HOUSE FINANCE COMMITTEE APRIL 28, 1997 2:10 P.M. TAPE HFC 97 - 114, Side 1, #000 - end. TAPE HFC 97 - 114, Side 2, #000 - #082. CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 2:10 P.M. PRESENT Co-Chair Therriault Representative Kelly Representative Davies Representative Martin Representative Davis Representative Moses Representative Foster Representative Mulder Representatives Grussendorf, Hanley and Kohring were not present for the meeting. ALSO PRESENT Senator Bert Sharp; Brett Huber, Staff, Senator Rick Halford; Jane Angvik, (Testified via teleconference), Director, Division of Land, Department of Natural Resources; Robert Nauheim, (Testified via teleconference), Department of Natural Resources. SUMMARY HB 109 An Act relating to the management and disposal of state land and resources; relating to certain remote parcel and homestead entry land purchase contracts and patents; and providing for an effective date. CS HB 109 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Natural Resources dated 4/23/97. SB 67 An Act relating to the imposition of criminal sentences; and amending Rule 32.2, Alaska Rules of Criminal Procedure. CS SB 67 (JUD) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Law dated 3/5/97, two by the Department of Public Safety dated 3/5/97, the Senate Finance Committee dated 3/13/97 1 and a zero fiscal note by the Alaska Court System. SB 161 An Act relating to management of certain municipal assets by the Alaska Permanent Fund Corporation. CS SB 161 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue 4/15/97. HOUSE BILL 109 "An Act relating to the management and disposal of state land and resources; relating to certain remote parcel and homestead entry land purchase contracts and patents; and providing for an effective date." Co-Chair Therriault explained that HB 109 is a housekeeping measure intended primarily to clarify certain Title 38 statutes governing the Department of Natural Resources' (DNR) management of State land and resources. The bill is intended to bring greater efficiency to the management of state lands by simplifying programs and reducing costs to DNR. Co-Chair Therriault noted the highlights of the legislation: * Rewrite of the "remote cabin permit program" to a program that would allow for either the sale or lease for a remote cabin site. The permit program was never implemented because of the associated administrative costs with only a minimal return to the State. * Clarifies that the sale of state land does not obligate the State to provide additional services. * Simplifies the methods to receive a homestead parcel title by requiring that within five years, a parcel must be lived on for 25 months or purchased at fair market value. JANE ANGVIK, (TESTIFIED VIA TELECONFERENCE), DIRECTOR, DIVISION OF LANDS, DEPARTMENT OF NATURAL RESOURCES, commented that the Department supports HB 109 as it would clean-up Title 38, resulting in the Division of Lands being operated more efficiently. She added that the Department also supports the amendments distributed to Committee members. She spoke to the shore fisheries issue and the Supreme Court ruling regarding that concern. Co-Chair Therriault noted that section had been dropped from the 2 proposed legislation. Representative J. Davies questioned why it would be difficult for the Division of Lands to follow the rules of the Supreme Court. Ms. Angvik replied that the Kachemak Bay Watch case challenged DNR to authorize aquatic water sites on State lands, a decision which called for significant aquatic planning efforts. The Court recommended that the Department participate in a land use plan identifying areas where mari-culture could occur and which was to be done after an accumulative evaluation of all events that could occur over time. If the Division of Lands had to comply with the Court ruling, it would take seven employees to perform an area wide plan for all of the coastal regions of the State. Representative J. Davies inquired if the Court required the Division to address the entire State for permit operations. Ms. Angvik replied that the Court indicated that the Division had failed in Southeast Alaska and Southcentral Alaska, so they ruled that the entire State must be undertaken. Representative J. Davies asked if the Department was planing to return to the Legislature with statutes which make sense. Ms. Angvik explained that the Division is doing a thorough job with each mari-culture location evaluation, although, the Court requested a higher standard. Discussion followed between Representative Davies and Ms. Angvik regarding land use planning. Representative Martin voiced concern for the shoreline tidelands and the coastal communities in Southeast Alaska. Ms. Angvik stated that the proposed amendment was designed to allow up-line owners to obtain a non competitive lease for dock sites. In a tideland area, a user can get a long- term lease to be able to operate a dock. The amendment would allow the tideland applicant to apply for a similar application for fresh water lakes and rivers. Co-Chair Therriault asked the terms of a lease for fresh water shore land. Ms. Angvik replied that the terms would probably be a 20 year lease for facility on a carbo operation, instead of a year by year competitive auction. The issue of value would be negotiated between the lessee and the State through an appraisal. The amendments do not address the negotiation process. ROBERT NAUHEIM, (TESTIFIED VIA TELECONFERENCE), DEPARTMENT OF NATURAL RESOURCES, offered to answer questions regarding litigation which lead to the language of the bill. 3 Representative J. Davies noted that the litigation had indicated that the process used was not adequate. The bill has been accompanied by an amendment appropriate to that concern. He asked how a facility could be created in the future. Mr. Nauheim explained that the legislation was written to rescue several classes of aquatic farming operations which are in a difficult legal position. The Alaska Supreme Court stipulated that the application process was invalid. The Court upheld that the identification method used by the Department was faulty. The Department understood that, initially, the identification process was to be informal so as to aid the application process. The Supreme Court interpreted the straight forward language to require a very detailed formal planning process that would result in the identification of districts where specific sites would be identified for issuance of permits. That decision was determined invalid. The new legislation coupled with the newest amendments will call for the repeal of the old system. Representative J. Davies questioned if the regulations would create a new process for permitting of the facilities. Mr. Nauheim advised that the new language would command that the commission adopt new regulations and establish criteria for approving or denying the applications. Regulations will be similar to the current ones. Representative J. Davies asked if Amendment #3 was adopted, would a permit applicant be applying for a finite period of time. Ms. Angvik responded they would need to apply within 90 days. Co-Chair Therriault MOVED to adopt Amendment #1. [Copy on file]. Representative Martin questioned if the shoreline/tideline concerns in Southeast Alaska had been adequately addressed. Ms. Angvik offered to work with Representative Martin regarding his concerns. There being NO OBJECTION to Amendment #1, it was adopted. Co-Chair Therriault MOVED to adopt Amendment #2. [Copy on file]. There being NO OBJECTION, it was adopted. Co-Chair Therriault MOVED to adopt Amendment #3. [Copy on file]. There being NO OBJECTION, it was adopted. Representative J. Davies MOVED to report CS HB 109 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. 