MINUTES SENATE FINANCE COMMITTEE April 7, 2000 9:09 AM TAPES SFC-00 # 79, Side A and Side B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:09 AM. PRESENT Co-Chair John Torgerson, Co-Chair Parnell, Senator Dave Donley, Senator Lyda Green, Senator Pete Kelly, Senator Loren Leman, Senator Randy Phillips, Senator Gary Wilken Also Attending: SENATOR LYMAN HOFFMAN; REPRESENTATIVE CARL MORGAN; GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game; SUSAN SCHRADER, Conservation Advocate, Alaska Conservation Voters; JONATHAN LACK, staff to Representative Andrew Halcro; ROBIN GILCRIST, President, Housing First; DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance Corporation; Attending via Teleconference: From Anchorage: KEVIN DELANEY, Director, Division of Sport Fish, Department of Fish and Game; KNEELAND TAYLOR, Chair, Alaskan's Against Snaring Wolves; DAVID GUNDACKER SR; MIKE BURNS; DAVID LAWER, President, Alaska Bankers Association; JAN SIEBERTS; HUBERT GELLERT, Private Landlord, Former Chair, Board of Equalization, Municipality of Anchorage; MATT REAMS; WILEY BROOKS, Property Manager; JEFF JUDD, Executive Director, Anchorage Mutual Housing Association; From Fairbanks: STAN BLOOM, Vice President, Chitina Dip Netters' Association; DICK BISHOP, Vice President, Alaska Outdoor Council; MIKE TINKER, Chair, Fairbanks Fish and Game Advisory Committee; MARY BISHOP; MAC MINARD, Interior Regional Supervisor, Division of Sport Fish, Department of Fish and Game; GREG MACHACEK, Fairbanks Fish and Game Advisory Committee, part- time charter boat operator on the Chitina River; PETE BUIST, President, Alaskan Trappers Association From Glennallen: JOSEPH HART, representing the Chitina and Ahtna Native Corporations; JOE MATTIE; From Bethel: JAMES BERLIN JR, Resource Specialist, ABCP, Inc.; From Barrow: BEN HOPSON JR., Chair, Coalition to the Alaskan Way of Life; From Mat-Su: RON ARNO, Guide SUMMARY INFORMATION SB 192-APPPROPRIATIONS; CAPITAL BUDGET/REAPPROPS The Committee heard a summary of the recommendations of the Capital Budget Subcommittee. The bill was held in Committee. SB 256-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURE The bill was reported from Committee with no further debate. SB 301-CHITINA DIPNET FISHING PERMIT The Committee adopted a committee substitute and an amendment. Public testimony was heard. The bill was reported from Committee. SB 271-FOOD SAFETY: DEC OVERSIGHT/ADVISORY GRP. The Committee adopted a committee substitute and reported the bill from Committee. SB 259-CRIMES: REPRESENTATIONS/I.D./COMPUTERS After brief debate, the bill was held in Committee. HJR 56-CONST. AM: PROHIBIT WILDLIFE INITIATIVES The Committee heard from the sponsor, the Department of Fish and Game and various members of the public. The resolution was reported from Committee. HB 272-MUNICIPAL TAX: LOW INCOME HOUSING The Committee heard from the sponsor, the Alaska Housing Finance Corporation and members of the public. The bill was held in Committee. HB 3-DRUGS: LISTED CHEMICALS/METHAMPHETAMINE This bill was scheduled but not heard. HB 380-INSURER TAX CREDIT: FIRE STANDRDS COUNCIL This bill was scheduled but not heard. SENATE BILL NO. 192 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." Co-Chair Torgerson announced the Committee would be hearing a report from the Capital Budget Subcommittee and if the report were adopted, a committee substitute would be drafted and distributed. He continued saying the deadline for amendments to the capital budget legislation would be the following Monday at 3:00 PM. Senator Donley, chair of the Capital Budget Subcommittee, talked about the relatively new process of addressing capital budget requests in a subcommittee setting. He listed the membership of the subcommittee as Senator Torgerson, Senator Wilken, Senator Adams and himself. He stated that Senator Leman also participated in some of the subcommittee meetings in the place of Senator Adams. Senator Donley shared that the proposal from the subcommittee was to utilize $138,474,201. Those funds are a combination of approximately $80 million general funds, $18.5 million Alaska Industrial Development and Export Authority (AIDEA) dividend funds and $39 million Alaska Housing Finance Corporation (AHFC) funds, he said. He noted that the total amount is $15,679,932 less than the previous year's enacted capital spending and over $33 million less than the governor's requested funding level. Senator Donley told that the subcommittee was assigned the task of assisting in making reductions to the operating budget to reach the targeted goal of $30 million. He stressed that the subcommittee was faced with reducing the governor's requested budget increase as well as reducing the amount of funds spent in the previous fiscal year. Senator Donley conveyed the priorities and criteria established by the subcommittee for project evaluation of the proposed capital items. These, he said, included whether the project was life, safety or health related, school education related, was eligible for unique and special