HOUSE FINANCE COMMITTEE FEBRUARY 14, 1995 1:35 P.M. TAPE HFC 95 -21, Side 2, #000 - #506. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 1:35 P.M. PRESENT Co-Chair Hanley Representative Kohring Co-Chair Foster Representative Martin Representative Mulder Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Kelly ALSO PRESENT Wilson Condon, Commissioner, Department of Revenue. SUMMARY CONFIRMATION HEARING: Department of Revenue Commissioner Designate Wilson Condon CONFIRMATION HEARING: DEPARTMENT OF REVENUE - WILSON CONDON WILSON CONDON, COMMISSIONER, DEPARTMENT OF REVENUE, introduced himself to the House Finance Committee and stated his intent to fairly represent the people of Alaska. Representative Navarre asked if legislation would be provided by the Department which would address tax disputes. Mr. Condon replied to date, no legislative proposals have been submitted addressing that concern. He added, nevertheless, unresolved oil and gas tax revenue matters are of concern for the Department. Representative Kelly questioned Mr. Condon's participation in the Stanford Law School Environmental and Natural Resources Advisory Council, 1991-1994. Mr. Condon advised that in the late '60's, when he was in law school, environmental concerns and focus were in the fore front. He noted that he was one of the founding members of the Environmental Law Society at Stanford Law School. The activities of that group included recruiting volunteers from 1 various citizen groups to pursue environmental issues. He continued, the second organization in which he was a member was a group of advisors who serve as citizen support and also an advisory group to the law school. That group would advise on curriculum and changes made in order to better prepare lawyers who were interested in pursuing careers in those areas. Representative Martin asked if Mr. Condon would support Governor Knowles in disputes over controversies involving the Alaska Permanent Fund Board and the Alaska Industrial Development and Export Authority (AIDEA) Board. Mr. Condon explained that his responsibilities with the Alaska Permanent Fund Board are fiduciary related and judgments would be made for the best interest of the Permanent Fund Board. He emphasized that when interests of the Governor were not be in align with the fund, it would be his obligation to disagree with the Governor. Although, the responsibility of AIDEA Board members are not in a fiduciary realm, consequently, being appointed by the Governor, would indicate that board members would support implementation of policies that the Governor would want to see occur. Mr. Condon stated that he would support any decision made by the Governor in relationship to that board. Representative Martin questioned the settlement made between the Department of Law and the Department of Revenue regarding back oil taxes and the existing relationship between those departments. Mr. Condon acknowledged over the past few years, the departments have been able to work together amiably in order to bring closure to the back tax disputes. He thought that the good relationship would continue during the current Administration. Mr. Condon explained the three large dispute cases currently being addressed by the State. The first case involves Exxon and that the remaining two cases are confidential. Those two cases will generate one eighth the financial revenue that was received from Exxon. The remaining concerns regarding the oil and gas royalty issues are scheduled to go to trial, April, 1995. Those issues relate to gas and gas liquid production. He commented that the trial could take two months in court, although, he hoped the matter could settle before trial. That would be the end of royalty litigation. Representative Mulder asked Mr. Condon's perspective regarding the Mark Air proposal. Mr Condon replied, that at this date, he does not have the information provided by 2 AIDEA consultants. He noted that the Department's criteria would consider if the proposal was feasible, and if then that proposal would work, would it provide jobs. When that information has been accumulated, then a decision will be made by the State to determine if the Department should take the risk of spending those funds. Co-Chair Foster asked Mr. Condon to summarize his publication "Reforming the Mining Laws - The Case for a Leasing System" (1971). Mr. Condom pointed out that the paper was written when he was a third year law student. The paper advocated a leasing system in-place-of the location system for mining. He admitted that he did not know much about mining when the paper was written. Co-Chair Foster asked if Mr. Condon thought that leasing could enhance the mining industry in Alaska. Mr. Condon answered that the Constitution requires that there be a leasing system. He concluded, there will be no revenue from the mines, if there are no mines. People must express interest in mining if mining is to be used as a revenue generating source. Co-Chair Hanley explained the standard confirmation report form currently used does not indicate a "for" or "against" vote of the Committee. He noted that the Alaska Statute's require that there be a hearing on all appointed commissioners, but not necessarily a vote. Representative Navarre suggested sending a recommendation to the other members of the House of Representatives, inasmuch as Mr. Condon is a qualified candidate for Commissioner of Revenue. Representative Martin agreed with Representative Navarre and offered a positive recommendation for Mr. Condon based on a review of his qualifications. Representative Martin MOVED a consensus confirmation of Mr. Wilson Condon as Commissioner of the Department of Revenue. There being NO OBJECTION, it was confirmed. ADJOURNMENT The meeting adjourned at 2:05 P.M.