HOUSE FINANCE COMMITTEE MAY 7, 1995 2:15 P.M. TAPE HFC 95 - 117, Side 2, #000 - end. TAPE HFC 95 - 118, Side 1, #000 - #184. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 2:15 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 Sara Fisher, Staff, Representative Gene Therriault; John Shively, Commissioner, Department of Natural Resources; Wendy Redman, Vice-President, University Relations, University of Alaska; Senator Steve Frank; Jack Chenoweth, Attorney, Legislative Legal Counsel, Legislative Affairs Agency. SUMMARY SB 16 An Act relating to the University of Alaska and university land, authorizing the University of Alaska to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation. SB 16 was HELD in Committee for further discussion. SB 115 An Act relating to the establishment, modification, and enforcement of support orders and the determination of parentage in situations involving more than one state; amending Alaska Rule of Administration 9; amending Alaska Rules of Civil Procedure 79 and 82; and providing for an effective date. 1 CS SB 115 (FIN)am was reported out of Committee with "no recommendation", with a Senate Finance Letter of Intent, and with fiscal notes by the Department of Community and Regional Affairs dated 3/7/95, the Department of Law dated 3/7/95 and zero fiscal notes by the Department of Health and Social Services dated 3/7/95 and the Department of Revenue dated 3/7/95. HB 281 An Act ratifying an agreement between the Alaska Housing Finance Corporation and the commissioner of revenue and making certain pledges to obliges of the corporation regarding that agreement; relating to the authorization for and the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; and providing for an effective date. CS HB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 3/24/95 and a zero fiscal notes by the Statewide Budget Office dated 3/24/95 and the Department of Revenue dated 3/24/95. HB 282 An Act relating to the authorization for and the issuance of revenue bonds by the University of Alaska to pay for the costs of repair and rehabilitation of buildings and other structures, excluding student housing and dormitories, of the University of Alaska; expanding the uses of the Alaska debt retirement fund to allow financing of the repair and rehabilitation of University of Alaska facilities; and providing for an effective date. HB 282 was HELD for further consideration. HB 309 An Act approving the University of Alaska's plans to enter into long-term obligations to borrow money from the Alaska Housing Finance Corporation for the acquisition of student housing facilities; and providing for an effective date. CS HB 309 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Statewide Budget Office dated 4/21/95. SENATE BILL 115 2 "An Act relating to the establishment, modification, and enforcement of support orders and the determination of parentage in situations involving more than one state; amending Alaska Rule of Administration 9; amending Alaska Rules of Civil Procedure 79 and 82; and providing for an effective date." Representative Brown MOVED to report CS SB 115 (FIN)am out of Committee with individual recommendations and with the accompanying fiscal notes. Co-Chair Hanley noted that there was a previous MOTION on the table. Representative Brown WITHDREW THE MOTION to move the bill from Committee. Representative Therriault WITHDREW the amendment moved at the previous meeting. Representative Brown reiterated the MOTION to MOVE the bill from Committee with the accompanying fiscal notes. Representative Brown noted that it was not her intent to move the Letter of Intent. There being NO OBJECTIONS to moving the bill and fiscal notes from Committee, it was so ordered. Representative Therriault MOVED the Senate Finance Letter of Intent. Representative Brown OBJECTED. She asked the purpose of the letter. Representative Therriault stated that he had received complaints from constituents who have been good child support payers but received correspondence from that agency containing very strong language. Representative Brown voiced favor that all people should be treated with respect and recommended that the agency provide separate letters addressing specific situations. A roll call was taken on the MOTION to adopt the Letter of Intent. IN FAVOR: Therriault, Kohring, Kelly, Martin, Foster, Hanley OPPOSED: Parnell, Brown, Grussendorf, Mulder, Navarre The MOTION PASSED (6-5). CS SB 115 (FIN) am was reported out of Committee with "no recommendation", a Senate Finance Letter of Intent and with fiscal notes by the Department of Health and Social Services dated 3/7/95, the Department of Revenue dated 3/7/95 and zero fiscal notes by the Department of Community and Regional Affairs dated 3/7/95 and the Department of Law dated 3/7/95. HOUSE BILL 281 3 "An Act ratifying an agreement between the Alaska Housing Finance Corporation and the commissioner of revenue and making certain pledges to obliges of the corporation regarding that agreement; relating to the authorization for and the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; and providing for an effective date." HOUSE BILL 309 "An Act approving the University of Alaska's plans to enter into long-term