CS FOR SENATE BILL NO. 283(FIN) An Act making an appropriation to reverse the deposit of money available for appropriation in the general fund at the end of fiscal year 2003 into the constitutional budget reserve fund; making an appropriation for investment management fees for the constitutional budget reserve fund; making appropriations under art. IX, sec. 17(c), Constitution of the State of Alaska, from the constitutional budget reserve fund; and providing for an effective date. Co-Chair Williams moved Amendment #1. (Copy on File). Representative Croft OBJECTED for purpose of discussion. At Ease: 3:01 p.m. Reconvened: 3:04 p.m. Representative Croft stated that there was interest in the Minority Caucasus to give some Constitutional Budget Reserve (CBR) money directly to the Alaska Natural Gas Pipeline Development Authority (ANGDA). He warned against CBR money going directly to the Department of Revenue for ANGDA needs. He stressed that option is not something that the Minority is interested in doing. Representative Croft warned passing the request would endanger entire sweep bill. Co-Chair Harris agreed with Representative Croft's statement and requested to hear from the Department of Revenue, Steve Porter. STEVE PORTER, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE, commented that the requested dollars would keep the project moving forward. He spoke to the contracts for ANGDA for research in the amount of $426 thousand dollars. He addressed the socio-impact study beneficial to the ANGDA project for understanding the impacts to municipalities. Mr. Porter commented on the reasons for the money to go through the Department of Revenue resulting from a funding conflict. The expenses directly related to reimbursement between Conoco Phillips, British Petroleum (BP) and EXXON and their applications to the State are reimbursable. Anything spent on responding to an application by contractors can be reimbursed to do that. There is an overlap for all those concerns. The Department is attempting to determine how to allocate the money for the contracts between the parties. He added that the Department is trying to address issues relating to feasibility and stated that they would like to use the analysis and the questions that arise from it to do the research and assess the risk. Co-Chair Harris asked how much money would ANGDA need to accomplish the items mentioned. Mr. Porter responded that there are about $750 thousand dollars worth of contracts at this time and with additional needed funding. Co-Chair Harris pointed out that if Amendment #1 passed the House Finance Committee and the House Floor, for implementation, there would need to be a ¾ vote. He noted that there would be a good chance that the reverse sweep would not be adopted. He questioned if it would be better to adopt the reverse sweep clean or accept the amendment. Mr. Porter responded that if the addition of the amendment does not pass in the sweep bill, the Department of Revenue would go back to $3 million dollar request, which is the preferred amount. He mentioned on the Stranded Gas Act, requesting that it move forward. He concluded that the Department would be willing to defer to the judgment of the Legislature on timing. Co-Chair Harris inquired how important was the reversed sweep bill to the Department. Mr. Porter stated that they do not want to stop the reverse sweep bill and if they cannot get the ¾ majority, the Legislature should not put the attachment on the bill. Co-Chair Harris MOVED that the bill be HELD in Committee for further deliberation. th Vice Chair Meyer asked if there was a March 12 deadline with the Mid America paperwork. Mr. Porter responded that there is an impact statement needed that would not be ready th, for March 12 meeting as the contract is not yet available. Vice Chair Meyer asked if the Supplemental budget was the "other vehicle" referenced. Mr. Porter did not think so, pointing out that there are a couple of other bills that could be vehicles for the authority. Representative Hawker asked if the Department had been in discussion with the Alaska Natural Gas Pipeline Development Authority Board regarding the structuring of the money. Mr. Porter responded that there was a thorough discussion with the Board and they passed a resolution in favor of providing $3 million dollars for support of ANGDA and Stranded Gas. Representative Hawker questioned if that meeting involved both public and executive sessions. Mr. Porter acknowledged that and noted it resulted in a unanimous resolution. Representative Hawker admitted that he had heard different interpretations of those sessions and that they had been "spirited" and "cohesive". Representative Hawker asked how Mr. Porter would characterize what lead to the resolution. Representative Croft interrupted, requesting a Point of Order. He asked if Representative Hawker was asking for information of what had been said in Executive Session. Representative Hawker asked to qualify his question, recognizing that some of the sessions were in Executive Session and others were in the public domain. He asked how the nature of those discussions could be characterized. Mr. Porter responded that the board members