JOINT HOUSE FINANCE AND RESOURCE COMMITTEE MEETING March 24, 1994 2:00 p.m. TAPE HFC 94-82, Side 2, #000 - end. TAPE HFC 94-83, Side 1, #000 - 642. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 2:07 p.m. PRESENT HOUSE FINANCE COMMITTEE MEMBERS Co-Chair Larson Representative Hoffman Co-Chair MacLean Representative Martin Representative Brown Representative Navarre Representative Foster Representative Therriault Representative Grussendorf Representatives Hanley and Parnell were not present for the meeting. HOUSE RESOURCES COMMITTEE MEMBERS Chair Williams Representative Davies Representative Bunde Representative Green Representative Carney Representative Mulder Representative Finkelstein Representatives Hudson and James were not present for the meeting. ALSO PRESENT Senator Representative Gail Phillips; Bruce Botelho, Attorney General, Department of Law; Harry A. Noah, Commissioner, Department of Natural Resources; Ron Swanson, Director, Division of Land, Department of Natural Resources; Tom Koester, Independent Counsel, Department of Law. SUMMARY INFORMATION HB 201: "An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust, the management of trust assets, and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date." HB 201 was HELD in Committee for further discussion. HOUSE BILL NO. 201 "An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust, the management of trust assets, and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date." BRUCE M. BOTELHO, ATTORNEY GENERAL submitted to the Committee the following written testimony in its entirety. He provided a summation of this testimony. TESTIMONY BY ATTORNEY GENERAL BRUCE M. BOTELHO REGARDING PROPOSAL TO RESOLVE MENTAL HEALTH TRUST LITIGATION, WEISS v. STATE, 4FA-82-2208 CIVIL Good afternoon, Mr. Chairman and members of the committee. I am Bruce Botelho, Attorney General. Thank you for the opportunity to discuss the proposed committee substitute for HB 201 that is before you. This proposal will resolve the mental health trust land case, Weiss v. State, 4FA-82-2208 Civil. Unlike prior legislation on this subject, it does not establish a "process" for resolution that simply creates new opportunities for conflict and delay. Instead, it is a "product" resolution that takes effect immediately and includes all of the elements required for dismissal of the case. The proposal draws on the legislature's powers under the Alaska Mental Health Enabling Act and the Alaska Constitution and several court decisions to cure the state's breach of the mental health trust. These include: - the legislature's power under the Enabling Act to dispose of mental health land and spend the proceeds on mental health and other purposes; - the legislature's power under the Alaska Constitution to remove land from trust status if the trust is compensated for that land; - the set-off for state mental health expenditures that the Alaska Supreme Court held the state is entitled to in determining the compensation owed for removing mental health land from trust status; and - Judge Greene's recent determinations that (1) the adequacy of mental health funding is not at issue in the Weiss case, (2) the Enabling Act "did not guarantee any particular level of services or full funding for Alaska's mental health needs," and (3) there is no evidence that "Congress intended to provide funding for Alaska mental health programs in perpetuity." The proposal has two basic elements. First, it contains provisions to reconstitute and compensate the trust that will bring the case to an end even if all parties do not agree with it Second, as an incentive to the mental health community for an early end to the litigation, it provides for several of the mental health program enhancement provisions of the 1991 legislation (chapter 66, SLA 1991) to take effect in return for a final disposition of the case by December 15, 1994. I. The history of the Weiss case. A. The Alaska Mental Health Enabling Act. Congress enacted the Alaska Mental Health Enabling Act, P.L. 84-830, 70 Stat. 709, in 1956 "[f]or the purpose of vesting in the Territory of Alaska authority comparable in scope to that of the States and other Territories of the United States in the field of mental health." Because the Territory of Alaska did not have the power to levy taxes to raise revenue, Congress gave the territory the right to select a million acres of land to generate funds to help pay for the territory's mental health program. Congress placed the following conditions on the land grant: All lands granted to the Territory of Alaska under this section, together with the income therefrom and the proceeds from any dispositions thereof, shall be administered by the Territory of Alaska as a public trust and such proceeds and income shall first be applied to meet the necessary expenses of the mental health program of Alaska. Such lands, income, and proceeds shall be managed and utilized in such manner as the Legislature of Alaska may provide. Such lands, together with any property acquired in exchange therefor or acquired out of the income or proceeds therefrom, may be sold, leased, mortgaged, exchanged, or otherwise disposed of in such manner as the Legislature of Alaska may provide, in order to obtain funds or other property to be invested, expended, or used by the Territory of Alaska. The authority of the Legislature of Alaska under this subsection shall be exercised in a manner compatible with the conditions and requirements imposed by other provisions of this Act. Several of these provisions are noteworthy. First, the land, the income from the land, and the proceeds from disposal of the land must be managed as a "public trust." But the mental health public trust thus established is quite different from the school