MINUTES SENATE FINANCE COMMITTEE 16 January 1997 9:05 a.m. TAPES SFC-97, #1, Side 1 (000 - 588) Side 1 (588 - 323) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 9:05 a.m. PRESENT In addition to Co-chair Pearce, Senators Donley, Torgerson, Parnell and Adams were present. Co-chairman Sharp was excused from the meeting and Senator Phillips arrived shortly thereafter. ALSO ATTENDING: Senator Gary Wilken; Wilson Condon, Commissioner, Department of Revenue; Dr. Charles Logsdon, Chief Petroleum Economist, Division of Oil and Gas Audit, Department of Revenue; Deborah Vogt, Deputy Commissioner, Department of Revenue; Chris Miller, Chief, Research and Analysis, Department of Labor; John Boucher, Labor Economist, Department of Labor; Jeff Hadland, Economist, Department of Labor; Dwight Perkins, Special Assistant to the Commissioner, Department of Labor; Mike Greany, Director, Legislative Finance Division; and aides to committee members and other members of the legislature. SUMMARY INFORMATION STATE REVENUE UPDATE by the DEPARTMENT OF REVENUE Upon convening the meeting Co-chair Pearce invited representatives of the Departments of Labor and Revenue to join members at the committee table and commence presentation of updated revenue projections. Presenting testimony for the Department of Labor were Chris Miller, John Boucher and Jeff Hadland. Presenting testimony for the Department of Revenue were Commissioner Wilson Condon; Dr. Charles Logsdon; and Deborah Vogt, Deputy Commissioner. Co-chair Pearce welcomed the committee members and advised that the purpose of this meeting was to have a revenue forecast presentation by both Departments of Labor and Revenue. The Department of Labor presented an overview of the Alaskan economy and the Department of Revenue presented the current year projections along with highlights that were non-oil and gas revenue related. Mr. John Boucher gave a brief sketch of the current status of the State of Alaska's economy. He referred to the department's handout (see attached). He said recent trends seen in Alaska wage and salary job growth were a leading economic indicator. Currently the job count showed the economy was continuing to move forward; although the state was currently in a period of slower job growth than traditionally seen. The size of the economy was about 264,000 wage and salary jobs. That excluded some sectors of the economy and that number had continued to grow since 1995. Even though relatively slow job growth has been seen as compared to historic levels that understates the constant churning going on in Alaska's economy. The past year the department had tracked statistically new hires. A new hire was an individual who, in their most recent period of employment, had a job with a new employer. They are tracked back four quarters and a new hire was an individual that had a new job to them. Each new hire represented an opportunity for an unemployed Alaskan to join the work force. It showed that seasonality has and will remain a major factor in the ability for Alaskans to join the labor force. The role of non-residents in the economy remained fairly significant. In 1995 there were nearly 80,000 individuals out of 350,000 that worked in Alaska that were considered non-residents, using the permanent fund dividend (either application filed or the previous years dividend check) as an indicator of residency. Those individuals earned $923 million in Alaska and that represented a significant potential leakage from the State's economy that could potentially be captured either through wages that would be spent in Alaska or Alaskans joining the labor force in place of those non-residents. He referred to where Alaskans worked in 1990 and 1996. This helped illustrate where Alaska's economy ass currently headed. He explained that oil and gas industry was included in the mining section. He said that the Department of Labor's current classification did not allow tourism jobs to be identified separately from other industry jobs. They are known as an important factor in the transportation sector, under entrepreneurs and under services and trade sectors of our economy. Aleyeska Pipeline was currently counted in the transportation industries as a support for the oil sector. In the last six years certain sectors of the economy have grown in terms of employment opportunities and others shrunk. Seafood and timber manufacturing industries have grown smaller when it comes to their share of the pie. The military, federal government, government of all types and the oil and gas industry have also become smaller parts of the pie. The industries that have more or less displaced those have been the services sector, construction sector and retail trade. An individual may work for a company and then contract out, essentially moving to a different type of company performing the same job. These were the trends seen during the 1990's with the rise of the trade sector. He referred to the unemployment rate and said that there had been relatively slow job growth during the last several years. The unusual thing, looking historically, is relatively low unemployment rates. This year is the fourth year in a row that Alaska's unemployment rate was under 8%. It is not unusual in previous years for the annual unemployment rate to have been from 9-1/2% to 10-1/2%. Low unemployment was an unusual situation and at the same time basic industries were shrinking. The national economy was much healthier now and individuals that would normally have moved to Alaska for job opportunities were staying closer to home. Also, there had been some outmigration in the State due to military base closures and larger layoffs. There was a smaller pool of workers out there competing for