are a group of strong-minded individuals and in the public sessions, concerns had been openly discussed. Representative Hawker asked if it was true that funding through the Department of Revenue was not the Board's first choice. Mr. Porter explained that before the best course of action was defined that could have been true. Understanding how the finances are, the proposed idea is the best course of action. Representative Hawker thought that the best course of action would be direct funding rather than through the Department of Revenue. He asked what the Department did that persuaded the Board that funding through the Department of Revenue would be the best course of action. Mr. Porter replied that the Board saw that maximum value would be received by administering through the Department of Revenue. Representative Hawker understood that the relationship between ANGDA and the Department of Revenue was not always easy, but that they were attempting to work out their differences. Mr. Porter stated from the Department's point of view, they have always been interested in supporting the viability of that project. Representative Hawker asked if the ANGDA Board has reason to fear that if the money were appropriated through the Department of Revenue, would they then be able to access the funds needed to do the work that they need to accomplish th between now and June 30. He asked will there be adequate resources for the Board. Mr. Porter replied that they do have reason to "fear", as $1.6 million dollars may not be sufficient. Representative Hawker asked if the Department had $3 million dollars, would they be able to assure the Board adequate resources. Mr. Porter responded that with $3 million dollars, the Department believes that they could have adequate resources through the end of the year with enough to ask the necessary questions for contracts to provide a viable determination. Representative Hawker expressed "grave concerns" with the answers being provided by the Department of Revenue. Mr. Porter commented that was a "different concern" from the one originally presented. He did not see this as an issue. Each project would either fund and benefit ANGDA or benefit the industry. He suggested that he was being asked to choose between ANGDA and oil, claiming that the real question is how to distribute the cash. If the industry receives a proportionate share, there would then be value to everyone. Representative Croft asked if Mr. Porter had ever told the ANGDA Board that the only way to get significant money was to support the $3 million dollar request. Mr. Porter did not remember stating that. Representative Croft pointed out that the Board was historically an independent agency and that the tendency has been to make that Board more dependant and wrapped into the Department of Revenue. The funding for stranded gas is okay. Representative Croft stated that there are many appropriate uses for $2 million dollars but the fact that Mr. Porter may need $2 million for the Stranded Gas Project negotiations is very interesting. Representative Croft noted that the Minority was interested in having an independent look at those issues. If it is going to be "dependant", then that is not something that the Minority is willing to spend on. He warned that the proposed amendment "threatens" the reversed sweep legislation. Mr. Porter countered that the actual patrol of the Board has not changed moving it to the Department of Revenue. The move could change the Board's ability to spend on stranded gas versus ANGDA and the ability to manage the way in which the systems are billed out. The actual control over the ANGDA Board has not changed. He added that Board is very important to the State and they need to get to a place where the public can believe that they are strong and viable. Co-Chair Williams commented that the Committee has addressed what the Board wants by passing the proposed amendment. Vice Chair Meyer noted that the Senate had passed the bill without the amendment. He asked if discussion had been presented on the Senate side regarding the idea. He voiced his concern with continual delays in passage of the bill. Co-Chair Williams indicated that he had spoken with the Senate leadership and that they indicated that they did not have a problem with the language of the amendment. Co-Chair Harris pointed out that the bill passed from the Senate side was a "clean bill". The Minority has strictly indicated interest only for ANGDA and nothing else. Since that occurred, there has been many conversations. Co-Chair Harris did not believe that there was ¾ vote available on the Senate side to support the amendment. Co-Chair Harris stressed that time is of the essence. He commented that he would like to see that the bill kept clean. TAPE HFC 04 - 39, Side A  (Tape Malfunction) Vice Chair Meyer suggested that perhaps the amendment could be passed through the supplemental. Co-Chair Williams commented that the bill had sat in Committee for three weeks and that no amendments had been brought forward. Co-Chair Williams noted that it was not his intent to move the bill from Committee at this time. CS SB 283 (FIN) was HELD in Committee for further consideration.