HOUSE FINANCE COMMITTEE April 13, 2007 1:46 p.m. CALL TO ORDER Co-Chair Meyer called the House Finance Committee meeting to order at 1:46:12 PM. MEMBERS PRESENT Representative Kevin Meyer, Co-Chair Representative Bill Stoltze, Vice-Chair Representative Harry Crawford Representative Les Gara Representative Mike Hawker Representative Mike Kelly Representative Mary Nelson Representative Bill Thomas, Jr. MEMBERS ABSENT Representative Mike Chenault, Co-Chair Representative Richard Foster Representative Reggie Joule ALSO PRESENT Representative Jay Ramras; Patrick Gamble, President & CEO, Alaska Railroad Corporation; Lisa Parker, Corporate Affairs, Agrium, Inc.; Charisse Millet, Staff, Speaker John Harris; Kaci Schroeder-Hotch, Staff, Representative Thomas; Representative Bob Buch; Rick Svobodny, Chief Assistant Attorney General, Legal Services Section - Juneau, Criminal Division, Department of Law; Dwayne Peeples, Deputy Commissioner, Department of Corrections PRESENT VIA TELECONFERENCE Sarah Fisher-Goad, Deputy Director of Operations, Alaska Energy Authority; Chris Rose, Executive Director, Renewable Energy Alaska Project (REAP); Katherine Lamal, Vice President of Power, Golden Valley Electric Association; Connie Fredenberg, Community Development, Aleutian Pribilof Islands ASS Association (APIA); Meera Kohler, President & CEO, Alaska Village Electric Cooperative; Gwen Holdmann, Vice President of Development, Chena Hot Springs Resort; Gardner Cobb, Gang Unit, Anchorage Police Department SUMMARY HB 28 "An Act requiring retail suppliers of electricity to disclose sources of electricity to consumers." CSHB 28 (FIN) was REPORTED out of Committee with a "no recommendation" and with fiscal note #1 by the Department of Commerce, Community and Economic Development. HB 229 "An Act authorizing the Alaska Railroad Corporation to participate in a project consisting of the acquisition, construction, improvement, maintenance, equipping, or operation of real and personal property, including facilities and equipment, for the Kenai gasification project, authorizing the corporation to issue bonds to finance all or a portion of the project, and identifying these as bonds for an essential public and governmental purpose; and providing for an effective date." HB 229 was REPORTED out of Committee with a "no recommendation" and with a new fiscal note by the Department of Commerce, Community and Economic Development. HB 152 "An Act establishing a renewable energy fund and describing its uses and purposes." CSHB 152 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with two new indeterminate fiscal notes by the Department of Commerce, Community and Economic Development. HB 133 "An Act relating to requiring electronic monitoring as a special condition of probation for offenders whose offense was related to a criminal street gang." HB 133 was heard and HELD in Committee for further consideration. 1:46:28 PM HOUSE BILL NO. 28 "An Act requiring retail suppliers of electricity to disclose sources of electricity to consumers." REPRESENTATIVE JAY RAMRAS, sponsor, addressed concerns raised by a drafting error. Amendment #2 will address a concern about exempting small utilities and will delete wording to correct a drafting error. 1:48:35 PM Representative Gara MOVED to ADOPT Amendment #1: Page 1, line 1, following "sources of electricity": Insert "and emissions" Page 1, line 13, following "sources": Insert "and emissions" Page 2, following line 5: Insert a new bill section to read: "* Sec. 3. AS 42.05.695, as enacted by sec. 2 of this Act, is amended by adding a new subsection to read: (c) The retail supplier shall disclose to the consumer the supplier's best estimate of carbon dioxide emissions per billion BTU or other unit of energy output that is understandable by consumers." Renumber the following bill sections accordingly. Page 2, following line 29: Insert a new bill section to read: "*Sec. 7. Section 3 of this Act takes effect January 1, 2009." Representative Gara explained that the amendment would provide information to consumers about carbon dioxide emissions. It would also delay the effective date for Section 3 for another year. Representative Ramras preferred the bill to stand as it is without the amendment. Representative Gara argued in support of the amendment. 