federal funding sources and met deferred maintenance needs. He continued listing criteria as whether the funding request was for essential completion of a phased project, met critical administrative needs, and whether the project would have a high level of use to maximize benefit to the greatest number of users. He stated that none of the criteria was considered by itself and that the criteria had changed some from the previous year. Senator Donley added that the subcommittee attempted to not include projects that were not requested by the State Of Alaska and also to avoid projects where the state was asked to provide funding for projects requested by other governmental entities. Senator Donley qualified that the subcommittee did try to approve funding for projects that could reduce future operating budget expenses. He gave examples of capital projects that provided more efficient record keeping and case-management tracking. Senator Donley continued that to stay within the funding allocation goals, the subcommittee could not approve all the requested projects that met those criteria. He stressed that the subcommittee did attempt to rate the projects to include those that would have the most benefit. Senator Donley relayed that the subcommittee did not attempt to remedy the on-going problems with the Department of Transportation and Public Facilities Statewide Transportation Improvement Program (STIP) process. He said this was because it was felt that decisions related to these projects should be made by the full Senate Finance Committee. Senator Donley also reported that the subcommittee did not consider Grant Anticipation Revenue Vehicles (GARVEE) bonds as a funding source for capital projects. SENATOR LYMAN HOFFMAN was invited to join the Committee to speak for the Senate Minority on behalf of Senator Adams who was not present. Senator Hoffman spoke to an issue raised at the subcommittee level concerning the stated intent to try to obtain the maximum amount of federal matching funds as possible. He regarded most of the projects meeting this criteria were economic development projects. He believed this year was the first in five or six years that this criterion was not applied to consideration of funding projects. Senator Hoffman then expressed concerns about the confusion over which document the subcommittee was working from. He came to the conclusion that the original version of SB 192 was what the subcommittee was using. He reached this conclusion after asking the subcommittee chair the direct question and was told on the record that the original SB 192 was before the subcommittee. He stated that he would have objected to the adoption of the governor's amended version of SB 192 due to the omission of several rural projects. Senator Hoffman talked about the impacts on rural projects contained in each version. He wanted to make sure all of the important projects receive funding. Senator Hoffman spoke to the governor's amended request saying he did not think that the added STIP projects followed a fair public process in being included in the updated version. Co-Chair Torgerson stated that he had a side-by-side spreadsheet prepared by the Division of Legislative Finance that compared GARVEE bonds related to the STIP. He said he was trying to obtain information from the Administration as to what projects properly belong in the STIP. Co-Chair Torgerson spoke to frustrations the Committee has had with the Department of Transportation and Public Facilities in having the directions given by the legislature followed. He shared that he intended to remedy the situation. He went into detail about the federal funding allocated by the legislature to certain projects that the department refuses to undertake saying they do not rank high enough. Senator Leman clarified that Senator Hoffman suggested that if certain projects were not funded this year they would "drop off the list" of eligibility for federal funding. He understood that they would not be dropped, but only be delayed a year or so. Senator Hoffman conceded these projects could get funding in the future but that it was not fair that they be dropped after six years and supplanted by other projects that have not been on the STIP. Co-Chair Torgerson told Senator Hoffman that he hoped the Minority member would share those concerns with the Department of Transportation and Public Facilities, who made those decisions. Senator Donley emphasized the serious concerns with the entire STIP process as implemented by the Department of Transportation and Public Facilities. He questioned the constitutionality of the process. He stressed that the matter was more complicated than it seemed and expressed his desire that the Committee work to change the process. Co-Chair Torgerson announced that a committee substitute would be drafted to incorporate the recommendations of the subcommittee. He stated his intent to use AIDEA funds to pay for a portion of the capital projects. Co-Chair Torgerson ordered the bill HELD in Committee. COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 