Legislature(1999 - 2000)
04/15/2000 03:15 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 15, 2000
3:15 PM
TAPES
SFC-00 # 92, Side A and Side B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 3:15 PM
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Al Adams, Senator Lyda Green, Senator Randy
Phillips, Senator Gary Wilken, Senator Donley.
Senator P. Kelly and Senator Loren Leman were not present
for the meeting.
Also Attending: JAMES BALDWIN, Assistant Attorney General,
Department of Law; WENDY REDMAN, Vice President, Statewide
Programs, University of Alaska-Fairbanks; DAVID GUTTENBERG,
Staff, Representative John Davies; EDDIE GRASSER, Staff,
Representative Beverly Masek; PETER FELLMAN, Staff,
Representative John Harris; LORALI MEIER, Staff,
Representative Beverly Masek; PAUL GROSSI, Director,
Division of Workers' Compensation, Department of Labor and
Workforce Development; ROBERT LOHR, Director, Division of
Insurance, Department of Community & Economic Development.
Attending via Teleconference: BILL WARD, Delta Junction.
SUMMARY INFORMATION
SB 310-G.O.BONDS: SCHOOLS & UNIVERSITY
The Committee heard from the Department of Law and the
University of Alaska with consideration given to Amendments
#5 & #6. The bill was HELD in Committee for further
consideration.
SB 311-G.O.BONDS: TRANSPORTATION PROJECTS
CS SB 311 (FIN) was reported out of Committee with a "no
recommendation" and with a fiscal note by the Department of
Revenue.
HB 25-RIVER HABITAT PROTECTION TAX CREDIT
HB 25 was reported out of Committee with "individual
recommendations" and with fiscal notes by the Department of
Fish and Game and the Department of Community & Economic
Development.
HB 114-REPEAL PROHIBITION ANTLERLESS MOOSE
SCS HB 114 (RES) was reported out of Committee with a "do
pass" recommendation and with two fiscal notes by the
Department of Fish and Game.
HB 204-ELK FARMING
HB 204 was reported out of Committee with a "do pass"
recommendation and with fiscal notes by Department of
Natural Resources and Department of Fish and Game.
HB 272-MUNICIPAL TAX: LOW INCOME HOUSING
SCS HB 272 (FIN) was reported out of Committee with
"individual recommendations" and with a fiscal note by the
House C&RA Committee.
HB 290-STRANDED GAS PIPELINE CARRIERS
CS HB 290 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by Department of
Revenue, Department of Natural Resources, and Department of
Community & Economic Development.
HB 378-FEES FOR WORKERS COMP AND WORKER SAFETY
Co-Chair Torgerson noted that HB 378 would be HELD in
Committee for further consideration.
SENATE BILL NO. 310
"An Act providing for and relating to the issuance of
general obligation bonds for the purpose of paying the
state cost of school, University of Alaska, and port
and harbor capital projects; and providing for an
effective date."
JAMES BALDWIN, Assistant Attorney General, Department of
Law, advised that he had prepared a memo as requested by
Senator Torgerson regarding concerns whether certain items
contained in SB 310 would qualify as capital improvements
for the purpose of issuing general obligation bond debt.
[Copy on File].
Mr. Baldwin cited that the Alaska Supreme Court has made
two decisions relative to the concern: Wright versus City
of Palmer and City of Juneau versus Hixson. The Court has
not provided a specific definition of capital improvement,
but rather defined it by example. Generally, it refers to
permanent betterment of permanent structures. The
Department has concluded that major renovations designed to
preserve the permanency of a building would qualify as a
capital improvement. Expenditures for property which
become a legal fixture would be a capital improvement. In
certain circumstances, there can be expenditures associated
with capital projects that might not otherwise become a
capital item.
Mr. Baldwin suggested consideration of, for the record,
that the nature of any doubtful project be considered in
order that it may be defended against a challenge brought
when the bonds are sold.
Senator Phillips referenced Page 3, Line 11. He asked if
the allocated $11.7 million dollars would qualify.
Mr. Baldwin understood that was to be the State's 70%
contribution. The municipalities are under the same
constitutional administration and must use their bonds for
capital improvements. He assumed that those bonds were
issued for capital improvements.
Senator Phillips referenced Page 4, Line 12 & 13 requested
allocation in the amount of $25.1 million dollars for the
University of Alaska - Fairbanks in deferred maintenance.
He asked if that would qualify under the capital
improvement projects (CIP).
Mr. Baldwin noted that he did not know and that he did not
have access to all the required information to make that
determination.
Senator Phillips asked further clarification of the memo.