1:51:29 PM Representative Kelly spoke in support of the bill and against the amendment. Co-Chair Meyer MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Gara OPPOSED: Stoltze, Thomas, Hawker, Kelly, Meyer Representatives Crawford, Foster, Joule, Nelson, and Chenault were absent for the vote. The MOTION FAILED (1-5). Co-Chair Meyer MOVED to ADOPT Amendment #2: Page 2, following line 5: Insert a new subsection to read: "(c) An electric utility that does not gross more than $5,000,000 annually is exempt from the provisions of this section." Page 2, lines 21 - 25: Delete all material. Renumber the following bill section accordingly. Representative Hawker OBJECTED. Representative Ramras explained that this amendment addresses a concern brought forth by Representative Hawker. It exempts utilities that do not gross more than $5 million a year. Representative Kelly commented that rural power is the most expensive power produced. He agreed to try the exemption. Representative Hawker WITHDREW his objection. There being NO OBJECTION, it was so ordered. 1:56:37 PM Vice Chair Stoltze MOVED to REPORT CSHB 28 (FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 28 (FIN) was REPORTED out of Committee with a "no recommendation" and with fiscal note #1 by the Department of Commerce, Community and Economic Development. 1:57:57 PM HOUSE BILL NO. 229 "An Act authorizing the Alaska Railroad Corporation to participate in a project consisting of the acquisition, construction, improvement, maintenance, equipping, or operation of real and personal property, including facilities and equipment, for the Kenai gasification project, authorizing the corporation to issue bonds to finance all or a portion of the project, and identifying these as bonds for an essential public and governmental purpose; and providing for an effective date." DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND BANK AUTHORITY, DEPARTMENT OF REVENUE, offered to answer questions. Representative Hawker asked Mr. Mitchell if the legislation causes any problems for the state. Mr. Mitchell explained that it appears that a double benefit will be gained by this legislation: developing use of a raw resource with the coal and anchoring Agrium in the Kenai Peninsula where it has a huge economic impact. He addressed non-recourse revenue bonds where the railroad has a unique ability to contemplate issuing industrial development bonds that are now precluded by the Tax Reform Act of 1986. He suggested that the project, as proposed, makes sense. Representative Hawker spoke of a concern over the industrial development bonds and the effect on the state's rating. Mr. Mitchell replied that it should have not impact and there has never been an issue in that regard. He gave an example of development bonds from the City of Valdez. 2:02:12 PM Representative Gara asked how a railroad that generated such large profits last year can issue $2.6 billion worth of bonds. Mr. Mitchell responded that the market would have to validate a high probability of success. Representative Gara asked about a state-owned gas pipeline and its effect on the bonding. Mr. Mitchell replied that it would have no impact on this bonding proposal. Representative Kelly wondered about pulling the authorization some time in the future if it doesn't get used. Mr. Mitchell reported that once the bond is issued there are contractual issues. Representative Kelly restated the question. Mr. Mitchell explained that if the bonds are not issued, statute can be changed. 2:05:25 PM Representative Gara MOVED to ADOPT Amendment #1: Page 4, line 4, following "this Act,": Insert "and compliance with the requirement of (b) of this section," Page 4, following line 23: Insert a new subsection to read: "(b) The Alaska Railroad Corporation may not issue bonds under the authorization and approval set out in this section unless the Department of Environmental Conservation certifies that the coal gasification and electrical power generation facility will be designed and operated in a manner that does not release more carbon dioxide into the atmosphere, per megawatt of power produced, than the average carbon dioxide released per megawatt during calendar year 2006 by the Beluga natural gas power plant, located on the western coast of Cook Inlet." Re-letter the following subsections accordingly. Co-Chair Meyer OBJECTED. Representative Gara explained that the amendment deals with carbon emissions from the coal plant. He wanted to regulate carbon emissions in exchange for the bonding request. Co-Chair Meyer noted that Co-Chair Chenault was not in support of the amendment. He said he sees the bill as a financial tool. 2:08:26 PM Representative Kelly spoke strongly against Amendment #1. LISA PARKER, CORPORATE AFFAIRS, Agrium, testified that there are regulations already in place regarding this issue. Representative Gara emphasized the importance of limiting carbon emissions and the problem of the greenhouse effect. He requested pro-active steps to reduce carbon emissions. Co-Chair Meyer spoke against Amendment #1. Representative Kelly explained his beliefs regarding global warming. He termed the amendment irresponsible relative to global warming. 