HOUSE SPECIAL COMMITTEE ON WORLD TRADE AND STATE/FEDERAL RELATIONS April 20, 1995 5:10 p.m. MEMBERS PRESENT Representative Ramona Barnes, Chairman Representative Gary Davis Representative Bill Williams Representative Gene Kubina MEMBERS ABSENT Representative Gail Phillips, Vice Chairman Representative Eldon Mulder Representative Jerry Mackie COMMITTEE CALENDAR * HJR 39: Relating to the Northern Sea Route. PASSED OUT OF COMMITTEE * HJR 31: Urging the United States Congress to consider and enact legislation to revise the Internal Revenue Service Code to levy a flat tax. PASSED OUT OF COMMITTEE * HJR 41: Supporting an exemption from the Jones Act for bulk commodities, such as coal and coal derived fuels, produced in Alaska. PASSED OUT OF COMMITTEE (* First public hearing) WITNESS REGISTER ORSON P. SMITH, PE, PhD. Coastal Engineer/Oceanographer Civil Works Branch United States Army Corps of Engineers Post Office Box 898 Anchorage, Alaska 99506-0898 Telephone: 753-2632 POSITION STATEMENT: Supported HJR 39 PAUL FUHS, Self 10652 Portar Lane Juneau, Alaska 99801 Telephone: 790-3030 POSITION STATEMENT: Supported HJR 39 REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature State Capitol, Room 102 Juneau, Alaska 99801-1182 Telephone: 645-3743 POSITION STATEMENT: Offered sponsor statement to HJR 31 JACK PHELPS, Legislative Assistant Representative Bill Williams Alaska State Legislature State Capitol, Room 128 Juneau, Alaska 99801-1182 Telephone: 465-3424 POSITION STATEMENT: Provided position statement for HJR 41 THOMAS CRAFFORD, Manager Minerals and Coal Cook Inlet Region, Inc. 2525 C Street, Suite 500 Anchorage, Alaska 99503 Telephone: 274-8638 POSITION STATEMENT: Supported HJR 41 PREVIOUS ACTION  BILL: HJR 39 SHORT TITLE: NORTHERN SEA ROUTE DEVELOPMENT SPONSOR(S): SP CMTE WORLD TRADE & ST/FED RELATIONS JRN-DATE JRN-PG ACTION 03/27/95 932 (H) READ THE FIRST TIME - REFERRAL(S) 03/27/95 932 (H) WTR, TRANSPORTATION 04/20/95 (H) WTR AT 05:00 PM CAPITOL 408  BILL: HJR 31 SHORT TITLE: ENDORSE FEDERAL FLAT INCOME TAX SPONSOR(S): REPRESENTATIVE(S) JAMES,Kott JRN-DATE JRN-PG ACTION 02/15/95 369 (H) READ THE FIRST TIME - REFERRAL(S) 02/15/95 369 (H) FINANCE 02/27/95 511 (H) COSPONSOR(S): KOTT 03/15/95 756 (H) WTR REFERRAL ADDED 04/20/95 (H) WTR AT 05:00 PM CAPITOL 408  BILL: HJR 41 SHORT TITLE: JONES ACT EXEMPTION FOR BULK COMMODITIES SPONSOR(S): REPRESENTATIVE(S) WILLIAMS,Bunde,Kott JRN-DATE JRN-PG ACTION 04/06/95 1051 (H) READ THE FIRST TIME - REFERRAL(S) 04/06/95 1051 (H) WTR, TRANSPORTATION 04/11/95 1270 (H) COSPONSOR(S): KOTT 04/20/95 (H) WTR AT 05:00 PM CAPITOL 408 ACTION NARRATIVE There is no tape available due to technical difficulties. The meeting of the House Special Committee on World Trade and State/Federal Relations was called to order by Chairman Ramona Barnes at 5:10 p.m. Members present at the call to order were Representatives Barnes, Davis and Kubina. Members absent were Representatives Phillips, Mulder, Williams and Mackie. CHAIRMAN RAMONA BARNES stated that there was not a quorum present, but would conduct the meeting until such time as a quorum could be satisfied. HJR 39 - NORTHERN SEA ROUTE DEVELOPMENT DR. ORSON P. SMITH, Project Manager for the study of the Northern Sea Route for the United States Army Corps of Engineers, testified via teleconference from Anchorage in support of HJR 39, reiterating much of his testimony from a previous World Trade State/Federal Committee meeting (3/23/95). Dr. Smith urged passage of the Resolution. PAUL FUHS, spoke in favor of HJR 39, stating that he had no changes to make to the legislation. He hoped the legislature would be able to act on the Resolution this session. REPRESENTATIVE GARY DAVIS informed the committee that he would confer with his committee to waive HJR 39 from the House Transportation Committee. REPRESENTATIVE BILL WILLIAMS arrived at 5:17 p.m. REPRESENTATIVE RAMONA BARNES noted that with Representative Williams presence, a quorum had been satisfied. REPRESENTATIVE GENE KUBINA made a motion to move HJR 39 out of committee with individual recommendations. CHAIRMAN BARNES asked if there were any objections. Hearing none, the motion passed out of the Special Committee on World Trade and State/Federal Relations. HJR 31 - ENDORSE FEDERAL FLAT INCOME TAX REPRESENTATIVE JEANNETTE JAMES, sponsor of the Resolution, stated the current federal Internal Revenue Code is characterized by loopholes, exceptions, exemptions, complicated schedules, and