Mr. Baldwin reiterated the contents of the memo, stating
that if it were to be ordinary repair and maintenance, it
would not qualify under the CIP guidelines; however, a
major renovation, repair or maintenance necessary to
maintain the permanency of the facility, could be a CIP.
He noted that the current Court conclusions have not yet
gone that far.
Co-Chair Torgerson asked if the proposition proposal in
Anchorage passes, would Anchorage then be restricted on
major maintenance projects that met the criteria submitted
by the Department.
Mr. Baldwin responded that the information contained in the
voters pamphlets becomes a "contract" with the voters and
that it can not be parted from without violating the public
trust. He presumed that the ballot materials would inform
the voters what the project consists of.
Senator Adams questioned the distinguishment between
repairs and maintenance. He asked the judgement call
needed to stay in "repaired maintenance".
Senator Adams suggested that perhaps there should be an
expenditure limitation on the capital projects over a
certain amount.
Mr. Baldwin replied that the total bond issue drives the
"economics" because of the cost of issuance. He believed
that a major upgrade would most likely fall under "capital
improvement".
Co-Chair Torgerson pointed out that there had not been a
completed list submitted by the University, instead,
submitted by building name only. He advised that he had
prepared some amendments to the proposed legislation.
Senator Donley MOVED to adopt Amendment #5. [Copy on
File].
Co-Chair Torgerson explained that the amendment would
remove all reference to issuing bonds for port and harbor
projects in SB 310 they had been incorporated into SB 311.
There being NO OBJECTION, Amendment #5 was adopted.
Senator Donley MOVED to adopt Amendment #6. [Copy on
File].
Co-Chair Torgerson clarified that the amendment would
delete the "$943,565" dollars on Page 5, Lines 13-14 and
would insert "an amount equal to one percent of the
principle amount of the bonds, or as much of that amount as
is found necessary".
Senator Adams inquired what would occur if that amount were
higher than 1% of the principle.
Co-Chair Torgerson explained that the agency could then
come back to the Committee to request an increase.
There being NO OBJECTION, Amendment #6 was adopted.
Senator Phillips requested a list of the general obligation
(GO) bonds. He believed that there were items that should
not be included in these bonds. He objected to the
proposed methodology.
Senator Adams recommended that a representative from the
University of Alaska speak to the submitted requests.
Co-Chair Torgerson emphasized that if the requests do not
meet the criteria that they should be deducted from the
bill. He requested greater detail regarding all three
campuses for the University requests.
WENDY REDMAN, Vice President, Statewide Programs,
University of Alaska-Fairbanks, stated that the language
used in the past for the statewide GO bonds in the Alaska
Housing Finance Corporation (AHFC) bond issue was "deferred
maintenance/renewal and replacement/code compliance". That
phrase provides the most flexibility to the University.
She requested that if possible, that would be the preferred
language.
Co-Chair Torgerson asked if there was a list indicating
work to be done on each building.
Ms. Redman commented that the list does provide specific
types of projects for each facility. She inquired the
level of detail needed.
Co-Chair Torgerson interjected that the Committee wants a
more thorough explanation of each project. He noted that
the "rule" he follows is if it extends the "life of the
building".
Ms. Redman commented that no "on-going" maintenance had
been included in the request. She noted that it were
present problems to break it down to specific details of
each project. Some projects are a "best guess" until the
space is taken apart, making it difficult to determine the
actual costs.
Co-Chair Torgerson noted that SB 310 would be HELD in
Committee for further consideration.
SENATE BILL NO. 311
"An Act providing for and relating to the issuance of
general obligation bonds for the purpose of paying the
state cost of port and harbor capital projects; and
providing for an effective date."
Co-Chair Torgerson spoke to Amendment #1 & #2. [Copies on
File].
Amendment #1 would remove the matching funds from the bond
project list because the match for Kake was funded in SB
192.
Amendment #2 would delete language on Page 3, Lines 9-10,
"the amount equal to one percent of the principal amount of
the bonds, or as much of that amount as is found
necessary"; it would insert "an amount equal to one percent
of the principal amount of the bonds, or as much of that
amount as is found necessary".
Senator Adams MOVED to adopt Amendment #1. There being NO
OBJECTION, the amendment was adopted.
Senator Adams MOVED to adopt Amendment #2. There being NO
OBJECTION, the amendment was adopted.
Senator Leman MOVED to adopt Amendment #3, which would
"round the numbers off by eliminating the last three digits
and adding zeros". There being NO OBJECTION, it was
adopted.
Senator Wilken MOVED to report CS SB 311 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS SB 311 (FIN) was reported out of Committee with "no
recommendation" and with a fiscal note by the Department of
Revenue.
HOUSE BILL NO. 272
"An Act relating to the tax assessment by a home rule
or general law municipality of housing that qualifies
for the low-income housing credit under the Internal
Revenue Code; and providing for an effective date."
