
audit statements would not appear in future audits.                                                                             
                                                                                                                                
Acting Commissioner  Mahoney replied that her  goal was full                                                                    
transparency.                                                                                                                   
                                                                                                                                
Co-Chair Stedman asked for a restatement of her response.                                                                       
                                                                                                                                
Acting Commissioner Mahoney restated  that her goal was full                                                                    
transparency.                                                                                                                   
                                                                                                                                
Senator   Wielechowski   appreciated   the  goal   of   full                                                                    
transparency. He recalled  a meeting where he  had asked for                                                                    
some  documents that  his office  had repeatedly  requested,                                                                    
and  she stated  that she  would provide  that document.  He                                                                    
noted that  his office had  not yet received  that document.                                                                    
He  wondered whether  there was  a  plan to  comply to  that                                                                    
request for information.                                                                                                        
                                                                                                                                
Acting Commissioner  Mahoney replied that she  would discuss                                                                    
that with her staff, and provide that information.                                                                              
                                                                                                                                
9:25:01 AM                                                                                                                    
                                                                                                                                
Senator Hoffman expressed  concern Co-Chair Stedman's point.                                                                    
He  specifically noted  his  concern  about the  possibility                                                                    
that the attorney  general might be making  a statement that                                                                    
was  a  change  from   normal  standing  procedures  of  the                                                                    
auditors to access  the records. He remarked  that there had                                                                    
not been a  similar issue in the past. He  stressed that the                                                                    
attorney  general  opinion  might   be  different  than  the                                                                    
standard operating procedure. He  felt that the commissioner                                                                    
of DOR must be "as forceful  as possible" in order to have a                                                                    
"clean  audit."  He  queried any  changes  than  the  normal                                                                    
standard procedures.                                                                                                            
                                                                                                                                
Acting Commissioner  Mahoney replied  that when she  was the                                                                    
CFO for  the City of  Anchorage, she frequently  worked with                                                                    
the city  attorneys to influence  in ways she felt  would be                                                                    
best for the  city. She remarked that she would  do the same                                                                    
in the DOR position.                                                                                                            
                                                                                                                                
Senator  Wielechowski queried  thoughts on  the revenue  and                                                                    
fiscal issue in the state.                                                                                                      
                                                                                                                                
Acting   Commissioner  Mahoney   replied  that   it  was   a                                                                    
complicated question,  considering that  she was not  yet on                                                                    
the job  full-time. She believed  that there needed to  be a                                                                    
long-term  fiscal   plan  that  evaluated  all   sources  of                                                                    
revenue, debt, and continue to decrease expenditures.                                                                           
                                                                                                                                
Co-Chair  Stedman  remarked  that  the  governor's  proposal                                                                    
would consume the entire state's balance.                                                                                       
                                                                                                                                
Acting Commissioner  Mahoney did not  feel that she  had all                                                                    
the  detail to  provide a  solution. She  believed that  the                                                                    
department was very skilled, and  needed to work together to                                                                    
come up with solutions.                                                                                                         
                                                                                                                                
9:31:23 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  wondered  whether  the  new  software                                                                    
project that was enacted in Anchorage was a mistake.                                                                            
                                                                                                                                
Acting  Commissioner Mahoney  did  not feel  that  it was  a                                                                    
mistake  to implement  a new  software  program. She  agreed                                                                    
that mistakes were made along the way.                                                                                          
                                                                                                                                
Co-Chair Stedman handed the gavel to Co-Chair von Imhof.                                                                        
                                                                                                                                
Senator  Wielechowski  queried  any potential  conflicts  of                                                                    
interest from her businesses.                                                                                                   
                                                                                                                                
Acting Commissioner Mahoney responded  that she started many                                                                    
businesses.  She  explained  that  she was  a  member  of  a                                                                    
company  that  issued patents  for  engineers.  She did  not                                                                    
believe that any  of the patents would  cause any conflicts.                                                                    
She  invested  in some  marijuana  companies.  She had  some                                                                    
small  minority interest  ownerships  in  a global  security                                                                    
company and  a real estate  investment company. She  did not                                                                    
believe any would present any conflicts.                                                                                        
                                                                                                                                