the available job opportunities and one of the results had been a lower unemployment rate. He then moved on to looking at Alaska in an historical perspective. There had been pretty much sustained growth since statehood. There were many reasons for this but generally there had been a slow-down in the rate of growth over time. He then referred to what the expectations for the future were. As the economy has grown the growth rates seen in the '60's, '70's and early '80's were getting much more difficult to duplicate. The economy was beginning to look more like the national economy. With that came a different set of expectations. It was expected within the next five to ten years the growth would converge more with national trends that diverge. In talking about the last several years of the economy growth rates for 1995 and 1996 are relatively slow when the overall period of the 1990's was looked at. Presently growth is less than one percent per year. There were a number of causes for this, but primarily it was because of significant economic setbacks such as oil industry cutbacks. The timber industry and seafood processing sector have been continuing to struggle and they have been accompanied by downsizing on the federal government side and the military side. There have been significant dampers on potential job growth. The economy still managed to show some job growth despite these factors. Slower growth was going to be a factor in the future. Some trends were probably going to continue. It was not expected the services and trade sectors to continue carrying Alaska's economy. Referring to the last page of the handout from one day to the next one could probably move some of the items from the bear to the bull column and from the bull to the bear column. However, things were dynamic and could change. Some positives now were new oil investments and potential new oil finds coming on line which should be positive for employment, additional hardrock mining activity and anticipated visitor industry. Anchorage and Fairbanks looked to continue to benefit in growth in Pacific Rim trade. There was continued growth in the permanent fund and also the cost of doing business had continued to be favourable in comparison to other locations in the country. There had been no tremendous wage pressures and there was no difference between Alaska wages and the rest of the country. In employing residents the more income captured in the local economy the more vital those local economies were going to be. On the downside, it was anticipated that the government sector in Alaska was going to continue shrinking both on the military, federal and the state side. There did not appear to be any reversal in the timber industry right now. There was the closure of the Ketchikan Pulp Mill on the horizon, salmon markets continuing to struggle and all were aware of what the long term outlook of Prudhoe Bay was. Senator Pearce asked about British Petroleum announcing at the end of the year they would be making fairly significant investments in exploration but at the same time announcing their plans to downsize their present work force both in the actual Prudhoe Bay field and the Anchorage headquarters and if there had been enough information to codify what that really meant in terms of jobs for Alaskans. Mr. Boucher indicated that he did not think that had gone into effect yet, however, new technologies always seemed to be a duel-edged sword. Production may be increased but that may mean less jobs. That is a trend occurring in every industry. Senator Pearce asked if there was a feel for the Anchorage support jobs that would be more administrative and if these were affected by the downsizing. She wanted to be sure they were not moving the accounting section to Cleveland, for instance. Mr. Boucher said he had not made an assessment on this matter. Senator Adams referred to the chart reflecting unemployment below 8% and asked that he explain how that particular average had been arrived at. Were people who had to apply for jobs placed in there? Mr. Boucher explained that it was the result of a regression equation which took into account the trend and unemployment claims and the result of a survey that was conducted house-to-house. It was not a perfect method in terms of measuring unemployment, particularly in rural Alaska. Senator Adams said the chart was inaccurate because it was not calculated right. Welfare roles need to be looked at. It was wonderful to tell the people, even in the Governor's speech, Alaskans were below for unemployment, which is not true. It is much higher because an accurate count in rural Alaska was not being done. Mr. Boucher said he was aware of the situation and they were trying to make strides in the shortcomings of the measurements of unemployment in Alaska. It must be considered that the definition of unemployment is someone looking for a job during the past four weeks and that is where most of rural Alaskans fall out of the picture. Senator Adams indicated that in most parts of rural Alaska there were not jobs to look for. That is why the chart was inaccurate. Wilson Condon, Commissioner of Revenue and Chuck Logsdon, Chief Petroleum Economist were invited to join the committee. Mr. Condon referred to summary tables from their autumn 1996 revenue forecast. This summarized revenues actually received in FY 1996 and their projections as of 1 November for FY '97, '98 and '99. Mr. Chuck Logsdon continued the presentation referring to oil prices and where they were and where they were going. He referred specifically to a monthly publication that they did because the oil price situation was fairly dynamic and they liked to keep everyone updated as to the effective movements of oil