and university public land trusts to which it is sometimes compared. School land may only be leased, but mental health land may be "sold, ..., exchanged, or otherwise disposed of" in addition to being leased. The proceeds from the sale of university land must be deposited in a permanent trust fund but the proceeds from dispositions of mental health land "shall first be applied" to fund mental health programs -- i.e., they must first be spent for programs and services -- and not be preserved in perpetuity. Finally, revenue from school and university land is dedicated exclusively to school and university purposes but income and proceeds from mental health land are not dedicated to mental health purposes and may be used for other public purposes once the mental health program has been funded. Also noteworthy is the last sentence of the subsection: The legislature's broad management authority is to be exercised "in a manner compatible with the conditions and requirements imposed by other sections of this Act" -- i.e., the maintenance of a mental health program -- and Alaska has maintained a mental health program since statehood. B. State administration of mental health land. The Alaska Mental Health Enabling Act land grant was confirmed to the state in section 6(k) of the Alaska Statehood Act, and mental health land was among the first selected by the state. A separate board was established to oversee management of the land and a record of income and proceeds was kept. Mental health expenditures greatly exceeded the revenues from the land. In 1978, legislation was enacted to remove mental health land from trust status by redesignating it as general grant land. This made it available for a number of uses that might not be permissible if the land had remained in trust status, including: - conveyance to private parties under all of the state's land disposal laws, including those that do not require payment of fair market value; - conveyance to municipalities with no monetary return to the state; - claim staking and other mineral leasing and entry; - placement in state parks, wildlife refuges, and other legislatively designated areas to be managed for those purposes and not to generate revenue; and - use by state agencies for state agency purposes. The 1978 redesignation legislation provided for the mental health trust to be compensated for the removal of the land from trust status by payment of one and one-half percent of all public land revenues into a permanent mental health trust fund from which only the earnings would be spent. The legislation made the payment of the one and one- half percent "subject to legislative appropriation of sufficient funds," however, and no money was ever appropriated. Both before and after the 1978 redesignation legislation, many transactions occurred with respect to mental health land, and thousands of acres have been conveyed to third parties, municipalities, Native corporations, and the university, been the subject of significant resource development expenditures, placed in parks and wildlife refuges, and used by state agencies. So, as of 1982, all of the original mental health land had been removed from trust status, the trust had not been given any direct compensation for that land, and much of the land had been conveyed out of state ownership or dedicated to non-trust uses. At the same time, however, the state had consistently maintained a mental health program as contemplated by Congress in the Alaska Mental Health Enabling Act. C. The Weiss litigation. In 1982, a class of plaintiffs needing mental health services sued the state, alleging that the 1978 redesignation legislation breached the federally created mental health land trust and was invalid. The state defended on the ground that the 1978 legislation was consistent with the purpose of the Enabling Act -- maintenance of a mental health program -- because the state had maintained such a program since statehood and spent far more on it than the lands had generated in proceeds and income. The superior court held that the 1978 redesignation legislation was a breach of the trust because the trust had not been compensated for the land removed from trust status, but that the remedy for the breach was not to invalidate the 1978 redesignation legislation but instead to order the state to compensate the trust for the fair market value of the land. In reaching those conclusions, the superior court relied on State v. University of Alaska, 624 P.2d 807 (Alaska 1981), in which the Alaska Supreme Court held (1) article VIII, section 2 of the Alaska Constitution gives the legislature the constitutional power to remove trust land from trust status, (2) removing land from trust status without compensating the trust for the fair market value of the land is a breach of trust, and (3) the proper remedy for such a breach is monetary compensation and not invalidation of the legislation removing the land from trust status. The state appealed the superior court's finding that the 1978 redesignation legislation was a breach of trust. The plaintiffs appealed the finding that the remedy was monetary compensation and not invalidation of the 1978 redesignation legislation. In State v. Weiss, 706 P.2d 681 (Alaska 1985), the Alaska Supreme Court affirmed the superior court's determination that the 1978 redesignation legislation was a breach of trust. It reversed the superior court's determination that the appropriate remedy was monetary compensation, however, and held that the 1978 legislation was invalid. It distinguished the University of Alaska case on the ground that one could infer a legislative intent to compensate the university trust for the inclusion of 5,040 acres of university land in Chugach State Park in that