targeted tax breaks, which makes it difficult for the taxpayer to calculate the tax obligation due. Thus, there is a real need to replace the current system with one that is fairer and simpler. This Resolution calls for the United States Congress to enact legislation replacing the current IRS tax code with a fixed-rate or "flat" tax. This will create a tax system that is less difficult to comply with and tax all income once. A "flat" tax would also exclude from the definition of taxable income the earnings from personal and business savings, encouraging individuals and families to save and invest a portion of their incomes. REPRESENTATIVE KUBINA asked if this would exempt all savings from taxation. A scenario would be that people who earn millions each year could place huge sums of money into personal savings and thus escape being taxed. REPRESENTATIVE JAMES said that it was the intent of the measure to help the struggling and average income families who had scrimped and saved all year long and then be penalized by taxes. The current system does not work. She added that the "devil of this Resolution is in the details," referring to the fact that the millionaires and billionaires of this country would find ways around this measure. REPRESENTATIVE KUBINA suggested that deleting lines 14-16 on page 1, would tighten up the language and intent of the Resolution. REPRESENTATIVE JAMES supported the suggested change. REPRESENTATIVE DAVIS suggested amending HJR 39 by changing "would" on line 14, page 1 to "could". REPRESENTATIVE JAMES said she would support any change that would keep in tact where individuals would not have to pay a "penalty" for savings. REPRESENTATIVE KUBINA made a motion to delete lines 14-16. CHAIRMAN BARNES asked if there were any objections. Hearing none, the motion passed. REPRESENTATIVE DAVIS asked what percent of Internal Revenue Service would be eliminated by this Resolution. REPRESENTATIVE JAMES was not certain of the total effect the Internal Revenue Service would feel by this measure. REPRESENTATIVE DAVIS made a motion to move CSHJR 31(WTR) out of committee with individual recommendations. CHAIRMAN BARNES asked if there were any objections. Hearing none, the motion passed. HJR 41 - JONES ACT EXEMPTION FOR BULK COMMODITIES JACK PHELPS, Legislative Assistant to Representative Bill Williams, stated that HJR 41 asks Congress to carve out of the Jones Act an exemption for Alaska bulk commodities, thus allowing Alaska coal suppliers to respond to new opportunities in the world market for coal. There are currently no United States manufactured vessels capable of servicing large scale movements of Alaska coal. Therefore, a Jones Act exemption is an important part of any effort to market Alaska coal, especially since the effort is likely to include markets in the western United States and Hawaii. MR. PHELPS said that Alaska is the only state that is discriminated against by the Jones Act. Under current conditions, Alaska suppliers of coal will be noncompetitive with Asian coal shipments to the United States ports, which harms both Alaska and the United States balance of trade. MR. PHELPS added that HJR 41 is consistent with state policy set forth in Title 44 which requires the Governor to use "best efforts and all available means to persuade the United States Congress to repeal" the Jones Act. THOMAS CRAFFORD, Manager, Minerals and Coal for Cook Inlet Region, Inc., testified in support of HJR 41 and that he's always looking into safe methods for shipping coal. CHAIRMAN BARNES asked Mr. Crafford if he was familiar with the Healy Coal Project. She said that a Hawaii market would be very advantageous for Alaska. MR. CRAFFORD responded by saying that he knew of the project, but was not totally familiar with it. REPRESENTATIVE DAVIS asked Mr. Crafford about the status of the Beluga coal fields. MR. CRAFFORD stated that no one had stepped forward to work these fields. Coal is a much different commodity in terms of handling and shipping. It's not like oil, where if a spill would occur, it would leave a major impact on the environment. REPRESENTATIVE DAVIS made a motion to pass HJR 41 out of committee with individual recommendations. CHAIRMAN BARNES asked if there were any objections. Hearing none, the motion passed. ADJOURNMENT There being no further business to come before the House Special Committee on World Trade and State/Federal Relations, CHAIRMAN BARNES adjourned the meeting at 5:45 p.m.