obligations to borrow money from the Alaska Housing Finance Corporation for the acquisition of student housing facilities; and providing for an effective date." SARA FISHER, STAFF, REPRESENTATIVE GENE THERRIAULT, provided an explanation of the changes contained in the work drafts LS1076\K, Chenoweth, 5/7/95 for CS HB 309. Representative Therriault, Subcommittee Chair, MOVED the committee substitute work draft for HB 281 as the version before the Committee. There being NO OBJECTION, it was adopted. Representative Therriault MOVED to report out of Committee CS HB 281 (FIN) with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTIONS, it was so ordered. CS HB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 3/24/95 and a zero fiscal notes by the Statewide Budget Office dated 3/24/95 and the Department of Revenue dated 3/24/95. Representative Therriault MOVED the committee substitute work draft for HB 309 as the version before the Committee. There being NO OBJECTIONS, it was adopted. Representative Therriault MOVED to report CS HB 309 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTIONS, it was so ordered. CS HB 309 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Statewide Budget Office dated 4/21/95. 4 SENATE BILL 16 "An Act relating to the University of Alaska and university land, authorizing the University of Alaska to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation." JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, spoke against the proposed legislation. He noted that the Department of Administration also has consistently opposed the bill. The legislation would allow the University of Alaska to select certain lands from the State's land entitlement. He thought that the benefit received by the State would be minimal and that the legislation would not be a good use of the State's limited resources. He suggested an alternative approach would be to investigate federal lands being used for the University's land base through direct appropriations. SENATOR STEVE FRANK testified in support of SB 16. He noted that the University of Alaska is called a "Land Grant University" in the tradition of American land grant universities, providing teaching, research and public service to the people of Alaska. While the University has attempted to mold itself in the land grant tradition, one piece of that tradition is lacking--a sufficient land grant. Senator Frank continued that Alaskans look to the University of Alaska to provide for some of its financial needs by earning income from the federal land grant, yet Alaskans do not realize the need of lands to be managed by the university. He added, passage of the legislation would allow expansion of the University of Alaska land grant, and would allow the University to generate additional revenue in support of its programs. The land would need to be responsibly managed in order to generate income. The University is currently involved in a wide range of projects including commercial leasing, development and sale of residential and remote subdivisions, oil and gas lease sales, timber and gravel sales and mining leases. Representative Mulder asked how many acres of land the State owns. Senator Frank replied currently, there exists approximately 104 million acres of state property. Representative Mulder asked if it would be possible for the University to select land that has oil and gas developments on it. Senator Frank stated that it was, although, the Commissioner had been given a very broad power. No land 5 could be selected that was on the State's five year oil and gas leasing program, and the University could not select any other lands that the Commissioner thought were vital for the State's best interest. Representative Brown voiced concern about the treatment of the oil and gas licensing. She referenced language on Page 7, indicating that the oil and gas license would be different than the lease. Senator Frank explained that the intent was more clearly defined on Page 5, Line 4. Representative Brown commented that information on Page 7, Subsection (3) would not be in the best interest of the State. Senator Frank noted that the Commissioner would have the ultimate authority to consider what would be in the best interest of the State. Representative Brown asked if the lands, when under State ownership, would be exempt from taxation. Senator Frank understood that they would be, although any lease-hold would be subject to taxation. Representative Brown thought that the current language was confusing and that it did not clarify if the University land would be subject to taxation. Senator Frank recommended that a lawyer provide that information, although he thought that land conveyed to a private entity would carry a tax immunity. Representative Brown asked why the University should be managing their own resources and surface real estate. Senator Frank replied that the University currently has a specified Lands Management Department to manage their own acreage. He continued, the Department of Natural Resources currently manages 1.4 million acres and that the University currently has a land grant. He believed that the legislation would allow the University greater economy of scale in land management, pointing out that the legislation would provide a net long term economic benefit to the State. Representative Brown asked if revenues which the University received from the lands would continue to be appropriated by the Legislature. Senator Frank stated that they would be appropriated through the Executive Budget Act. Representative Brown questioned the potential revenue stream. Senator Frank replied that information would be speculative at this time, although he hoped it would be high so that the University would be able to continue their high standards with less dependence on the general fund. Discussion continued between Representative Brown and Senator Frank regarding the statutory adjustment which the legislature made for leases made in law after 1980. 