case, but it was not reasonable to infer a legislative intent to pay for the entire million acres of mental health land for which the Court believed there was no present use. The Supreme Court gave the superior court the following "guidance:" Those general grant lands which were once mental health lands will return to their former trust status. In the event exchanges have been made, those properties which can be traced to an exchange involving mental health lands will also be included in the trust. To the extent that former mental health lands have been sold since the date of conveyance the trust must be reimbursed for the fair market value at the time of sale. In calculating the total amount owed, the trial court should grant a set-off for mental health expenditures made by the state during the same period. In the event that expenditures exceeded the value of lands sold, the state need not furnish cash as part of the reconstitution. The goal is to restore the trust to its position just prior to the conveyance effected by the redesignation legislation.4/ _______________ 4/ Amicus raises questions regarding the title held by conveyances and bona fide purchasers of mental health lands. In view of our disposition of this case, we deem it unnecessary to address those issues at the present time. Several things are noteworthy about the Supreme Court's Weiss decision. First, the Court confirmed its earlier holding in the University of Alaska case that the legislature can remove land from trust status if the trust is compensated for the fair market value of the land. Second, state mental health expenditures may be set-off against amounts owed the trust as compensation, and no cash appropriation is necessary if expenditures exceed the amounts owed. Finally, the court found it unnecessary to address specific title questions in light of its other findings. D. Previous legislation to resolve the case. Legislation was passed in 1987, 1990, and 1991 to settle the case, but they all were rejected by the plaintiffs. Chapter 48, SLA 1987, would have reconstituted the mental health trust with state land in state parks, wildlife refuges, and other legislatively designated areas that was equal in value to the original mental health land grant. The state then would have rented that land from the trust for eight percent of its fair market value. While value was being determined, the state voluntarily agreed to allocate five percent of the state's unrestricted general fund annually to a mental health trust income account, which would first be used to fund the state's mental health program as a transitional provision. The chapter 48 approach ultimately failed when the interim mental health trust commission, a majority of which represented the plaintiffs, valued the original land grant at $2.243 billion. That figure greatly exceeded what the Department of Natural Resources believed the land was worth, and an impasse was declared. Chapter 210, SLA 1990, provided that the mental health trust consisted of all land in state parks, wildlife refuges, and other legislatively designated areas as of 1987 which the state would rent for six percent of the state's unrestricted general fund annually. The plaintiffs rejected chapter 210 as not providing enough income in light of the projected decline in state revenues, obtained a preliminary injunction to prevent the state from issuing patents to mental health land even when the contracts had been paid off and otherwise preventing the state from authorizing activities on mental health land, and filed with the state recorder notices that title to all original mental health land was in litigation. In the meantime, however, they have benefited significantly from the six percent allocation as mental health funding has increased in recent years despite the dramatic drop in state revenues, and have recently claimed that the trust is entitled to the six percent allocation under chapter 210 -- which they simultaneously profess to have rejected as inadequate! -- and have asked the trial court to order the state to repay to the trust amounts spent to reconstitute the trust and to pay their costs and attorney fees. Chapter 66, SLA 1991, proposed (1) reconstituting the trust with some original mental health land and exchanging other state land of equal value and equal revenue generating potential for original mental health land conveyed to third parties and municipalities or placed in state parks, wildlife refuges, and other legislatively designated areas, (2) creating a new Mental Health Trust Authority to manage the reconstituted land trust, to coordinate and oversee the state's mental health program, and to have significant influence over the expenditure of trust revenue, (3) making a number of improvements to the state's mental health program, and (4) phasing out the six percent annual allocation of the state's unrestricted general over a twelve year period. Chapter 66 was challenged by two of the four trust beneficiary groups, a coalition of environmental, fishing, and tourist industry groups, and two oil companies. Although the superior court found that the basic approach taken in chapter 66 was constitutional and otherwise legal, the court denied preliminary approval because there was no valid security for the state's performance of its obligations under chapter 66 and, under the settlement agreement between the parties, both the state and the settling plaintiffs could terminate the settlement even it was approved by the court. In its December 30, 1993, decision, however, the superior court made clear that "the adequacy of [mental health] funding and services is outside the scope of this case," that "[t]he only issues raised in this case have been whether the State breached the