prices and current year estimates. The main point of interest was with prices as they were presently they were running at $100 million above the November 1 projection. He addressed the chart indicating "ANS oil prices", 1985 to 2010. The first thing noted was the 1985 - 1987 period being a downward trend in oil prices. It should be noted in the forecast that in the middle was the price bubble was being experienced now. Looking further the nominal dollar price drifted up towards $25 while the real dollar price fell and stayed level at about $16/barrel. They felt this was no different from the long term forecasts that have been made in the last few years and not all that different from what others who engage in this type of speculation felt was likely to occur. It is further thought that this trend will stabilize at around the $16/barrel. On the supply side, technology has proven over the years to be a very significant impactor on the supply side of any, even depletable, resource. In the case of petroleum that meant liquid fossil fuels. As technology advanced not only are more liquid hydrocarbons being discovered in the ground more of the liquid hydrocarbons that are in the ground are being produced such as the North Slope. Over time, technology allowed one to produce things that were not quite as liquid as others and there was a lot of fossil fuel in the ground, whether low cost liquid hydrocarbons like the oil in Saudia Arabia or the somewhat more difficult to produce stuff in abundance on the North Slope. There are literally trillions and trillions of barrels. Technology advances will continue to make the supply more available. At the same time on the demand side, there were a number of factors that suggested oil prices would tend to trend around the $16/barrel level. It was known that technology also improved the efficiency of the energy consuming capitals stock. The economic trends right now would suggest that the West would probably be using at a much lower rate than those who do things like telecommunicate and spend more time on the Internet than they do on the road. The developing countries would also be growing fairly rapidly and their increased use of fossil fuels would also begin to grow. One of the big drivers on the demand side was population growth and as the world economies mature the population growth rates begin to come down. That would also put a lid on the demand side. Finally the greening of the global economy. If it became an overriding policy goal to impose taxes or regulate fossil fuel consumption for reasons such as global warming, those are also factors which would limit demand over the long haul. These were not necessarily original thoughts but a compilation of what many people who are engaged in this sort of speculation about long term oil prices generally feel is going to be the case. Looking at the price bubble, there was a very positive influence on the oil revenues and revenue picture in general. He referred to early 1996 when it became apparent demand was outrunning supply. Crude inventories and petroleum product inventories began to fall quite rapidly. As a result price moved up fairly rapidly; by March it was over $20/barrel. During that period of time there was concern by the refineries and the purchases of oil that it was a temporary phenomena because Iraq was close to getting the embargo lifted totally and there would be the export of humanitarian oil. Also the oil fields in the North Sea were coming on at a fairly rapid pace. It was generally felt in the industry that oil prices would be coming down. As a result inventories were kept quite lean, while at the same time demand continued to be quite strong, resulting in oil prices staying relatively high. What happened in the fall was that Iraq was going to export and then they never showed up on the market. The North Sea additions to production did not occur quite as robustly as was expected and yet the global economy, which was called the core driver of demand, remained very strong. Therefore the winter period came in with a lean inventory. With lean inventories and a series of winter storms and extraordinary cold in January North Slope crude was $24/barrel. The weather bureau just announced that this winter has been the coldest in the midwest. However, it is believed that the bubble is going to burst. The graph showed the price coming down in about April. First, seasonal demand will go away; second, higher energy costs would show up as a damper on global economic growth; and third, there would be a fairly significant non- OPEC production response to the higher oil prices. As a case study, Alaska's North Slope technological innovations that were being pioneered would inevitably spread world wide and with higher prices there would be more wells drilled and more production showing up. Seasonal demand would go away, core demand would weaken and there would be a big surge on the supply side with the price coming back down. He referred to the outlook for fiscal year '96, '97, and '98 as the oil price went up. For '97 the estimates are over 2- 1/2 billion barrels and well over 2 billion in '98 compared to the spring forecast. The '96 level due to last spring's higher oil prices was booked in at 50 million over what had been predicted. That was the value of the bubble. He concluded by referring to the futures market and implied ANS prices. He cautioned those looking at the futures price saying it was probably a pretty good measure of value in the next few months because there was a great deal of buying and selling and futures contracts for delivery several months out. The futures market was a measure of market expectation or downside risk because the futures price was lower