256(HES) "An Act relating to regulation of managed health care and allowing physicians to collectively negotiate with a health benefit plan that has substantial market power." This was the third hearing for this bill in the Senate Finance Committee. At the last meeting, the Committee adopted CS SB 256, 1-LS1291\I as a workdraft and made an amendment to the committee substitute. Senator P. Kelly offered a motion to report from Committee, CS SB 256, 1-LS1291\I, as amended with forthcoming fiscal notes from the Department of Administration, the Department of Community and Economic Development and the Department of Law. There was no objection and the bill MOVED FROM COMMITTEE. COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 301(RES) "An Act relating to the Chitina dip net fishing permit; and providing for an effective date." This was the second hearing for this bill in the Senate Finance Committee. Senator Wilken moved to adopt CS SB 301, 1-LS1516\K as a workdraft. There was no objection. Amendment #2: this bill made the following changes to page 1, lines 7-10 of the committee substitute. Delete: "A person who has in the person's physical possession a permanent identification card issued under AS 16.05.100(b) and members of the person's family who are in the presence of the person are not required to pay the fee for the permit while engaged in dip net fishing at Chitina." Insert: "A person who has received a permanent identification card issued under AS 16.05.400(b) may obtain a Chitina dip net fishing permit without charge. The members of the family of a person who has obtained a Chitina dip net fishing permit are not required to have a Chitina dip net fishing permit while they are engaged in dip net fishing at Chitina if they are engaged in fishing in the presence of the person and the person has the Chitina dip net fishing permit in the person's physical possession." Senator Wilken moved for adoption. He referenced a memorandum from the Division of Legal and Research Services dated April 6, which recommends the adoption of this amendment. [Copy on file.] Senator Wilken explained it clarifies the stipulation that senior citizens are required to obtain a permit, but that there is no charge to them for the permit. In addition, he said, the amendment allows family members of a person holding a permit to participate in the fishery so long as the permit holder is present. Without objection, the amendment was ADOPTED. KEVIN DELANEY, Director, Division of Sport Fish, Department of Fish and Game, testified via teleconference from Anchorage in support of the bill. STAN BLOOM, Vice President, Chitina Dip Netters' Association, testified via teleconference from Fairbanks in favor of the ten dollar fee proposed in the bill. He spoke of the hassle-free dip netting that has been occurring on the Chitina River for the past 20 years. He requested a legislative letter of intent that stipulates the revenues raised by the fees only be used for access to the fishery and for no other purpose. DICK BISHOP, Vice President, Alaska Outdoor Council, testified via teleconference from Fairbanks in support of the legislation and stated his appreciation for the Committee's work on the bill. He stressed that the Administration and the legislature must address the access issues within the next year. MIKE TINKER, Chair, Fairbanks Fish and Game Advisory Committee testified via teleconference from Fairbanks about his approval in changing the name of the fishery to "Chitina Dip Net Fishery". He spoke to the problems in settling the trespass issue. MARY BISHOP testified via teleconference from Fairbanks that she thought something else must be done to make the public aware that the state is doing something about the trespassing issue. MAC MINARD, Interior Regional Supervisor, Division of Sport Fish, Department of Fish and Game, testified via teleconference from Fairbanks thanking the legislature for its efforts on this bill. He reiterated the department's support of the bill saying it was viewed as the best solution to some complex problems. He stated the bill attempts to maximize legal public access while minimizing conflicts between the users. GREG MACHACEK, part-time charter boat operator on the Chitina River, testified via teleconference from Fairbanks about his efforts with the Native association to establish a positive relationship. He was also in support of the legislation. JOSEPH HART, representing the Chitina and Ahtna Native Corporations, testified via teleconference from Glennallen that he supported the original intent of the bill but was concerned about giving access to some without compensation for the impact on the corporations' property. He remarked that the corporations would need to renegotiate with the Department of Fish and Game, the amendment pertaining to senior citizens' access without payment. Co-Chair Torgerson stated that it was understood that this was only a temporary solution and that the issue would need to be revisited next year. Senator Wilken offered