4 CS HB 109 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Natural Resources dated 4/23/97. SENATE BILL 67 "An Act relating to the imposition of criminal sentences; and amending Rule 32.2, Alaska Rules of Criminal Procedure." BRETT HUBER, STAFF, SENATOR RICK HALFORD, noted that when a felon is sentenced to a term of imprisonment, the public often receives a false sense of security by believing the criminal will actually be incarcerated for the stated sentence. As a result of "good time", as well as mandatory and discretional parole provisions, the actual sentence served is virtually guaranteed to be less than that which is imposed by the judge. If enacted, SB 67 would require that a victim of a crime, their family, as well as the public, be provided with an accurate statement of the minimum period of time which must be served before the criminal is released. At the very least, the victim and their families, as well the public, deserve an honest and accurate assessment of the amount of time a criminal will actually be incarcerated. SB 67 requires that the judge provide this information. Mr. Huber continued, the enactment of SB 67 would also allow the Department of Corrections to receive up to $650 thousand dollars in federal funds which are available to states which meet federal "truth in sentencing" guidelines. Representative Mulder asked how the legislation would help the State qualify for receiving truth in sentencing grants. Mr. Huber noted that Section #2 of the bill added language by the Department of Law. The federal truth in sentencing grant had initially required states to have a minimum of 85% of the sentence actually served by those convicted. Since that time, the federal government revamped the program. Section #2 does not change any of the sentencing or mandatory parole procedures that the State is in, although, it does provide language which the Department of Law is comfortable will allow Alaska to qualify for the federal aid dollars. Mr. Huber noted that the fiscal note accompanying the bill was prepared by the Senate Finance Committee and indicates estimated federal receipts including the estimated 10% general fund match. Representative Foster MOVED to report CS SB 67 (JUD) out of 5 Committee with individual recommendations and with the accompanying fiscal notes. Representative Mulder OBJECTED. He noted that he was considering an amendment which would address the surcharges on criminal offense fines. The convicts who are able to pay for criminal offenses should be assessed those fees. He believed the State lagged behind the federal assessment allowance. An amendment would allow the State to recoup funds and money to go back for the victims. Representative Mulder WITHDREW his OBJECTION. There being NO further OBJECTION, it was so ordered. CS SB 67 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Alaska Court System, two by the Department of Public Safety dated 3/5/97, the Department of Law dated 3/5/97 and the Senate Finance Committee dated 3/13/97. #SB161 SENATE BILL 161 "An Act relating to management of certain municipal assets by the Alaska Permanent Fund Corporation." SENATOR BERT SHARP stated that the legislation would authorize the Permanent Fund Corporation to manage the assets of a municipal savings or investment account. The parameter of a management agreement starts on Page 1, Line 9, through the remainder of the bill. These were established by the corporation as conditions to accommodate without compromising their mission. The legislation would offer municipalities the option of investing management services within Alaska. The management costs would be totally reimbursable to the Permanent Fund Corporation by the municipalities. Representative Martin asked the advantage to the local municipalities. Senator Sharp pointed out that local governments had sold the utilities. Co-Chair Therriault commented that the University's trust and assets were managed by the Department of Revenue. Representative J. Davies asked if the appropriation account would be a general fund expenditure. Senator Sharp explained that the Permanent Fund Corporation had voiced concern that the money not be deposited into the general fund, instead, it be returned to the Permanent Fund Corporation through the Earnings Reserve Account, confirmed by the Legislature. Representative Davies agreed, although, noted that the Earnings Reserve Account is an appropriation account and appropriations from that account do not appear as general funds. 6 Senator Sharp stated that the fiscal note indicates that the funds appear as corporate receipts to the Permanent Fund. The fiscal note indicates that there was a reimbursement of the Permanent Fund earnings account for those expenses. Co- Chair Therriault stated that budgeting for the corporation come from corporate receipts from the earnings reserve. The money which comes for the management of the fund would be tracked in a similar fashion. Representative J. Davies asked if the reserve earnings would remain in the municipal account. Senator Sharp responded that any earnings not drawn by the municipality on an annual basis would stay and increase the assets on the municipalities account. (Tape Change HFC 97-114, Side 2). Representative G. Davis pointed out that the Alaska Municipal League has initiated and is operating a Municipal Investment Pool. He suggested that if members were curious as to how much money each municipality has to invest, they could track those area pools. Representative Foster MOVED to report CS SB 161 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS SB 161 (FIN) was reported out of Committee with a "do pass" recommendation and with the a fiscal note by the Department of Revenue dated 4/15/97. ADJOURNMENT The meeting adjourned at 3:05 P.M. 7