SJR 31-FEDERAL FUNDING FOR EDUCATION    VICE CHAIR THOMAS WAGONER called the Senate Resources Standing Committee meeting to order at 3:30 p.m. Present were Senators Kim Elton, Fred Dyson, Ben Stevens, Ralph Seekins and Vice Chair Thomas Wagoner. The first order of business to come before the committee was SJR 31. SENATOR GENE THERRIAULT, sponsor, said the statistics used in this resolution were based on the Utah Legislative Council's fiscal office statistics and he would be referencing a number of charts during his comments, which follow. SJR 31 is related to urging the United States Congress to compensate the State of Alaska for the effect of federal land ownership on the state's ability to fund public education. This legislation stems from a resolution adopted in July of 2002 by the Executive Committee of the Council of State Governments-West (CSG-WEST) urging its membership of 13 states to support and pass joint resolutions expressing how federal land ownership hinders western states' ability to fund education. Chairman Ogan and myself are members of that committee. The CS before you had one change that was made in State Affairs and that was adding another "whereas" paragraph to page 2, line 27, which ties this resolution to the overall efforts of CSG-WEST and the other 12 member states. Since this effort began, all 13 states have introduced similar resolutions and all but four - California, Washington, Colorado and Alaska - have passed them. This initiative is the result of research and preparation by the legislature [indisc.} of the State of Utah.... The Western Governors' Association (WGA) has also endorsed this resolution, which has been termed APPLE from the Action Plan for Public Land and Education. Western states, as a group, are falling behind in education funding when measured in growth of real per- pupil expenditures during the period of 1979 - 1998. Eleven of 12 of the states with the lowest real growth in pupil expenditure are western states. The growth rate of rural per-pupil expenditures in the 13 western states is less than half - 28 percent versus 57 percent - of that, in the 37 other states. Look at graph 1. On average, enrollment in western states is projected to increase dramatically while the growth rates in other states is projected to actually decrease (graphs 2 and 3).... In western states the state and local taxes, as a percentage of personal income, are as high or higher than other states (graphs 4 and 5). In 1998-99, western states had 11.1 percent versus 10.9 percent for the eastern states. In western states, commitment to education as a percentage of the state budget is equal to that of other states. In year 2000, western states' contribution was 32.6 percent versus 32.7 percent for the eastern states. (That is a percentage of total funds (illustrations 6 and 7). The problem lies with the federal government and the enormous amount of land it owns in western states. If an imaginary line was drawn from Montana to New Mexico, no state east of that line has more than 14 percent of its land owned by the federal government. No state west of that line has less than 27 percent of their land federally owned - with the exception of Hawaii. Four western states have more than 62 percent of their land federally-owned. Alaska is one of those - Idaho, Nevada and Utah (graphs 8 through 11). Number 8 shows that if you draw that imaginary line north to south, those states that are to the west are the ones that have the high percentage of federal ownership.... The primary ways that federal land ownership impacts funding of education in western states is through enabling acts and property taxes. Most enabling acts for western states including Alaska promise to give the state five percent of the proceeds from the sale of federal land for the benefit of public education. In 1977, the federal government abandoned its original policy to dispose of public lands depriving the states of public education funding estimated to be over $14 billion. This resolution does not recommend that federally owned lands be sold, only that the states be compensated as promised. States are not allowed to assess property tax on federal lands impacting western states in the amount of over $4 billion annually. The federal government does provide payment in lieu of taxes - PILT money - as we know, and we receive some PILT money here in the State of Alaska, since states cannot tax federal lands. But the amount of PILT payments to states in 2001 was only 4 percent of the annual property tax revenue lost by western states. This resolution proposes to, number one, create legislative awareness; two, educate the public; three, build a western states coalition; and four, petition Congress to compensate western states. In summary, the western states are financially harmed in a significant way by the amount of federal land ownership. The conclusion is that federal land ownership hinders western states' ability to fund public education. That brings us to the question of what is next. CSG- WEST has formed the APPLE initiative steering committee, which is chaired by Speaker Marty Stevens with the Utah House of Representatives and I am also a member, as President of the Alaska State Senate to that steering committee. The steering committee will work like a strategic planning group who will press the case in Congress and the judiciary. The first meeting of the steering committee will be in the CSG- WEST annual meeting that is scheduled to take place in Anchorage this fall. SENATOR KIM ELTON said the whereas clauses all talk about the issue for western states including Alaska, but the resolve just urges Congress to appropriate just compensation to the State of Alaska only with copies sent to our congressional delegation. He asked why just compensation for the other 12 states couldn't be included. SENATOR THERRIAULT replied that he wasn't sure, but that would be a good question for Brian Alread, the Utah Legislative research staff person who worked on this resolution. MR. BRIAN ALREAD, Office of Legislative Research, Utah, responded that there is no official directive limiting this resolution to the various states. I think it's simply a matter of each state identifying the issue in their state and becoming part of a larger coalition....I don't think there's any reason to not expand that language if you chose to do so. SENATOR THERRIAULT pointed out that specific language was added on page 2, lines 27 - 30, about other states' efforts in passing the joint resolution on their individual state, but he felt this resolve could be opened to allow the State of Alaska to advocate on behalf of the entire group. SENATOR RALPH SEEKINS noted that Alaska is unique in that another 47 million acres have been withdrawn from the tax base by federal fiat, even though they are private lands. He wondered why they wouldn't ask the federal government to apply the same formula to those lands. SENATOR THERRIAULT replied that the committee could consider adding another whereas clause pointing out the difference if it desired. SENATOR SEEKINS reiterated that those lands were removed by federal requirement and the effect is the same as if they were federal lands outside of the state's tax system. VICE CHAIR WAGONER agreed and added that those lands were supposed to go off of their protected status after 25 years, but Congress authorized it for another 25 years; then asked, "Why aren't we receiving compensation because a lot of that land lies in the unorganized areas, also, of the State of Alaska?" SENATOR SEEKINS recalled that Texas was the last state to be admitted to the union without being forced to grant lands to the federal government as a condition of statehood. VICE CHAIR WAGONER asked if the committee was interested in adding another whereas on this issue or put it in separate legislation. SENATOR SEEKINS replied that he would prefer dealing with it as a separate issue. He moved to pass CSSJR 31(STA) from committee with individual recommendations and attached fiscal note. There were no objections and it was so ordered.