2:13:39 PM Co-Chair Meyer MAINTAINED his objection. A roll call vote was taken on the motion. IN FAVOR: Gara, Nelson OPPOSED: Thomas, Hawker, Kelly, Stoltze, Meyer Representatives Crawford, Foster, Joule, and Chenault were absent for the vote. The MOTION FAILED (2-5). 2:15:13 PM Representative Hawker acknowledged a concern about the impact of the bill on the state; however, he stated support for the bill in its present form. Vice Chair Stoltze stated concerns by the Mat-Su about a rail extension to Port McKenzie being shut out due to this bill. He referred to a letter from the Mat-Su Borough (copy on file.) He spoke in support of the Agrium project but not at the expense of the Port McKenzie project. He mentioned that the Mayor of Wasilla has had no contact with the Alaska Railroad Corporation (ARRC). He brought out concerns about the Port of Anchorage route. He concluded by stating support for the bill. 2:22:28 PM PAT GAMBLE, PRESIDENT AND CEO, ALASKA RAILROAD CORPORATION, thought that Vice Chair Stoltze was correct about the Wasilla-to-Anchorage corridor problems. He spoke in favor of the extension to Port McKenzie, but thought the project decision was up to Agrium. It is not a preference issue for the railroad; at issue is the urgency and need to meet a timeline. The railroad is the easiest component, but works in response to Agrium's direction. Vice Chair Stoltze apologized for the use of the word "cavalier" in reference to ARRC. Representative Thomas asked about the Beluga Coal Mine route and the possibility of saving money. Ms. Parker said that had been looked into and both options are being considered. 2:29:30 PM Vice Chair Stoltze MOVED to REPORT HB 229 out of Committee with individual recommendations the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 229 (FIN) was REPORTED out of Committee with a "no recommendation" and with a new fiscal note by the Department of Commerce, Community and Economic Development. 2:30:47 PM HOUSE BILL NO. 152 "An Act establishing a renewable energy fund and describing its uses and purposes." CHARISSE MILLET, STAFF, SPEAKER JOHN HARRIS, sponsor, explained the purpose behind HB 152. The high cost of fuel in Alaska has made it increasingly difficult for Alaskan residents to prosper. Home heating fuel and gasoline prices have skyrocketed in recent years leaving some Alaska families, who already struggle to make ends meet, left to prioritize between basic necessities of life: heat, food, or health care. The bill contains recommendations from the Alaska Energy Policy Task Force formed in 2003. With the bill, Alaska would be one of 40 states to institute a policy on renewable energy. Ms. Millet reported that the bill accomplishes two things: provides for a revolving loan fund under the Alaska Energy Authority (AEA) and has a grant component. There is currently no funding mechanism for the fund. The bill seeks only to establish the fund in statute. 2:33:37 PM KACI SCHROEDER-HOTCH, STAFF, REPRESENTATIVE THOMAS, co- sponsor, explained the sections of the bill. She mentioned that a natural gas project could also qualify for a grant. She explained the makeup of the advisory committee. 2:36:38 PM SARAH FISHER-GOAD, DEPUTY DIRECTOR OF OPERATIONS, ALASKA ENERGY AUTHORITY, testified in support of HB 152. She spoke of the intentions of the renewable energy fund. She suggested an amendment which would allow the Department of Revenue to be the investment manager of the new fund. 2:38:14 PM CHRIS ROSE, EXECUTIVE DIRECTOR, RENEWABLE ENERGY ALASKA PROJECT (REAP), testified in support of HB 152. He explained that there are no fuel costs related to generating renewable energy. The bill would create a fund similar to ones in 15 other states, and will attract capital to the state. KATHERINE LAMAL, VICE PRESIDENT OF POWER, GOLDEN VALLEY ELECTRIC ASSOCIATION, testified in support of the legislation, which would help jumpstart renewable energy in Alaska and show that Alaska is a forward-looking state. 2:41:27 PM CONNIE FREDENBERG, COMMUNITY DEVELOPMENT, ALEUTIAN PRIBILOF ISLANDS ASSOCIATION (APIA), testified in support of the legislation. She noted that the Aleutian Islands have had renewable energy for the past four years. She maintained that the technology exists and that much of Alaska could benefit from renewable resources. Displacing diesel fuel with renewable resources is a long-term solution. She stressed the need for the political will to make it happen. She maintained that establishing a renewable grant fund would benefit all of Alaska. 