Chairman Randy Phillips introduced  SB 202  (SALE OF STATE WATER TO           
 MUNICIPALITIES) as the first order of business.                               
                                                                               
 SENATOR MILLER stated in his sponsor statement that SB 202 gives              
 municipalities another mechanism to replace revenue.                          
                                                                               
 SENATOR LEMAN asked which municipalities have an ample supply of              
 water and may be interested in selling.  Senator Miller replied               
 that they are mainly in Southeast Alaska.                                     
                                                                               
 Number 065                                                                    
                                                                               
 JOHN COWDERY, representing the Municipality of Anchorage, discussed           
 existing statutes and the changes SB 202 would make.  He questioned           
 if the conservation fee would generate enough revenues to cover a             
 full operation.  He urged passage of SB 202 to the next committee             
 of referral.                                                                  
                                                                               
                                                                               
 SENATOR ADAMS asked if the sale of water from the Municipality of             
 Anchorage to cargo ships would increase costs.  Mr. Cowdery said              
 that at present there is a surplus of water, so there should be no            
 increase.                                                                     
                                                                               
 Number 135                                                                    
                                                                               
 SENATOR LEMAN questioned if the Municipality of Anchorage pays a              
 conservation fee to the Department of Natural Resources (DNR).  Mr.           
 Cowdery stated that currently DNR's water division has not                    
 implemented any regulations to form the network for collecting any            
 fees.  Senator Leman said that this legislation is clarification of           
 original intent.                                                              
                                                                               
 Number 190                                                                    
                                                                               
 SENATOR ZHAROFF asked what volume of excess water would be sold and           
 the cost recovery.  Mr. Cowdery said that some inquiries for large            
 quantities of water had been made and the cost was unknown at this            
 time.  He believed that the sale and money of this water should go            
 directly to the municipalities.                                               
                                                                               
 Number 245                                                                    
                                                                               
 JERRY GALLAGHER, Legislative Liaison, Department of Natural                   
 Resources, explained that DNR is reviewing water fees and costs               
 across the board, however DNR has no position regarding SB 202 yet.           
                                                                               
 Number 264                                                                    
                                                                               
 SENATOR ADAMS inquired if Governor Hickel's proposed water pipeline           
 would have any effect on SB 202.  Mr. Cowdery stated it would have            
 no effect.                                                                    
                                                                               
 Number 272                                                                    
                                                                               
 JERRY GALLAGHER addressed the fiscal note and speculated a small              
 net decrease in revenue to the state.  Currently, under the water             
 conservation fee, the state was not collecting anything because               
 collecting regulations are not in place.                                      
                                                                               
 Number 294                                                                    
                                                                               
 SENATOR ADAMS requested a fiscal note from the Department of                  
 Revenue.  The bill with the fiscal note will be brought before the            
 committee on Tuesday.                                                         
                                                                               
 SENATOR TAYLOR stated support of SB 202 by Ketchikan and Sitka.