6 Representative Brown asked what expertise the University had to manage oil and gas resources. Senator Frank did not know the extent of their expertise. Representative Brown asked for an explanation of Section (D), Subsection (2). WENDY REDMAN, VICE PRESIDENT, UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, responded that Section D deals with "time and space" after the University has selected lands, but prior to conveyance. She noted that there had been substantial concern, because that process may take some time. She added that there should not be a prohibition against entry into the lands during that period of time. Subsection (2) deals with what will occur to the proceeds during the entry prior to conveyance. Ms. Redman advised that the University could be given leased land, however, the State will retain the income for that land for the life of the lease/contract through the extension period. She pointed out that language was similar to the language used in the last land settlement ruling in 1986. (Tape Change, HFC 95-118, Side 1). Representative Brown asked if the transferred land properties selected by the University of Alaska would be subject to taxation by the municipalities. JACK CHENOWETH, ATTORNEY, LEGISLATIVE LEGAL COUNSEL, LEGISLATIVE AFFAIRS AGENCY, stated that they would not be subject to taxation under current law nor would they be by the amendment made in Section 12 of the Resources' version. Representative Brown asked if the land would be subject once transferred to a private owner. Mr. Chenoweth advised that beyond ownership by the University, the lands would then become taxable. SB 16 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:00 P.M. HOUSE FINANCE COMMITTEE MAY 7, 1995 2:15 P.M. TAPE HFC 95 - 117, Side 2, #000 - end. TAPE HFC 95 - 118, Side 1, #000 - #184. CALL TO ORDER 7 Co-Chair Mark Hanley called the House Finance Committee meeting to order at 2:15 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 Sara Fisher, Staff, Representative Gene Therriault; John Shively, Commissioner, Department of Natural Resources; Wendy Redman, Vice-President, University Relations, University of Alaska; Senator Steve Frank; Jack Chenoweth, Attorney, Legislative Legal Counsel, Legislative Affairs Agency. SUMMARY SB 16 An Act relating to the University of Alaska and university land, authorizing the University of Alaska to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation. SB 16 was HELD in Committee for further discussion. SB 115 An Act relating to the establishment, modification, and enforcement of support orders and the determination of parentage in situations involving more than one state; amending Alaska Rule of Administration 9; amending Alaska Rules of Civil Procedure 79 and 82; and providing for an effective date. CS SB 115 (FIN)am was reported out of Committee with "no recommendation", with a Senate Finance Letter of Intent, and with fiscal notes by the Department of Community and Regional Affairs dated 3/7/95, the Department of Law dated 3/7/95 and zero fiscal notes by the Department of Health and Social Services dated 3/7/95 and the Department of Revenue dated 3/7/95. 8 HB 281 An Act ratifying an agreement between the Alaska Housing Finance Corporation and the commissioner of revenue and making certain pledges to obliges of the corporation regarding that agreement; relating to the authorization for and the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; and providing for an effective date. CS HB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 3/24/95 and a zero fiscal notes by the Statewide Budget Office dated 3/24/95 and the Department of Revenue dated 3/24/95. HB 282 An Act relating to the authorization for and the issuance of revenue bonds by the University of Alaska to pay for the costs of repair and rehabilitation of buildings and other structures, excluding student housing and dormitories, of the University of Alaska; expanding the uses of the Alaska debt retirement fund to allow financing of the repair and rehabilitation of University of Alaska facilities; and providing for an effective date. HB 282 was HELD for further consideration. HB 309 An Act approving the University of Alaska's plans to enter into long-term obligations to borrow money from the Alaska Housing Finance Corporation for the acquisition of student housing facilities; and providing for an effective date. CS HB 309 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Statewide