Senator Leman MOVED that the Committee adopt work draft 1-
LS1148\B, Chenoweth, 4/14/00, as the version of the bill
before the Committee.
Senator Adams OBJECTED for the purpose of discussion. He
pointed out that the "grandfather clause" had been removed
in the work draft.
Co-Chair Torgerson commented that a community could still
be "grandfathered", however, the local assembly would also
be responsible to take action. The language would give
local governments the authority to pass an ordinance
authorizing the resolution.
Senator Adams WITHDREW his OBJECTION to adopt the "B"
version.
Senator Leman referenced Page 2, Line 1, "the value of the
property and the actual income derived from the property".
He asked if that was the correct standard.
JONATHAN LACK, Staff, Representative Rick Halford, stated
that the question of income derived had not yet come into
discussion. The uniform property standard adopted by the
property assessors now indicates that the income approach
does not address what has been received. He clarified that
the income approach is what could be received.
Senator Leman explained given that understanding he no
longer questioned that section. He inquired if this was a
current accounting standard.
Mr. Lack stated that it is and that the uniform assessors
group uses it. He interjected that the assessor in
Anchorage does not obey the established standard.
Senator Leman countered that if that assessor does not obey
the standard, what assurance does the State have that he
will obey the proposed law.
Mr. Lack replied that there are working drafts addressing
the assessor establishing the standard. The work draft
before the Committee, has the standard adopted by the local
governing body.
Senator Donley reinforced that point and the possibility of
leaving it empty. The language references the maximum of
what could be derived.
Senator Leman recommended language indicating it could be
from income derived from property at full occupancy.
Senator Donley MOVED the changes recommended by Senator
Leman, Page 2, Line 2, following "property" inserting "at
full occupancy" as Amendment #1.
Mr. Lack acknowledged that there are some questions that
Senator Halford has about the proposed committee
substitute. He was not confident to answer the question.
There being NO OBJECTION, Amendment #1 was adopted.
Senator Green asked if the amendment would apply on Line
14. She MOVED that language be added to Line 14 following
"property".
There being NO OBJECTION, the change was made.
Senator Leman MOVED a text change to Page 2, Line 17,
deleting "relating" and inserting "related". There being
NO OBJECTION, it was adopted.
Senator Leman MOVED to report SCS HB 272 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note.
Senator Phillips OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Donley, Leman, Adams, Wilken, Green,
Parnell, Torgerson
OPPOSED: Phillips
Senator P. Kelly was not present for the vote.
The MOTION PASSED (7-1).
SCS HB 272 (FIN) was reported out of Committee with
"individual recommendations" and with a fiscal note by the
House C&RA Committee.
HOUSE BILL NO. 25
"An Act relating to a municipal river habitat
protection tax credit."
DAVID GUTTENBERG, Staff, Representative John Davies,
offered to answer questions of the members. He explained
that the bill is a land management tool that provides the
option of protecting fish habitat along the rivers by
offering a tax credit to property owners along those
waterways. It would not be an unfunded mandate and would
be entirely optional at the local government level.
Senator Wilken spoke in support of the bill and encouraged
the Committee's support.
Senator Wilken MOVED to report HB 25 out of Committee with
individual recommendation and with the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 25 was reported out of Committee with "individual
recommendations" and with fiscal notes by the Department of
Fish and Game and the Department of Community & Economic
Development.
Co-Chair Torgerson
SENATE CS FOR HOUSE BILL NO. 114(RES)
"An Act relating to the taking of antlerless moose."
EDDIE GRASSER, Staff, Representative Beverly Masek,
explained that the changes made in the Senate Resources
Committee made sure that the Advisory Committee would
continue to have a role in the process. The bill puts the
anterless regulations on the same two-year cycle the Board
now uses, saving the State time and money. He mentioned
that HB 114 would benefit the State and the Board of Game
by streamlining the regulatory process providing cost
savings to the State in time and money.
Senator Green MOVED to report SCS HB 114 (RES) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
SCS HB 114 (RES) was reported out of Committee with a "do
pass" recommendation and with tow fiscal notes by
Department of Fish and Game.
CS FOR HOUSE BILL NO. 204(RES)
"An Act relating to elk farming."
PETER FELLMAN, Staff, Representative John Harris, clarified
that the legislation was an attempt to move the oversight
of elk farming out of the Department of Fish and Game to
the Division of Agriculture, Department of Natural
Resources. Currently, the regulations of domestic elk do
not have statutory authority in the Department of Fish and
Game. The Division of Agriculture are the experts at such
concerns.