a motion to report from Committee, CS SB 301, 1-LS1516\K with accompanying $250,000 fiscal note from the Department of Fish and Game. There was no objection and the bill MOVED FROM COMMITTEE. SENATE BILL NO. 271 "An Act relating to fees charged for inspections by the Department of Environmental Conservation; and providing for an effective date." This was the fifth hearing for this bill in the Senate Finance Committee. DARWIN PETERSON, staff to the Senate Finance Committee addressed the proposed committee substitute, 1-LS1223\H, and noted the major changes made to the bill based on remarks made at the previous hearing. Mr. Peterson noted the first change as reflected on page one of the committee substitute, gave the definition of "mobile food unit" as a facility "that serves only beverages and prepackaged food that are from an improved source and are not potentially hazardous.". He said this essentially refers to espresso carts. Mr. Peterson continued with the second change shown on page 2, lines 17 through 19. This language, he said further defines that buildings housing more than one establishment and share the same kitchen would be charged only one inspection fee. He gave as an example, a bar and restaurant that share the same kitchen. He noted that if the bar and restaurant have separate kitchens, they would be charged separate inspection fees. Mr. Peterson pointed out that the make-up of the Food Safety Advisory Group was changed on page 3, lines 6 and 7 of the committee substitute. Instead of having the members of the group selected by the commissioner of the Department of Environmental Conservation, he stated the Speaker of the House of Representatives and the President of the Senate would select the members. Mr. Peterson added that the legislature's Regulation Review Committee would now be responsible for staffing the Food Safety Advisory Group as stipulated in language on page 3, lines 14 through 16. Mr. Peterson noted an additional change that was present in both the previous committee substitute and this proposed committee substitute establishing the effective date at January 1, 2001, by request of the department. Senator Green noticed the language pertaining to the Food Safety Advisory Group did not address notices of upcoming meetings to the staff. She was concerned that the group might hold meetings without notifying the staff. Co-Chair Torgerson knew of no specific language other than the Open Meetings Act that pertains to notices of meetings. He commented that it would not always be necessary to have staff present at these meetings. He hoped the group would get together on it's own. However, he stressed that when official recommendations are made, the Regulation Review Committee staff needs to write the regulations to present to the legislature. Senator Green relayed that if she were a staff member of the Regulation Review Committee, she would want to attend the meetings and be involved in the formation of regulations. Senator Leman moved to adopt CS SB 271, 1-LS1223\H as a workdraft. It was adopted without objection. Senator Leman then offered a motion to report CS SB 271, 1- LS1223\H from Committee with forthcoming fiscal note from the Department of Environmental Conservation. Without objection, the bill MOVED FROM COMMITTEE. COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 259(JUD) "An Act relating to crimes and offenses relating to aural representations, recordings, access devices, identification documents, impersonation, false reports, and computers; and providing for an effective date." This was the forth hearing for this bill in the Senate Finance Committee. Co-Chair Torgerson announced that he would oppose adoption of the proposed committee substitute, 1-LS1284\M. He commented that the sweeping changes should be addressed in the Senate Judiciary Committee if they were to be considered. Senator Donley said there were some elements of the committee substitute that he supports, but that there were also concerns. Co-Chair Torgerson said he would hold the bill if Senator Donley wanted to work on improvements but that the Committee did not have time to get into it at this time. Co-Chair Torgerson ordered the bill HELD in Committee. HOUSE JOINT RESOLUTION NO. 56 Proposing an amendment to the Constitution of the State of Alaska prohibiting certain initiatives relating to wildlife. This was the first hearing for this bill in the Senate Finance Committee. REPRESENTATIVE CARL MORGAN, sponsor of the bill, noted the bill has wide bipartisan support. Representative Morgan talked about the ballot initiative process in Alaska and the wildlife-related initiatives placed on the ballot in 1996 and 1998. Representative Morgan stressed that the claims made in support of the same-day airborne wolf hunting initiative that was adopted in 1986 were untrue. He asserted that these claims dealt with people's emotions and passions in the use of video footage of wolves being killed by an employee of the Department of Fish and Game. He stated that in the footage showing a wolf being