9:35:44 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski  noted  her husband's  involvement  in                                                                    
represented  Trans-Alaska  Pipeline   System  (TAPS)  owners                                                                    
against the  state. He wondered  how she would  separate any                                                                    
involvement with the oil companies.                                                                                             
                                                                                                                                
Acting Commissioner Mahoney replied  that she did not intent                                                                    
to  be  involved with  anything  historical  or any  of  the                                                                    
issues  that  her husband  was  involved  in. She  would  be                                                                    
involved   in  any   legislation  that   might  change   tax                                                                    
structures.                                                                                                                     
                                                                                                                                
Co-Chair  von Imhof  pointed  out that  Alaska  was a  small                                                                    
state, so it was difficult to  find someone who would not be                                                                    
involved in the oil industry.                                                                                                   
                                                                                                                                
Senator  Bishop   asked  for  more  information   about  her                                                                    
consulting business  position, and wondered whether  she was                                                                    
involved in the audits.                                                                                                         
                                                                                                                                
Acting  Commissioner  Mahoney  replied   that  she  was  the                                                                    
Director of Advisory  Services, and she was  not involved in                                                                    
the audits.                                                                                                                     
                                                                                                                                
9:41:12 AM                                                                                                                    
                                                                                                                                
Senator  Wielechowski   surmised  that  her   husband  still                                                                    
represented  oil and  gas  companies, but  her  plan was  to                                                                    
prospectively  be involved  in production  tax and  property                                                                    
tax issues.                                                                                                                     
                                                                                                                                
Acting Commissioner  Mahoney responded that her  plan was to                                                                    
be involved  with prospective and forward  looking plan, but                                                                    
nothing historical associated with her husband's work.                                                                          
                                                                                                                                
9:42:49 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:43:02 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator Bishop FORWARDED the  appointment of Lucinda Mahoney                                                                    
for  consideration in  accordance  with  Alaska Statute.  He                                                                    
relayed that  this did not  reflect an intent by  any member                                                                    
of the Senate  Finance Committee to vote for  or against the                                                                    
confirmation   of  the   individuals   during  any   further                                                                    
sessions. There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
9:43:47 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:45:28 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 150                                                                                                           
                                                                                                                                
     "An Act repealing the termination date for the                                                                             
     intensive management hunting license surcharge."                                                                           
                                                                                                                                
9:46:00 AM                                                                                                                    
                                                                                                                                
SENATOR JOSH REVAK, SPONSOR, explained the legislation.                                                                         
                                                                                                                                
9:47:35 AM                                                                                                                    
                                                                                                                                
DUSTIN  ELSBERRY, INTERN,  SENATOR JOSH  REVAK, stated  that                                                                    
the  title summed  up  the  bill. He  stressed  that it  was                                                                    
important  to  protect  hunting   and  wildlife  for  future                                                                    
generations.                                                                                                                    
                                                                                                                                
9:50:01 AM                                                                                                                    
                                                                                                                                
Co-Chair von  Imhof stressed that  the bill was  simple, and                                                                    
the purpose was to allow  for the continuation of collection                                                                    
of fees to expand the impact and leverage the funds.                                                                            
                                                                                                                                
Senator Revak agreed.                                                                                                           
                                                                                                                                
Co-Chair  von  Imhof  surmised that  the  hunting  community                                                                    
would continue to pay the fees and did not want a sunset.                                                                       
                                                                                                                                
Senator Revak replied in the affirmative.                                                                                       
                                                                                                                                
Senator Hoffman  wondered how  the funds  initially benefits                                                                    
the resource.                                                                                                                   
                                                                                                                                
Senator Revak  replied that there  was some data  to support                                                                    
the resource.                                                                                                                   
                                                                                                                                