trust and what constitutes the proper remedy for the breach of trust," that the Alaska Mental Health Enabling Act "did not guarantee any particular level of services or full funding for Alaska's mental health needs," that there is "no evidence that Congress intended to provide funding for Alaska's mental health programs in perpetuity," and that the Alaska Supreme Court's Weiss decision "did not discuss any guaranteed income stream for the trust." As a consequence of the superior court's recent ruling and the detailed analysis of the original mental health land grant in preparation to implement chapter 66, all parties now agree that under scenario the mental health community will remain dependent on state general funds to pay for most of the state's mental health program. II. What is at risk. At this point, the state is at a crossroads. All previous attempts to provide a framework for resolving the case have been rejected by the plaintiffs or the court or both. The cloud of this litigation, we are told, has adversely affected land sales and resource development in Alaska, and the preliminary injunction continues to impede management of the land. Third parties' and municipalities' title to land is clouded, the plaintiffs have sued oil and coal companies that have leased mental health land, and the status of original mental health land in parks and wildlife refuges is unclear. All of this is contrary to the Alaska Constitution's requirement that the legislature "provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people." Not taking action at this time will leave things in the current unsettled state, a status quo that is detrimental to Alaska's economy and well-being. At the same time, not acting to change the current situation will adversely affect the mental health community's ability to obtain state general funds to pay for the state's mental health program. There is considerable discussion in these halls of the "backlash" against the mental health community because of its perceived inability or unwillingness to seek settlement on terms that are both fair to the beneficiaries of the mental health trust and the rest of the state. A failure to bring this case to a close will only make that problem worse. III. How this bill will end the litigation. It accordingly is time for this case to end, and the proposal before you will do that in a way that is fair to both the beneficiaries of the mental health trust and the public with interests in original mental health land. First, it will return certain original mental health land to trust status as the Supreme Court directed in its Weiss decision. It will at the same time, however, preserve all legal interests in those lands that exist on the effective date of the Act in recognition of the legislature's authority to sell, lease, exchange, or otherwise dispose of mental health land. The land returned to trust status will be managed by the Department of Natural Resources consistent with the requirements of the Alaska Mental Health Enabling Act under the provisions of state law governing other state land to the extent they are consistent with the Enabling Act under the Enabling Act's authorization for the legislature to provide for the administration of mental health land. Second, it will confirm and ratify the removal from trust status of certain other original mental health land, an exercise of the legislature's constitutional power to remove land from trust status, a power the Alaska Supreme Court found the legislature has in the University of Alaska case. It also will confirm and ratify all dispositions and uses of that land -- sales and other conveyances to private third parties, municipalities, Native corporations, and the University of Alaska; resource development and other leases, mining claims, and permits; inclusion in state parks wildlife refuges, and other legislatively designated areas; and uses by state agencies -- to fulfill the legislature's constitutional obligation to provide for state land to be managed for the maximum benefit of the people by validating all previously created interests in and actions taken with respect to that land. The trust will be compensated for the land removed from trust status by first exercising the legislature's power under the Alaska Mental Health Enabling Act to exchange certain other state land to the trust. The exchanged land will be managed by the Department of Natural Resources in the same way it will manage the original mental health land returned to trust status. To the extent there is additional state liability to the trust for the land removed from trust status, the bill identifies and claims the $1.3 billion in state mental health expenditures since 1978 for the purpose of the set- off to which the state is entitled under the Alaska Supreme Court's Weiss decision. In the unlikely event that is not sufficient, up to $100 million per year will be allocated from the general fund to a new "mental health trust income and proceeds account" in the general fund until the state's liability is satisfied. As provided in the Alaska Mental Health Enabling Act, those "proceeds" from the removal of the land from the trust can then be appropriated by the legislature to fund the state's mental health program. As you can see, the proposal has all the elements necessary to bring the case to an end, and the Department of Law will move vigorously to remove the preliminary injunction, free the third party hostages, and get the case dismissed as quickly as possible. IV. The incentive for an early dismissal. While the provisions of the proposal I have just described will bring the case to an end whether the plaintiffs in the Weiss case like them or not, there is no question that an earlier end to the case can