shot from a helicopter, the wolf was actually being tranquilized and not killed. Representative Morgan told of the efforts required to spot wolves from an aircraft, find a place to land the aircraft and then run over 100 yards to the place were the wolf was last seen before a shot can be taken. He remarked on the difficulty of running in the snow and then stopping to aim and shoot. He asserted that fair chase is given to the wolves in this case. Representative Morgan stated that similar ballot initiative legislation has been adopted in Minnesota, and was pending in Arizona, Idaho and North Dakota. Representative Morgan referred to the animal rights groups efforts to eliminate funding from Ameri-Gas for Iditarod musher, Randy Brooks. Representative Morgan admonished that the groups never researched the positive works of Mr. Brooks, which include the receipt of a humanitarian award in 1998. Representative Morgan addressed the argument that this resolution is taking away the people's right to vote on important matters. He asserted that by placing this constitutional amendment on the ballot, all Alaskan's are given the chance to decide how wildlife should be managed. Representative Morgan countered the assertion that only 20 percent of Alaskans hunt and/or trap, saying that the constitution is intended to protect the freedom of the minority. Representative Morgan relayed that tourists come to Alaska to see the Native people and how they live, as well as to see wildlife. He said it is important for visitors to see Alaskan Natives thriving culturally, which includes a dependence on wildlife. Representative Morgan listed some of those who have written letters in support of the resolution. [Copy of list and letters on file.] One of these organizations is the Alaska Wildlife Society, which he remarked is made up of 300 professional biologists working for the Department of Fish and Game or the federal government. Senator Phillips requested copies of the Utah and Minnesota constitutional amendments regarding wildlife. Representative Morgan supplied the Utah constitutional amendment language. [Copy on file.] GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game, stated that the department could not support the proposal because it fails to recognize that there is more to the management of the public's wildlife resources than the application of science and technical expertise. He stressed that wildlife management must also consider and respond to the values held by the public about how they want their wildlife managed. Mr. Bruce pointed out that there are usually many options for wildlife management that are all biologically sustainable and therefore consistent with the sustained yield principal. He stated that the principle of achieving the maximum human harvest of big game as always the highest and best use of big game is not a scientific matter, but a public policy matter. Like many public policy issues, he asserted, there are different views. He said the initiative process is the most direct way the public sorts out its views on public policy and taking the process away is not something the department can support. Mr. Bruce continued saying wildlife management does involve scientific and special expertise, but so does the administration of many other public functions, such as education, public health and transportation planning. It appeared to him and the department, to be no reason to separate wildlife management as a subject too complex for the public to make policy decisions through the initiative process. Mr. Bruce added that it is worth remembering that a law enacted can be amended by the legislature immediately if there is some error, or if it brings about an unanticipated consequence that is injurious to the public or the wildlife resource. After only two years, he continued, the legislature may repeal the initiative entirely if the legislature believes it is an inappropriate policy for the state. Mr. Bruce concluded that given these checks and balances to the initiative process, there is little risk that a poor initiative would cause any lasting harm to Alaska's wildlife. On the other hand, he remarked that to remove wildlife management issues from the reach of the initiative process would lead to more conflict rather than less. JAMES BERLIN JR, Resource Specialist, ABCP, Inc., testified via teleconference from Bethel on behalf of 56 villages and one-quarter of Alaska's tribes. He relayed the corporation's support of the resolution. He spoke to the fine balance required to manage resources, saying a ballot initiate process could not achieve this. He told of his forefathers' management of wildlife that was dictated by the proper leaders and users of the resources. Tape: SFC - 00 #79, Side B 9:56 AM Mr. Berlin, Jr. continued stressing that the public input in wildlife management is already considered through the Board of Game process. BEN HOPSON JR., Chair, Coalition to the Alaskan Way of Life, testified via teleconference from Barrow in support of the resolution. He described