2:44:15 PM MEERA KOHLER, PRESIDENT & CEO, ALASKA VILLAGE ELECTRIC COOPERATIVE, testified in support of the legislation. She provided examples of renewable resources used in the villages. She maintained that Alaska has a large potential for renewable resources. Representative Kelly expressed concern that the members of the advisory committee would end up gridlocked most of the time. Ms. Kohler explained that the committee has great potential, is small, and workable. The committee is needed to focus on renewable resources. 2:48:35 PM GWEN HOLDMANN, VICE PRESIDENT OF NEW DEVELOPMENT, CHENA HOT SPRINGS RESORT, testified in support of the legislation. She noted that their power plant has won awards. She reported that in seven months, they were able to offset $280,000 in diesel fuel costs. She provided other details of their use of renewable resources and the resulting savings. She observed that they would not have been able to make the advances without grant funding. 2:51:47 PM Co-Chair Meyer MOVED to ADOPT Amendment 1: Page 3, line 19 After "balance" Insert "of" There being NO OBJECTION, it was so ordered. Representative Thomas MOVED to ADOPT Amendment 2: Page 3, line 17: Delete "and" Page 3, line 20, following "section": Insert "; and (4) apply for and be able to receive contributions from other sources for distribution as grants to eligible applicants" Representative Crawford noted that other funding sources are available for renewable energy systems. 2:56:49 PM Ms. Millet explained that there is nothing in the bill that prohibits AEA from seeking other funding. Some fund sources are weighted higher than others due to the possibility of matching funds. Representative Crawford emphasized the wording "apply for" in the amendment. He agreed that there is nothing in the bill that would prevent that, but there is also nothing that states that "they should" apply for other sources of funds. Representative Thomas said he has no problem with Amendment #2. 2:58:22 PM Representative Hawker asked if Speaker Harris would agree with Amendment #2. Ms. Millet said he would have no problem with it. Co-Chair Meyer WITHDREW his objection. There being NO OBJECTION, Amendment #2 was adopted. Representative Thomas MOVED to ADOPT Amendment #3: Page 5, lines 14-17 Delete after (g): [as applicable to licensing water- power development projects, unless the authority adopts a different definition based on a determination made by a nationally recognized independent nonprofit corporation that considers the environmental effects of hydropower practices;] Co-Chair Meyer OBJECTED. Representative Thomas pointed out that the amendment would keep the definition as defined under AS 42.45.350(g). Ms. Millet said the sponsor has no objection to the amendment. Co-Chair Meyer WITHDREW his objection. There being NO OBJECTION, it was so ordered. 2:59:57 PM Representative Thomas MOVED to ADOPT Amendment # 4: Page 3, line 9 Add: (4) investments to be managed by the Department of Revenue Co-Chair Meyer OBJECTED. Representative Thomas explained that the amendment was at the recommendation of Ms. Fisher-Goad from AEA. Ms. Millet agreed with the amendment. Co-Chair Meyer WITHDREW his objection. There being NO OBJECTION, Amendment #4 was adopted. Co-Chair Meyer questioned fiscal note #2. He thought $126,000 should be general fund money rather than renewable energy fund money. Ms. Millet did not have a problem with that. 3:03:47 PM Representative Hawker mentioned that either the account or the fund will require a separate appropriation before there is any money available. He suggested that both fiscal notes be indeterminate, rather than a fixed number. Ms. Millet suggested consulting with AEA about the fiscal notes. Representative Kelly commented that the full-time position is not needed. He agreed with Representative Hawker. Co-Chair Meyer thought both fiscal notes should be indeterminate fiscal notes. Ms. Millet agreed. Ms. Fisher-Goad explained that the reason for the amount under the renewable energy fund was because of the assumption that there would be an appropriation to make the program move forward. She said she would comply with the will of the committee. Representative Hawker spoke about travel, which he thought AEA could absorb. 