be obtained with their consent. And the proposal includes a substantial incentive to them -- a premium, if you will -- for agreeing to an early dismissal. If the case is dismissed by December 15, 1994, with no appeals pending or possible, a number of the chapter 66 mental health program "enhancement" provisions will take effect, including: - Establishment of the Alaska Mental Health Trust Authority to oversee the state's mental health program and participate in the appropriation of trust revenues for mental health program purposes; - The separate process for appropriating trust revenues, under which the mental health community acting through the Trust Authority will have substantial control over the use of those monies; and - The improvements to the state's mental health program, including defining the beneficiaries of the mental health trust, establishing priorities for service delivery, coordinating the various programs, equalizing each of the boards representing the various beneficiary groups, etc. In addition, $225 million from the state's royalty share of the proceeds from oil and gas leases will be allocated to the trust in 15 annual installments of $15 million each. That money will be considered trust income which, through the special appropriation process for trust revenue, can be spent or saved for future use. We are continuing our discussions with all the parties to the litigation, and hope to reach agreement with them on all of the aspects of the proposal -- the land lists, the management language for the reconstituted trust land, and the "incentive" package. The key point, however, is that it is time to bring the mental health trust litigation to an end. This proposal will do that, and we urge your favorable consideration. Representative Martin expressed concern that the Department of Natural Resources did not manage university lands well. HARRY A. NOAH, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES assured him that the Department would handle the mental health lands differently. Commissioner Noah provided members with a chart detailing the schedule of events over the last months (Attachment 3). He reviewed the chart. He reiterated that Judge Greene denied the preliminary motion for approval on December 15, 1993. (Tape Change, HFC 94-83, Side 1) The state started contacting parties concerned with the litigation in mid-January to begin discussions. By February 10, 1994 public notice was given identifying lands nominated by the settling plaintiffs for use as proposed substitute lands. The state gave a written proposal to each of the parties involved. Commissioner Noah emphasized that the mental health land problem can be solved through resolution or settlement. He defined a settlement as an agreement by all parties. He noted that HB 201 would be a legislative solution to resolve the issue in terms of the Mental Health Lands Trust. He suggested that a settlement would be preferred to a resolution. He emphasized that no action by the legislature, absent a settlement, would result in gridlock. Commissioner Noah emphasized that the court and plaintiffs' have agreed that the land trust would not have been able to fully fund the mental health programs. He anticipated that the legislature will continue to fund mental health programs. He observed that the effort is focused on curing the breach. He maintained that it is in the best interest of all parties to reach a settlement. He noted that the settlement must be reviewed by the courts since it is the result of a class action lawsuit. Commissioner Noah reviewed the concerns of the involved parties. He noted that some mental health lawyers want to reconstruct the trust as close as possible to its original form, have the trust authority manage the lands and determine how money is spent. Other lawyers want assurance that the Trust will have some cash flow. They are also concerned over the administrative cost of managing trust lands. Commissioner Noah observed that environmental groups do not want additional land to go into the Trust. They want some of the original mental health trust land to come out of the Trust. He maintained that environmental grounds want the Department of Natural Resources to manage the lands under title 38. Commissioner Noah noted that resource development groups do not want additional lands to go into the trust and also want lands to be managed by the Department of Natural Resources. Commissioner Noah stressed that municipalities want to maintain mental health lands they received from the state. They want to complete their municipal land entitlement selection process. He asserted that municipalities want to limit the amount of lands currently selected by the municipalities from going into the trust. Commissioner Noah observed that third party land owners just want clear title to the lands they own. Commissioner Noah suggested solutions to the concerns of each of the concerned parties. He noted that to address the concerns of the mental health lawyers the state has agreed to reconstruct the trust, include substituted lands proposed by the group, and maintain those provisions in Chapter 66 which set up the Trust. The state has also offered cash as part of the settlement. The trust authority will stay in place and the Department of Natural Resources has agreed to manage the trust and address administrative costs. Commissioner Noah remarked that to address concerns of environmental groups, the state will use the current regulatory scheme to the extent possible under the Mental Health Enabling Act. Commissioner Noah noted that to allay the concerns of resource development groups, the state will eliminate from negotiation for the land list, most large projects currently permitted. Commissioner Noah observed