the organization as a diverse coalition of many Native organizations, sportsmen, trappers and hunters in both rural and urban Alaska. He stressed that Outside interests are managing the state's renewable resources through their money and by using emotional influences. He contended that these animal rights groups only want to see total elimination of hunting and trapping in the United States, including Alaska. RON ARNO, Guide, testified via teleconference from Mat-Su that it is not in the best interest of Alaskans to use the initiative process for fish and wildlife matters. He spoke of the Civil Rights Movement of the 1960's, animal rights and racism. DICK BISHOP, Vice-President, Alaska Outdoor Council, testified via teleconference from Fairbanks in strong support of HJR 56. He asserted that contrary to popular press reports, this resolution is not a matter of ignoring the public's interest, but instead is responding to the public's interest. MIKE TINKER, Chair, Fairbanks Fish and Game Advisory Committee testified via teleconference from Fairbanks about the importance of this resolution to the advisory committee. MARY BISHOP testified via teleconference from Fairbanks suggesting that while the adage "don't watch sausage or legislation being made" was wise, watching laws made by 30- second sound bites was more painful. JOE MATTIE testified via teleconference from Fairbanks in favor of the resolution saying that the legislature and the Board of Game is the best voice for Alaskans. GREG MACHACEK, Fairbanks Fish and Game Advisory Committee testified via teleconference from Fairbanks to say that the advisory committee is the best process for managing fish and game. He suggested that the only parties who benefited from ballot box biology were those who got paid for their efforts in getting the initiative passed. PETE BUIST, President, Alaskan Trappers Association, testified via teleconference from Fairbanks that he did not think it was fair that Alaskans had to spend their money fighting heavily funded groups. KNEELAND TAYLOR, Chair, Alaskan's Against Snaring Wolves, testified via teleconference from Anchorage in opposition to the resolution. He argued that Alaskans should put their trust in democracy. He asserted that if this resolution passes, it would be a "slap in the face" to the large number of Alaskans who voted for the two previous initiatives from 1996 and 1998. He noted that there was a third ballot initiative relating to wildlife, which was on the ballot in 1994 and pertained to sport fishing. He noted that HJR 56 does not apply to fish and commented the omission is a political move. He addressed the assertion that voters are not smart enough to voice their opinions on wildlife matters. He compared the amount of money spent by interest groups on both sides of the wildlife management issue, saying that the conservation groups are vastly outspent by the sportsmen's groups. He suggested the election to decide this initiative will be funded on both sides from sources outside the state. Senator P. Kelly stated that he did not approve of Outside interests deciding Alaskan's way of life. SUSAN SCHRADER, Conservation Advocate, Alaska Conservation Voters, testified in Juneau talked about the importance of the ballot initiative process. She stated that her organization opposes the resolution. She suggested that if the concern is with the influence of Outside factors, why the legislature is proposing to limit Alaskan's rights. She asserted passing this resolution would not solve the problem of Outside money and suggested campaign finance reform was a better option. Senator Green mentioned the downside of this particular type of initiative. She wanted to know if this resolution poses a limitation on limited entry. Senator Leman answered there is no limited entry for the taking of wildlife. He noted that Mr. Taylor brought up a good point worth considering regarding managing of fish at the ballot box, which he thought, was not good. Senator Green noted there was no constitutionally valid method restricting Outside interests' spending money and influencing Alaskan elections. She stated that a court decision issued the previous year made it even broader. Co-Chair Torgerson had the same understanding. Senator Phillips asked if, constitutionally, the state could limit the amount of spending on constitutional amendment initiatives. Co-Chair Torgerson didn't think so. Several members commented it was a matter of free speech and the First Amendment of the U.S. Constitution. Senator Donley cited court decisions affirming this. Senator Phillips spoke to the constitutional amendment proposed in the State of Utah, saying its provision requires that two-thirds of voters must vote in favor to any constitutional amendment regarding wildlife. Senator Phillips was curious to know how much Outside funds was spent of the wildlife-related ballot initiatives in the 1996 and 1998 elections. Senator P. Kelly supported the initiative and wanted to counter some points brought up in testimony. He noted that in many