Budget Office dated 4/21/95. SENATE BILL 115 "An Act relating to the establishment, modification, and enforcement of support orders and the determination of parentage in situations involving more than one state; amending Alaska Rule of Administration 9; amending Alaska Rules of Civil Procedure 79 and 82; and providing for an effective date." Representative Brown MOVED to report CS SB 115 (FIN)am out of Committee with individual recommendations and with the 9 accompanying fiscal notes. Co-Chair Hanley noted that there was a previous MOTION on the table. Representative Brown WITHDREW THE MOTION to move the bill from Committee. Representative Therriault WITHDREW the amendment moved at the previous meeting. Representative Brown reiterated the MOTION to MOVE the bill from Committee with the accompanying fiscal notes. Representative Brown noted that it was not her intent to move the Letter of Intent. There being NO OBJECTIONS to moving the bill and fiscal notes from Committee, it was so ordered. Representative Therriault MOVED the Senate Finance Letter of Intent. Representative Brown OBJECTED. She asked the purpose of the letter. Representative Therriault stated that he had received complaints from constituents who have been good child support payers but received correspondence from that agency containing very strong language. Representative Brown voiced favor that all people should be treated with respect and recommended that the agency provide separate letters addressing specific situations. A roll call was taken on the MOTION to adopt the Letter of Intent. IN FAVOR: Therriault, Kohring, Kelly, Martin, Foster, Hanley OPPOSED: Parnell, Brown, Grussendorf, Mulder, Navarre The MOTION PASSED (6-5). CS SB 115 (FIN) am was reported out of Committee with "no recommendation", a Senate Finance Letter of Intent and with fiscal notes by the Department of Health and Social Services dated 3/7/95, the Department of Revenue dated 3/7/95 and zero fiscal notes by the Department of Community and Regional Affairs dated 3/7/95 and the Department of Law dated 3/7/95. HOUSE BILL 281 "An Act ratifying an agreement between the Alaska Housing Finance Corporation and the commissioner of revenue and making certain pledges to obliges of the corporation regarding that agreement; relating to the authorization for and the issuance of bonds by the Alaska Housing Finance Corporation to pay for the costs of repair and rehabilitation of student housing facilities of the University of Alaska; and providing for an effective date." 10 HOUSE BILL 309 "An Act approving the University of Alaska's plans to enter into long-term obligations to borrow money from the Alaska Housing Finance Corporation for the acquisition of student housing facilities; and providing for an effective date." SARA FISHER, STAFF, REPRESENTATIVE GENE THERRIAULT, provided an explanation of the changes contained in the work drafts LS1076\K, Chenoweth, 5/7/95 for CS HB 309. Representative Therriault, Subcommittee Chair, MOVED the committee substitute work draft for HB 281 as the version before the Committee. There being NO OBJECTION, it was adopted. Representative Therriault MOVED to report out of Committee CS HB 281 (FIN) with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTIONS, it was so ordered. CS HB 281 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue dated 3/24/95 and a zero fiscal notes by the Statewide Budget Office dated 3/24/95 and the Department of Revenue dated 3/24/95. Representative Therriault MOVED the committee substitute work draft for HB 309 as the version before the Committee. There being NO OBJECTIONS, it was adopted. Representative Therriault MOVED to report CS HB 309 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTIONS, it was so ordered. CS HB 309 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Statewide Budget Office dated 4/21/95. SENATE BILL 16 "An Act relating to the University of Alaska and university land, authorizing the University of Alaska to select additional state public domain land, and defining net income from the University of Alaska's endowment trust fund as 'university receipts' subject to prior legislative appropriation." 11 JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, spoke against the proposed legislation. He noted that the Department of Administration also has consistently opposed the bill. The legislation would allow the University of Alaska to select certain lands from the State's land entitlement. He thought that the benefit received by the State would be minimal and that the legislation would not be a good use of the State's limited resources. He suggested an alternative approach would be to investigate federal lands being used for the University's land base through direct appropriations. SENATOR STEVE FRANK testified in support of SB 16. He noted that the University of Alaska is called a "Land Grant University" in the tradition of American land grant universities, providing teaching, research and public service to the people of Alaska. While the University has attempted to mold itself in the land grant tradition, one piece of that tradition is lacking--a sufficient land grant. Senator Frank continued that Alaskans look to the University