9:52:40 AM                                                                                                                    
                                                                                                                                
RON  SOMERVILLE, TERRITORIAL  SPORTSMEN INC.,  JUNEAU, spoke                                                                    
in support of the legislation.                                                                                                  
                                                                                                                                
9:57:03 AM                                                                                                                    
                                                                                                                                
Senator Wielechowski  wondered whether this was  a dedicated                                                                    
or designated fund.                                                                                                             
                                                                                                                                
Mr. Somerville replied that it was a dedicated fund.                                                                            
                                                                                                                                
Senator Revak  stressed that the commissioner  of Department                                                                    
of Fish and Game (DFG) was available for questions.                                                                             
                                                                                                                                
9:58:07 AM                                                                                                                    
                                                                                                                                
DOUG  VINCENT-LANG,  COMMISSIONER,  DEPARTMENT OF  FISH  AND                                                                    
GAME,  stated  that it  had  benefitted  hunting across  the                                                                    
state.                                                                                                                          
                                                                                                                                
Senator  Hoffman  stressed  that  intensive  management  was                                                                    
extremely important to protect the resource.                                                                                    
                                                                                                                                
10:03:38 AM                                                                                                                   
                                                                                                                                
Senator  Bishop  queried  an update  on  UAVs  for  research                                                                    
management.                                                                                                                     
                                                                                                                                
Commissioner Vincent-Lang replied that  the FAA was evolving                                                                    
its regulatory oversight of the UAV use.                                                                                        
                                                                                                                                
Senator  Bishop   was  encouraged   that  the   habitat  had                                                                    
increased eighteen over nineteen.                                                                                               
                                                                                                                                
Co-Chair von Imhof OPENED public testimony.                                                                                     
                                                                                                                                
10:05:37 AM                                                                                                                   
                                                                                                                                
THOR  STACEY,   ALASKA  PROFESSIONAL   HUNTERS  ASSOCIATION,                                                                    
FAIRBANKS (via teleconference), testified  in support of the                                                                    
legislation.                                                                                                                    
                                                                                                                                
10:07:39 AM                                                                                                                   
                                                                                                                                
ROD  AMO,   EXECUTIVE  DIRECTOR,  ALASKA   OUTDOOR  COUNCIL,                                                                    
FAIRBANKS  (via teleconference),  spoke  in  support of  the                                                                    
bill.                                                                                                                           
                                                                                                                                
Co-Chair von Imhof CLOSED public testimony.                                                                                     
                                                                                                                                
Senator Bishop reviewed the fiscal note.                                                                                        
                                                                                                                                
10:10:07 AM                                                                                                                   
                                                                                                                                
Co-Chair  von   Imhof  remarked   that  the   surcharge  had                                                                    
increased, and were used to  match the dollars. She stressed                                                                    
that it was important to keep the program going.                                                                                
                                                                                                                                
SB  150  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 55                                                                                                            
                                                                                                                                
     "An Act relating to judges of the court of appeals;                                                                        
     and providing for an effective date."                                                                                      
                                                                                                                                
10:11:05 AM                                                                                                                   
                                                                                                                                
Co-Chair von  Imhof announced that  the committee  had moved                                                                    
the bill  from committee  a year  prior. She  explained that                                                                    
the  bill was  returned  to the  Senate Judiciary  Committee                                                                    
where there  was a  solution with  a larger  proposed fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
10:11:31 AM                                                                                                                   
                                                                                                                                
SENATOR DAVID WILSON, SPONSOR, introduced himself.                                                                              
                                                                                                                                
10:11:36 AM                                                                                                                   
                                                                                                                                
JASMIN  MARTIN,  STAFF,  SENATOR  DAVID  WILSON,  introduced                                                                    
herself.                                                                                                                        
                                                                                                                                
Senator Wilson explained the bill.                                                                                              
                                                                                                                                
Co-Chair von Imhof surmised that  the bill proposed a fourth                                                                    
judge be added to the Court of Appeals.                                                                                         
                                                                                                                                