farther out into the future. He compared the February 1997 price for ANS at $23.51 with the futures price for implied ANS price in February 1998 of $18.50. Essentially the futures market is down about $5. The fall forecast for '98 was $17.71/barrel. The current spot price is $24.35/barrel. The bottom line was to enjoy a nice little revenue injection due to the price bubble but as it stands most of the things looked at today suggest the bubble will burst and would fall under the forecast of $16/barrel. Senator Pearce asked what the current projections for fiscal year '97 revenues were and Mr. Logsdon said $21.63 was expected out to the penny. That is essentially based on using futures prices for the next four months. That would be a surplus just over $100 million or $2-1/2 billion of general fund unrestricted revenue. In terms of the fall forecast we are about $100 million ahead or over the '97 budget. Senator Pearce referred to the revenue chart showing the January 1997 forecast for revenues in fiscal year '98 has increased over '97 and asked what the new number would be. Mr. Logsdon said this was based on a price that would be about $1.50/barrel above so that would be roughly $19.00/barrel. That would be a futures market assessment. Senator Adams asked about contracts prices with the state and how did they lag behind the actual prices. Mr. Logsdon said a major attempt had been made to get the prices on a contemporary basis. The prices were fairly close because the state required the companies to pay their production tax using spot price. The tax return was going to be due a month after the month of production so there were some timing effects on when the check would be received. There were also some timing effects to the extent that they may be delivering the oil in a different month than produced so there could be some minor timing differences. Basically on the royalty and severance tax side the state was currently being paid spot prices. Commissioner Condon added that when spot price quotes are seen for West Texas Intermediate or ANS in the daily paper, for the most part those are for deliveries that are to occur next month. A spot price quoted today, mid-January, would be a quote for a delivery to occur in February. Senator Adams referred to revenue forecasts for FY '97 at $21.63. Some rely on Cambridge Energy at $22.00 and that is a $0.37 difference. The FY '98 estimate is $17.71. Cambridge is $19.50 and that is $1.79 difference. Should the committee be looking at the Cambridge estimate or taking an average between the two for actuality? Are there different philosophies because of an act of God such as cold weather or perhaps the mind game that is going on with Iraq? Which estimate should the committee be looking at? Mr. Logsdon recommended the futures market projection, realizing another short run assessment for fiscal years '98 and '99 would be made probably for release around the first of April. Senator Adams referred to the $100 million surplus and Mr. Logsdon said for fiscal year '97 that was the current estimate. Senator Adams said that with this money we were paying back the constitutional budget reserve money that we had borrowed. Mr. Logsdon said that was what he understood. Senator Adams said that pot of money in the constitutional budget reserve was about $3.1 billion. He asked how a dollar change was measured in the average price. Mr. Logsdon said the current rule of thumb was $100 million. That was driven by the current rate of production of about 1.4 million/barrel/day. Commissioner Condon turned to projected production volumes which was the other major variable in terms of oil revenue. The question that a number of folks have asked was about the recent announcements by ARCO and BP, their commitment to make additional investments in Alaska and would that change in any way the revenue forecast. He referred to the next graph showing the dotted line being the fall '96 forecast and the solid line reflecting what productions volumes would be if the additional investments announced by ARCO and BP bore the fruit they hoped it would bear. In the short term that would not make any difference but beginning in FY '99 if those investments work the way companies hoped then there would be an increase in production over what was previously forecast of 25,000 barrels/day. That increases out to the year 2005 when the increase production volume would be 300,000 barrels/day. That would take effect if those investments worked out as well as those companies hoped. In terms of revenue that would mean $25,000,000/year in additional revenue. In the year 2005, remembering that much of the new production is going to be what is referred to as marginal fields where the tax rate as a consequence of the way the economic limit factor works, will not be at the same level as the tax rate that applies to the production currently coming from the Prudhoe Bay and Kuparuk River fields. That was believed to be the effect of additional investments that ARCO and BP announced they are going to be if the investments work as they have projected. Another question is the Cambridge Energy Research associates projection of production that was put before the Legislature two years ago. The next graphic was a reflection of additions to the annual general fund revenue that would result from the production increases not yet reflected in any revenue forecasts. When looked at what it would mean for overall State revenue with the current tax arrangements that are on the books and the other revenues that would come into the State given the revenue raising measures that it employs what would be seen is nominal dollars coming into the general fund for the seven year period from FY '99 through 