states, voters do not have the right to amend their constitutions in any way. He suggested that on wildlife issues, the initiative process can be set aside because the animal rights and environmental extremists want to change Alaskan's way of life and turn Alaska into a big park. Results at stake at the ballot box. Secondly, he stated that the results of a mistake made at the ballot box are more dramatic with wildlife. Senator P. Kelly did not claim whether people knew what they were voting on or not in the 1996 election. However, he thought they did not understand the consequences on Rural Alaska, and in fact he didn't fully understand them either. He said this inability to understand the implications is the reason for the fish and game advisory committees and the Board of Game. He attested that it would take ten years to bring the moose population near McGrath back to minimum standards. Senator P. Kelly contended that the legislature could not turn these types of issues over to Outside interests who are very well financed. He asserted these groups use Alaska's issues to raise money. He stated that he saw no other reason for environmental and animal rights groups than to raise money to provide income for executive directors and to influence elections. Senator P. Kelly talked about college students from Oregon working to get signatures for the 1996 initiative. He stated that these "20-year old students with stars in their eyes" had no idea about the issue and knew nothing about Alaskans' way of life. He claimed they said things about the initiative that were not true. Senator P. Kelly stressed, "the fact remains, Outside groups are coming for this state and they've found a chink in our armor." Senator P. Kelly next asserted that wildlife viewing is a ruse and the arguments in favor are irrelevant. He stated that he has been in Alaska all his life and has seen very few wolves. He argued against the claim that this resolution would result in a loss of tourism due to too few wolves, saying it would be the exact opposite because there will be more moose, which are the animals more likely to be seen. Senator Green found it interesting that the Committee is told in the testimony against this resolution that constitutional amendments can be changed after the two-year period. She stressed that when the legislature actually attempts to make those changes it is accused of acting against the people's will. She surmised that this resolution was the answer to the dilemma. Senator P. Kelly offered a motion to move from Committee, HJR 56 with accompanying $1,500 fiscal note from the Division of Elections. Senator Phillips objected. A roll call was taken on the motion. IN FAVOR: Senator Leman, Senator Wilken, Senator P. Kelly, Senator Green, Senator Donley, Co-Chair Parnell and Co- Chair Torgerson OPPOSED: Senator Phillips ABSENT: Senator Adams The motion PASSED (7-1-1) The resolution was MOVED FROM COMMITTEE. AT EASE 10:36 AM / 10:36 AM HOUSE BILL NO. 272 "An Act relating to the tax assessment by a home rule or general law municipality of housing that qualifies for the low-income housing credit under the Internal Revenue Code; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. JONATHAN LACK, staff to Representative Andrew Halcro, testified that this bill would set into law, a formula for accessing federally qualified low-income housing. He shared that until 1998, local governments throughout the State Of Alaska were assessing low-income housing based on a federally restricted rental income, taking into consideration deed restrictions and other covenants on the properties that are required by the federal government. In 1998, he continued, the Municipality of Anchorage changed its formula for accessing its low-income housing. He stated the formula is now based on the market value of these units without consideration of deed restrictions. Mr. Lack remarked that unfortunately, because these units have deed restrictions on the amount of rent that can be charged, the non-profit organizations that sponsor these housing units, couldn't raise rents to compensate for these increased property taxes. In some cases, he shared; the increase in property taxes through the difference in assessment methods has been over 100 percent. Mr. Lack stated that this bill places these low-income housing units in jeopardy and places all units throughout Alaska at risk. He explained that banks are refusing to finance these projects anywhere in the state without a uniform taxation policy. Additionally, he said, the City and Borough of Juneau has tried to change its taxation policy in the past, but fortunately, the non-profit organizations were successful in their appeals to the local boards of equalization. Mr. Lack asserted that the bill follows the standards approved by the "uniform standards of special appraisal practices". He stated all Alaskan communities are affected by the Municipality of Anchorage policy; Anchorage is the only city affected by this legislation because other communities properly assess their