Senator Wilson replied in the  affirmative. He explained the                                                                    
Sectional Analysis (copy on file):                                                                                              
                                                                                                                                
     Section 1: Amends AS 22.07.010 to add a fourth judge                                                                       
     to the Court of Appeals.                                                                                                   
                                                                                                                                
     Section 2: Establishes an effective date of July 1,                                                                        
     2020.                                                                                                                      
                                                                                                                                
Co-Chair  von Imhof  noted that  the fourth  judge would  be                                                                    
added with the intention of addressing the case backlog.                                                                        
                                                                                                                                
10:16:18 AM                                                                                                                   
                                                                                                                                
NANCY MEADE, GENERAL COUNSEL, ALASKA  COURT SYSTEM, spoke in                                                                    
support of the bill.                                                                                                            
                                                                                                                                
Co-Chair von Imhof requested a review of the fiscal note.                                                                       
                                                                                                                                
Ms. Meade explained that the  fiscal noted included the cost                                                                    
for a permanent position, with the accompanying staff.                                                                          
                                                                                                                                
10:20:45 AM                                                                                                                   
                                                                                                                                
Co-Chair  von Imhof  wondered  whether the  plan  B was  the                                                                    
intention.                                                                                                                      
                                                                                                                                
Ms. Meade replied in the affirmative.                                                                                           
                                                                                                                                
Co-Chair von Imhof asked about Plan A.                                                                                          
                                                                                                                                
Ms. Meade stated  that if the bill were  passed, the request                                                                    
would be removed from the budget increment.                                                                                     
                                                                                                                                
Co-Chair Stedman stated that the fiscal note could be                                                                           
zeroed out to clear the accounting issue.                                                                                       
                                                                                                                                
Ms. Meade replied that it was not a fiscal note issue, but                                                                      
was a part of the Court System's budget increment request.                                                                      
                                                                                                                                
Senator Bishop stated that the published note was $228,020.                                                                     
                                                                                                                                
Co-Chair von Imhof agreed.                                                                                                      
                                                                                                                                
Co-Chair von Imhof discussed the following day's agenda.                                                                        
                                                                                                                                
SB 55 was HEARD and HELD in committee for further                                                                               
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
10:23:25 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:23 a.m.                                                                                         

Document Name Date/Time Subjects
SB 150 IM Activites and Spending FY18-FY19 2.11.2020.pdf SFIN 3/12/2020 9:00:00 AM
SB 150
SB 150 Letter of Support RHAK 2.11.20.pdf SFIN 3/12/2020 9:00:00 AM
SB 150
SB 55 Sectional Analysis v. S 2.21.2020.pdf SFIN 3/12/2020 9:00:00 AM
SB 55
SB 55 Explanation of Changes v. U to v. S 2.21.2020.pdf SFIN 3/12/2020 9:00:00 AM
SB 55
SB 55 Sponsor Statement v. S 3.10.2020.pdf SFIN 3/12/2020 9:00:00 AM
SB 55
031229 Revenue Department Commissioner Mahoney Resume.pdf SFIN 3/12/2020 9:00:00 AM
Confirmations 2020
SB 150 Support Document - IM Species Determinations 02.10.2020.pdf SFIN 3/12/2020 9:00:00 AM
SRES 2/21/2020 3:30:00 PM
SB 150
SB 150 Written Testimony- Alaska Professional Hunters Assn Inc 02.05.2020.pdf SFIN 3/12/2020 9:00:00 AM
SRES 2/21/2020 3:30:00 PM
SB 150
SB 150 ADF&G IM Stories of Success 01.2014.pdf SFIN 3/12/2020 9:00:00 AM
SRES 2/21/2020 3:30:00 PM
SB 150
SB 150 Support Document - Hunting License Surcharge Revenue CY17-CY19 02.10.2020.pdf SFIN 3/12/2020 9:00:00 AM
SRES 2/21/2020 3:30:00 PM
SB 150
SB 150 Affected Statutes and SLA.pdf SFIN 3/12/2020 9:00:00 AM
SB 150