2005, right around $1.9 billion, a fairly level annual revenue during that period of time. What the additional investments and production would mean, if they bore fruit, was that for this seven year period there would not be a nominal decline in State revenue. It would hold pretty steady right around $1.9 billion. Senator Pearce asked if the gas pipeline was in the projections and Commissioner Condon said it was not. The gas pipeline would not come on stream and be productive revenue before FY 2005. Senator Adams said in the Budget and Audit meeting earlier the Senator from Chugach brought up the effects of two new legislations that were passed were incentives on oil companies of the North Slope and asked what was the amount of tax breaks given to encourage the new production. Commissioner Condon said none of the taxes had been changed over the last couple of years. There have been some modifications made with respect to royalty arrangements with respect to the North Star field and arrangements were made in the previous year providing the possibility for other royalty changes but none have occurred. The basic fiscal arrangements pertinent to all this projected production save North Star have remained exactly as they were prior to two years ago. Obviously the perception of the industry, the investment climate and the desirability of Alaska as a place to do business, members of the industry would say have changed in terms of willingness of the government to search for ways where it believed the public and private interests of the oil companies were common. The last couple of years, both from the legislative branch and the executive branch perspective there had been an effect, but we have not sacrificed and actually gained revenue. Senator Adams asked if the new legislation and fiscal arrangement were good arrangements. The State of Alaska was not giving too much of their resources away and Commissioner Condon said he did not believe so. Commissioner Condon continued regarding corporate income taxes and what was seen on the next page (of the handout) was a table that reflected the tax liabilities or the returns that were filed in FY '96. In looking carefully back at the front page in the handout, there was reflected corporate income tax of $227 million, $173 million of which is from the corporate income tax as applied to oil and gas companies. He explained the difference between $170 million and $96 million. $96 million reflected the amounts that showed up on tax returns when they were filed. Tax returns filed in FY '96 related to money that was for the most part paid to the State in FY '95 because tax payers must file on a quarterly basis and then for the most part they file their tax returns on September 15 which comes after the end of the fiscal year. That reflected the difference. Information received from the tax returns filed in FY '96 one would observe that 94 taxpayers pay 92% of the corporate income tax that was paid to the State of Alaska. There were 1,000 corporations that pay $1,000 or more and if the cut-off line was $100 there are 2,000 corporations. Senator Pearce asked how oil and gas corporations were defined and if they had to be producers or would MAPCO who did not produce oil in Alaska come under the same category. Deborah Vogt, Deputy Commissioner, Department of Revenue was invited to join the committee. She said AS 43.20.072, which applied to oil and gas corporations as did old separate accountings to a tax payer who is either a producer or a pipeline transporter of oil or gas. Senator Pearce noted there are 37 companies that are either pipeline transporters or producers. Ms. Vogt concurred. Commissioner Condon said that if the numbers were looked at closely one would see there was rather a dramatic increase in projected revenue and actual revenue received during FY '96 from what would have been received in FY '95. This $96 million figure for oil and gas companies clearly reflected the fact worldwide oil and gas companies in the last couple of years have been considerably more profitable than they were in the preceding couple of years. The next chart for fiscal years '93 through '96 was a comparison for the number of gallons of gasoline sold versus the taxable gallons of gasoline. What occurred there was the ever increasing use of ethanol as an additive to gasoline and under the provisions of the tax applicable to motor fuel there is a tax exemption for fuel that has ethanol added to it. While motor fuel use has gone up the number of gallons that the gasoline tax applied to went down and consequently revenue on gasoline has gone down. The revenue on other motor fuels has not gone down so that the overall motor fuel tax revenues have not dropped steeply in the same way they would have if one was just looking at the gasoline part of motor fuel revenues. Senator Phillips asked if the administration was going to introduce a constitutional amendment for the dedication of the gasoline tax this year or next and Commissioner Condon informed the committee that he did not know. He said it had been brought up and discussed. Senator Phillips said that his district had an interest and would like to see it dedicated. Commissioner Condon said another matter discussed in preparation for this hearing was shared taxes. He did not know if the amount of money seen being shared with communities was going to remain a little over $25 million/year. There was nothing of any note that can be observed between or with respect to any of the various kinds of taxes and fees that we do share with local communities. He continued on to fisheries and said the table (in the handout) simply reflected the projections of catch value and consequent tax revenue by fisheries. He