of Alaska to provide for some of its financial needs by earning income from the federal land grant, yet Alaskans do not realize the need of lands to be managed by the university. He added, passage of the legislation would allow expansion of the University of Alaska land grant, and would allow the University to generate additional revenue in support of its programs. The land would need to be responsibly managed in order to generate income. The University is currently involved in a wide range of projects including commercial leasing, development and sale of residential and remote subdivisions, oil and gas lease sales, timber and gravel sales and mining leases. Representative Mulder asked how many acres of land the State owns. Senator Frank replied currently, there exists approximately 104 million acres of state property. Representative Mulder asked if it would be possible for the University to select land that has oil and gas developments on it. Senator Frank stated that it was, although, the Commissioner had been given a very broad power. No land could be selected that was on the State's five year oil and gas leasing program, and the University could not select any other lands that the Commissioner thought were vital for the State's best interest. Representative Brown voiced concern about the treatment of the oil and gas licensing. She referenced language on Page 7, indicating that the oil and gas license would be different than the lease. Senator Frank explained that the intent was more clearly defined on Page 5, Line 4. 12 Representative Brown commented that information on Page 7, Subsection (3) would not be in the best interest of the State. Senator Frank noted that the Commissioner would have the ultimate authority to consider what would be in the best interest of the State. Representative Brown asked if the lands, when under State ownership, would be exempt from taxation. Senator Frank understood that they would be, although any lease-hold would be subject to taxation. Representative Brown thought that the current language was confusing and that it did not clarify if the University land would be subject to taxation. Senator Frank recommended that a lawyer provide that information, although he thought that land conveyed to a private entity would carry a tax immunity. Representative Brown asked why the University should be managing their own resources and surface real estate. Senator Frank replied that the University currently has a specified Lands Management Department to manage their own acreage. He continued, the Department of Natural Resources currently manages 1.4 million acres and that the University currently has a land grant. He believed that the legislation would allow the University greater economy of scale in land management, pointing out that the legislation would provide a net long term economic benefit to the State. Representative Brown asked if revenues which the University received from the lands would continue to be appropriated by the Legislature. Senator Frank stated that they would be appropriated through the Executive Budget Act. Representative Brown questioned the potential revenue stream. Senator Frank replied that information would be speculative at this time, although he hoped it would be high so that the University would be able to continue their high standards with less dependence on the general fund. Discussion continued between Representative Brown and Senator Frank regarding the statutory adjustment which the legislature made for leases made in law after 1980. Representative Brown asked what expertise the University had to manage oil and gas resources. Senator Frank did not know the extent of their expertise. Representative Brown asked for an explanation of Section (D), Subsection (2). WENDY REDMAN, VICE PRESIDENT, UNIVERSITY RELATIONS, UNIVERSITY OF ALASKA, responded that Section D deals with "time and space" after the University has selected lands, but prior to conveyance. She noted that there had been 13 substantial concern, because that process may take some time. She added that there should not be a prohibition against entry into the lands during that period of time. Subsection (2) deals with what will occur to the proceeds during the entry prior to conveyance. Ms. Redman advised that the University could be given leased land, however, the State will retain the income for that land for the life of the lease/contract through the extension period. She pointed out that language was similar to the language used in the last land settlement ruling in 1986. (Tape Change, HFC 95-118, Side 1). Representative Brown asked if the transferred land properties selected by the University of Alaska would be subject to taxation by the municipalities. JACK CHENOWETH, ATTORNEY, LEGISLATIVE LEGAL COUNSEL, LEGISLATIVE AFFAIRS AGENCY, stated that they would not be subject to taxation under current law nor would they be by the amendment made in Section 12 of the Resources' version. Representative Brown asked if the land would be subject once transferred to a private owner. Mr. Chenoweth advised that beyond ownership by the University, the lands would then become taxable. SB 16 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 3:00 P.M. 14