qualified low-income housing. Mr. Lack stressed the need to support low-income housing in Alaska, saying that most rental housing in the state was constructed during the pipeline days and targets single adults. Today, he said there are more small families looking for housing due to low-paying service industry jobs that are replacing higher paying oil industry jobs. Mr. Lack relayed that other states, including Washington, Oregon, California and Hawaii, have exempted low income housing from all property taxes. HB 272 does not go that far, he stated. Instead, he said it only requires the assessor take into consideration, the rent restrictions that are on these properties. He added that this bill fills the need for affordable housing. ROBIN GILCRIST, President, Housing First, testified in Juneau in support of the bill. She described the Juneau- based non-profit housing development organization and the need for the organization to annually appeal its assessment. She stated that the assessment is based on a market-value system rather than a rent restricted system. DAN FAUSKE, CEO/Executive Director, Alaska Housing Finance Corporation, testified in Juneau in support on bill and the concept behind it. He thought this legislation would help "level the playing field." He talked about the corporation's low-income housing investments of approximately $58 million statewide. He said this bill would be a tool to use as the federal government is moving away from public housing and toward more "Section 8" rent subsidies. Senator Donley wanted to know the public policy ramifications. He gave a situation of a low-income family in Anchorage that saved to buy or built a house, using AHFC funding and is now paying a higher mortgage rate than those living in rural areas. Tape: SFC - 00 #80, Side A 10:44 AM Senator Donley commented on how this bill will require low- income homeowners to now subsidize the renters' portion of public services. He noted that some low-income renter have higher incomes than the homeowners do. Mr. Fauske replied that this housing would not have been built without some kind of "layered financing." He stressed that building these low-income units brings in more tax base, which eases the burden on the existing taxpayers because there is more property to be assessed. Senator Donley asked if those low-income residents wouldn't have to live somewhere. Mr. Fauske referenced a study done by the military at Elmondorf Air Force Base, that found the number of low- income units unacceptable. While he was not critical of private landlords, he stated that without the input of new stock, the state finds itself in a situation where demand exceeds supply. He said this results in a lower quality of units. He spoke of the large waiting list for the Section 8 program and the extensive work developers and financiers must go through to build low-income housing. Co-Chair Torgerson announced this bill would be brought up at a future Committee meeting for more public testimony. DAVID GUNDACKER SR testified via teleconference from Anchorage that he is a retired disabled veteran living in low-income rental housing. His biggest concern was that banks would no longer finance housing units such as where he lived if there were no tax break. He stressed this would devastating for people like himself. Senator Leman clarified that the bill would have just the opposite affect of what the witness stated. MIKE BURNS testified via teleconference from Anchorage to defer his time to the next testifier. DAVID LAWER, President, Alaska Bankers Association, testified via teleconference from Anchorage in support of HB 272. He referenced written testimony submitted by and representatives from Alaskan banks. [Copies on file.] JAN SIEBERTS testified via teleconference from Anchorage stating that Mr. Lawer spoke on his behalf. HUBERT GELLERT, Private Landlord, Former Chair, Board of Equalization, Municipality of Anchorage, testified via teleconference from Anchorage that he is currently developing low-income housing units in Girdwood. He supports the legislation. He challenged the appraisal process in Anchorage, giving details of its faults. MATT REAMS, resident of Spruce View low income housing area, testified via teleconference from Anchorage qualifying that he did not understand the legislative process but did not want increased taxes that would hamper the development of low income housing. WILEY BROOKS, Property Manager, testified via teleconference from Anchorage that he was not opposed to affordable housing but he did not like special interest legislation. He said no one was representing the small property owners. He referenced written testimony. [Copy on file.] JEFF JUDD, Executive Director, Anchorage Mutual Housing Association testified in Juneau about quality affordable housing. His organization was in support of the bill. He asserted that affordable housing was in a crisis situation. Co-Chair Torgerson ordered the bill HELD in Committee. ADJOURNED Senator Torgerson adjourned the meeting at 11:04 AM. SFC-00 (22) 04/07/00