that to confront the concerns of municipalities the state has offered to extend land selection for two years. Titles would be cleared to allow current selections to be finalized. He added that the legislation should allow third party land owners to have clear title to their land. Commissioner Noah reviewed HB 201. He noted that the legislation contains findings. He observed that the purpose of the finding section is to outline to the court the legislature's view of the issue. He commented that the findings hold that the legislature has the power to remove land from trust status if the trust is compensated for the land. He maintained that substitution of lands is a key component of the legislation. Commissioner Noah discussed the Trust Authority. The Trust Authority will be a public corporation of the state in the Department of Revenue. The Trust will ensure that an integrated comprehensive mental health program is developed. The Trust will be composed of seven members appointed by the governor based on their ability in financial management and investment or services to the beneficiaries of the trust. The trustees will be responsible for managing the cash assets of the Trust, coordinating state agencies providing services to the beneficiaries of the Trust, and making recommendations to the governor and the legislature for appropriations of both trust revenue and general funds to pay for mental health programs. Commissioner Noah noted that the legislation provides that the governor and legislature must accept the authority's recommendations for appropriations of trust revenues unless they make findings explaining the reasons for any changes and provide the basis for determining that the appropriations meet the needs of the beneficiaries of the Trust. In addition, the Trust Authority will be responsible for the policy making on the use and disposition of lands and resources associated with the designated Mental Health Trust Land. Commissioner Noah examined the monetary payments proposed by the legislation. He noted that the state would pay $15.0 million per year for 15 years. Commissioner Noah commented on the intent to reconstruct the Trust. The Trust would be reconstructed with approximately 500,000 acres of original trust lands and 400,000 acres of proposed substitute lands. He emphasized that this portion of the legislative solution is undergoing further discussions with the parties involved. Commissioner Noah pointed out that the Department of Natural Resources will continue to manage the trust lands under current statutes and regulations which are consistent with the Mental Health Enabling Act. He noted that all existing rights would be maintained on the lands. Instead of conveying the lands to the Trust the lands would be redesignated. Reconveyance would be more costly. He discussed the selection of lands. Representative Grussendorf expressed concern that two years may not be long enough for municipalities to approve land selections. Commissioner Noah assured him that public comment has been extensive and that municipalities want to resolve the issue. Representative Brown referred to section 20, additional compensation. She noted that section 16, reconstituted lands, would not take place until after the legislature's adjournment. Commissioner Noah observed that the intent is to allow closure to take place without further action. The provisions would allow action if the Supreme Court declares that additional compensation is needed. Co-Chair MacLean asked if a sunset date is needed. Commissioner Noah pointed out that if by December 16, 1994, the case is not dismissed that a number of the provisions in Chapter 66 would be appealed. Representative Davies asked if there is a time limit on the offer to municipalities to reconvey land. RON SWANSON, DIRECTOR, DIVISION OF LANDS, DEPARTMENT OF NATURAL RESOURCES explained that the department has met with all the municipalities. Representative Davies suggested that additional language is needed to clarify that there is not an open ended offer to the municipalities to reconvey lands. Representative Davies referred to section 16. He asked about the description of lands on the lands list. Commissioner Noah stressed that the Department intends to present the legislature with a specific land list. Co-Chair MacLean asked for further explanation of section 4. Commissioner Noah explained that the Department of Natural Resources will manage lands and that the Alaska Permanent Fund Corporation will manage the monetary land assets. TOM KOESTER, OUTSIDE COUNSEL, DEPARTMENT OF LAW explained that provisions for management by the Alaska Permanent Fund Corporation contained in Chapter 66 were negotiated and agreed to by the Corporation in 1991. Representative Martin expressed concern that section 10 would provide for on going general fund appropriations. Co- Chair Larson replied that revenues from the land trust alone are not enough to meet mental health needs. He maintained that the settlement is not dependent upon the Trust being self sufficient. He asserted that mental health funding will remain a state obligation. He stressed that the Mental Health Enabling Act intended that the state general fund would continue to supplement mental health trust money. Representative Martin expressed concern that administrative activities not be duplicated. He suggested that the Department of Natural Resources not manage trust lands. BRUCE BOTELHO, ATTORNEY GENERAL, DEPARTMENT OF LAW emphasized that the settlement will combine legislative and court required solutions. He stressed that environmentalists and resource development concerns both agree to management by the Department of Natural Resources. HB 201 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 3:40 p.m.