BILL WARD, (Testified via Teleconference), Delta Junction,
urged Committee members to support the legislation. A
licensing fee would be paid every two years in the amount
of $250 dollars. The fee would be used so that the
Division of Agriculture could send staff to maintain
fencing for elk farms.
Senator Donley referenced to Section 3. He asked if the
permit would be a particular "brand".
Mr. Fellman replied that there is a brand permit in the
State of Alaska. That brand must be registered before it
can be used.
Senator Green MOVED to report HB 204 out of Committee with
individual recommendations and with the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 204 was reported out of Committee with a "do pass"
recommendation and with fiscal notes by Department of
Natural Resources and Department of Fish and Game.
CS FOR HOUSE BILL NO. 290(RES)
"An Act relating to pipeline carriers of natural gas
produced from the North Slope of Alaska and to the
intrastate regulation by the Regulatory Commission of
Alaska of pipelines and pipeline facilities of that
natural gas."
LORALI MEIER, Staff, Representative Beverly Masek,
testified that the purpose of HB 290 is to make changes to
existing statute, which are needed to get the gas product
to the regulatory market. Before any natural gas pipeline
can succeed, certain amendments to the current State
statute are necessary.
HB 290 would amend the Pipeline Act to define a North Slope
natural gas pipeline, clarify the Regulatory Commission of
Alaska's (RCS's) authority in regulating a North Slope
natural gas pipeline extends only to the intrastate
transportation of gas through such a system, define a fair,
predictable and timely process to identify and dedicate
sufficient initial intrastate capacity in a North Slope
natural gas pipeline and to establish the criteria for
needed pipeline system expansions over the life of a North
Slope natural gas pipeline system to accommodate increased
demand for in-state gas supplies.
Tape: SFC - 00 #92, Side B 4:08 PM
Senator Adams MOVED to report CS HB 290 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS HB 290 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by Department of
Revenue, Department of Natural Resources, and Department of
Community & Economic Development.
CS FOR HOUSE BILL NO. 378(RLS)
"An Act relating to the establishment of, assessment
of, collection of, and accounting for service fees for
state administration of workers' compensation and
workers' safety programs; establishing civil penalties
and sanctions for late payment or nonpayment of the
service fee; and providing for an effective date."
PAUL GROSSI, Director, Division of Workers' Compensation,
Department of Labor and Workforce Development, clarified
that the bill was designed to replace general funds that
the Division of Workers' Compensation and worker safety
programs within the Department have lost. The bill would
create a dependable funding source paid equitably by all
employers using the system. He reiterated that the purpose
would be to provide a stable funding source to that
Division.
Mr. Grossi continued, the current system provides that
employers that purchase workers' compensation insurance pay
a tax or can become self-insured. The proposed legislation
addresses that inequity. The new fee system would be
designed to raise the same amount of money as the current
tax. Because the new system would spread costs among more
employers, those employers currently paying the premium tax
would realize a decrease in their payments. He concluded
that the bill would offer a fair, effective way of ensuring
continued funding for vital worker protection programs.
Co-Chair Torgerson noted that the bill would not be moved
from Committee at this time, however, all testimony would
be taken.
ROBERT LOHR, Director, Division of Insurance, Department of
Community & Economic Development, advised that the Division
of Insurance recommends two technical amendments. The
first change would revise the language so that the Division
of Insurance would deposit a portion of the premium tax
collected as opposed to the premium income reported.
Otherwise, deposits may be required that would be greater
than the amounts collected.
Mr. Lohr continued, the bill does not contain the phrase
"in lieu of all taxes…" as found on Page 2, Lines 25-28, of
the previous version. He recommended that the provision
amending AS 21.09.270 be removed. The change would
maintain the long-standing statutory status quo regarding
retaliatory fees. That would keep Alaska's retaliatory
calculation in line with other states and would promote a
level playing field between companies from this state and
other states.
Senator Phillips asked how it would differ from other
states.
Mr. Grossi replied that Alaska is one of the six states
that actually funds the program through the general fund.
The remaining states have some sort of "special" fund.
Sixteen states have a fee-funding source.
Senator Green asked if the excess money would be paying for
the Occupational Safety and Health Administration (OSHA).
Mr. Grossi replied that it would be used to fund the safety
programs and OSHA.
Senator Green pointed out that the legislation was not
necessarily intended to be used to improve workers'
compensation but rather for funding OSHA.
Senator Leman commented that the money would still be
available for appropriation.
Co-Chair Torgerson agreed that the Legislature would have
the authority to decide on how those funds were being
spent. He reiterated that those funds would be subject to
appropriation.
Co-Chair Torgerson noted that HB 378 would be HELD in
Committee for further consideration.
ADJOURNED
Senator Torgerson adjourned the meeting at 3:50 AM.
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