3:09:55 PM Representative Hawker MOVED that Fiscal Notes #1 and #2 be indeterminate. There being NO OBJECTION, it was so ordered. Co-Chair Meyer wanted to move the bill. Representative Hawker stated willingness to move the bill, but emphasized that this legislation is no assurance for funding for the program. Representative Crawford spoke in support of moving the bill and finding private sources of money to fund it. Representative Thomas agreed to move the bill and find funding later. 3:13:00 PM Representative Hawker MOVED to REPORT CSHB 152 (FIN), as amended, with individual recommendations and with the accompanying amended fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 152 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with two new indeterminate fiscal notes by the Department of Commerce, Community and Economic Development. 3:13:59 PM HOUSE BILL NO. 133 "An Act relating to requiring electronic monitoring as a special condition of probation for offenders whose offense was related to a criminal street gang." Vice Chair Stoltze MOVED to ADOPT the work draft for HB 133, labeled 25-LS0465\N, Luckhaupt, 4/13/07. There being NO OBJECTION, it was so ordered. REPRESENTATIVE BOB BUCH, sponsor, explained that the bill deals with the gang problem in Anchorage. It would require people who are convicted of violent, gang-related crimes to wear electronic monitoring devices as a condition of probation. The bill addresses a problem that has been documented by the Anchorage Police Department where gang members who have been convicted of violent crimes go back to gang activity. He spoke of the review of the bill by the Judiciary Committee. He clarified that the bill gives law enforcement a tool to deal with convicted, violent gang members. The scope of the bill is very narrow and applies only to those who are convicted of violent gang behavior. He noted that he has added a five-year sunset provision to make electronic monitoring a pilot program. 3:18:29 PM Representative Buch mentioned support of the bill from Chuck Copp, Chief of Police in Kenai. Vice Chair Stoltze asked why the courts need so much time to enact laws. Representative Buch noted that time is needed to convict gang members and to implement the bill. 3:19:45 PM GARDNER COBB, HEAD, GANG UNIT, ANCHORAGE POLICE DEPARTMENT, testified in strong support of the bill. He related his experience with gang problems in Anchorage. He predicted that ankle monitoring would prevent future crime. The focus of the bill is narrow to entail "gang-motivated" crime as opposed to "gang-related" crime. Representative Kelly asked how many states are having success with this device. Mr. Cobb related that it has been used for sex offenders in the past. Representative Kelly requested that information from the sponsor. Representative Hawker asked if the technology is readily available. Mr. Cobb thought that the Department of Corrections could better answer that. 3:26:41 PM Representative Buch addressed Representative Kelly's question. He said that he is getting a report back from San Bernadino, California, as to the results of the device being used there. He pointed out that one of the benefits of the ankle bracelet is that it gives the gang member an excuse to separate from the gang community. Representative Kelly asked how many states use the device. Representative Buch said approximately 20 states are utilizing the device. He noted that the sunset clause would allow for evaluation in five years. 3:29:53 PM DWAYNE PEEPLES, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS, answered Representative Hawker's questions regarding the availability and geographic restrictions of the technology. Mr. Peeples reported that the equipment is available, and he thought there would be no problems with the use of the device in urban or suburban areas. He thought there may be a staff monitoring issue in remote areas. Co-Chair Meyer asked if the electronic monitoring is for the entire probation period. Representative Buch said it is for the entire time a person is on parole or probation. Co- Chair Meyer asked what happens if the person leaves the state. Mr. Peeples discussed intrastate issues. Mr. Peeples thought the individuals would be closely monitored and not allowed to travel. 3:33:57 PM Co-Chair Meyer asked how this would be paid for. Representative Buch said that the convicted criminals would be responsible for paying for the device. Representative Gara spoke to the affordability provision. He thought that the GPS system would only be imposed in areas where there are gangs, and therefore there would not be a "use problem" in areas where there are no gangs. Representative Hawker asked if this legislation is a prospective application. Mr. Peeples said yes. There are currently clients who could have qualified. Representative Hawker wondered if they would be mandated to use the device. Representative Buch said the legislation would take place as soon as possible. Representative Hawker wondered if these conditions could be imposed on current parolees. Mr. Peeples said an aggravating factor would have had to have been found at the time of their conviction. 