called the committee's attention to what happened in calendar year 1995 and what was thought would happen in calendar year 1996 as payments were made to the State in April which was when payments for the principal fish taxes were due. He noted further the breakdown in terms of halibut, salmon, herring, shellfish and groundfish; what projected value of the catch was during the last season and revenue believed will show up April 1 when the tax payments are due for fish. Senator Parnell referred to the corporate tax issue and on the first spread sheet (general fund unrestricted revenue) and noted the projected corporation general income taxes at $5.1. He asked if the numbers reflected the governor's initiative as announced in the State of the State address regarding the education tax credits. Was this a reflection of the lost revenue in his projections? Commissioner Condon said they did not. Senator Parnell asked what the projected lost revenue would be at this point and Commissioner Condon said he did not know. Senator Pearce asked the Commissioner if he could give an overview of exactly what information about the corporate tax liabilities was available under Alaska Statutes even though much is held confidential. It was very difficult for the legislature and the people of Alaska to make an informed decision about any sort of a tax credit bill that might be before the legislature when it was known who the tax payers were and what they were paying. She also wanted to know whether any of the international air carriers were on the list and if $1 million was being given to them just to land in Anchorage, which is a worthy goal. It was still a lot of money to be given up. Ms. Vogt said the confidentiality statutes permitted providing the legislature any information that did not disclose the particulars of any specific taxpayer. She said there was a deficit in the information made available to the legislative body and they were trying to best address it. Senator Pearce said she did not know if the Governor was going to address the particular incentives mentioned Tuesday night again in the State of the Budget address but certainly not much of a discussion could be had until more information was available. Commissioner Condon said the assignment had been approached by trying to collect some fairly extensive information about the various sectors of the economy that legislators had expressed an interest in and staff members had been spoken to about information they would like to see that is not available. Staff was asked to collect information about other things and not just the tax returns as they went about it. The priorities of their assignments could be changed if members of the Finance Committees and the Legislature wanted specific information developed, information from the tax returns in particular. That could be done quickly. Senator Pearce said it was hard to know what to ask for when one did not know what was there. The legislature was kind of shooting in the dark. One needs to know the question to ask to get the information needed. It is a difficult process. Senator Pearce asked if international airlines paid corporate income taxes or not. Ms. Vogt said some international airlines paid corporate income taxes. Commissioner Condon also pointed out tour ships and tour ship companies. Ms. Vogt addressed this issue referring to a piece of litigation before the Alaska Supreme Court that was going to be argued next month. She referred to "OSG bulk ships" and it addressed a number of issues, the central one being from a tax policy perspective on whether a particular provision of the United States Tax Code is incorporated into the State tax code. Section 883 had to do with the fact that the United States does not tax the income of foreign flag ships. The United States used separate accounting, taxing income based on source, whereas almost all the states, like Alaska used some sort of apportionment formula to tax income, whether it be waters' edge or world wide. In taxing by apportionment, the federal code was incorporated into the Alaska Code for the purpose of defining what was income and what deductions were appropriate. One of the federal provisions of 883, expressed the federal decision not to tax foreign ships in return for the fact that most foreign nations do not tax American ships when they are plying the waters of the world. The problem with melding the two systems, separate accounting and apportionment was those rules do not fit. The argument in "OSG bulk ships" was that section 883 was a sourcing rule and should not be incorporated into the State Code like the rest of the sourcing rules that the Courts and the State have found impliably not to be incorporated into the State's code. Section 883 became involved because those tankers have affiliates throughout the world that are foreign ships and the question was whether to include that income. The tax auditors have included all of the so called factors associated with that income into the denominators of the formula for apportioning. If the income is not put in there would be an unbalanced approach as to what was Alaska's share. The issue gets more interesting when you look at the foreign bottoms that are doing business in Alaska which are the cruise ships. The same argument is made that because of section 883 the Feds have determined to leave that income out of the Federal pot should Alaska also then leave it out. It is an issue that should have an eye kept on. She did not know how much was involved because that information was not received from tax payers. Senator Pearce reviewed tomorrow's schedule for the committee beginning at 9:00 a.m. ADJOURNMENT The meeting was adjourned at approximately 10:25 a.m.