3:37:41 PM RICK SVODBODNY, CHIEF ASSISTANT ATTORNEY GENERAL, CRIMINAL DIVISION, DEPARTMENT OF LAW, related that it can only have a prospective application because it would have had to have been determined during the trial. He explained that parole conditions are discretionary and can be imposed at any time. Representative Hawker asked about the aggravating factors already existing in statute. He wondered if anyone currently qualifies. Mr. Svobodny said it is possible, but not likely. Representative Hawker asked if the bill would cause a change in behavior for prosecutors to try to identify this aggravating factor. Mr. Svobodny didn't think it would be a change of behavior because prosecutors in Anchorage are already trying to prove it. Mr. Peeples informed the committee that gangs are not being tracked in institutions. There are about 100 gang members on probation, and about 50-75 juvenile offenders, with notes in their records regarding an aggravating factor. He could not say how many would fall under the felony heading. The financial plan is to have an indeterminate fiscal note and then ask for funding as needed. 3:44:42 PM Representative Hawker addressed the bright line regarding proof of an aggravating factor. He wanted to lessen the burden of proof on the "good guys". Mr. Svobodny said that could legally be done. It depends on the court's view. He maintained it is a condition of probation and does not need to be tied to proving an aggravating factor. Representative Buch addressed Representative Hawker's concern. He pointed out that existing law provides for "auto waiver" for juveniles with violent crimes to be treated as adults. He reported that the fiscal impact of broadening the use of this legislation was out of sight. The new technology in the ankle bracelet does the monitoring. 3:49:59 PM Representative Hawker asked how to get the device on more ankles. Representative Buch pointed out that this is a pilot program and can be expanded if it works well. It addresses a public safety concern in Anchorage. Representative Kelly asked if it is mandatory for the judge to consider this as a condition of probation. Mr. Svobodny said it is. Representative Kelly asked if this device would cause lesser sentences to be given. Mr. Svobodny said he could not predict. It is tied to serious felonies and presumptive sentencing. If an aggravating factor is found, the sentence can be extended. Representative Kelly also supported making it easier for the "good guys". Representative Buch pointed out that the bill addresses a specific problem of bad behavior. It would be too expensive to have a broad perspective. Representative Kelly called it a tool and wished more could be used. 3:57:26 PM Representative Gara related the experience of increasing sentences and needing to prove beyond a reasonable doubt. He said the bill, as written, meets U.S. Supreme Court approval. "If you say the judge can do it without proof beyond a reasonable doubt", it may be unconstitutional. Vice Chair Stoltze referred to a letter from Rob Heun, Chief of Police, Anchorage (copy on file.) He thought conditions of probation should not be a negotiated process. Mr. Svobodny responded that they could be negotiated with the District Attorney early on. He said he hope that does not happen. The bright line in this bill is at sentencing. Representative Hawker referred to an earlier fiscal note. He wondered if it also included misdemeanors. Mr. Peeples said it did. It was a wide net with a differentiation between "gang related" and "gang associated". He discussed the earlier note. Representative Hawker did not take issue with the dollar amount, but with the public safety issue. He expressed concern about the "high hurdle" to meet the condition of aggravating factor. He read from AS 12.55.155(c)(29). He voiced concern that the bill falls short. 4:06:58 PM Representative Buch summarized that the idea behind the legislation is that it addresses a very specific crime with very specific criteria; a very specific tool for very extreme gang activity. HB 133 was heard and HELD in Committee for further consideration. ADJOURNMENT The meeting was adjourned at 4:09 PM.