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EASTER BREAK
The legislature took a long Easter weekend and returns to regular Committee meeting and session schedules today, April
13th. In light of the break, this is a late edition newsletter and all the topics you are used to seeing are not covered. Look
forward to a comprehensive regular edition of the newsletter this weekend.
BUDGET CLOSEOUT SUMMARY
I was very pleased with the operating budget close-out process and results. We were able to add back vital money for Fish
and Game, health services, state parks and public radio. There were only 16 amendments approved by the Finance
Committee, including funds for the Seward Recorder’s Office. It has now come to light that dust control for Homer roads and
operational funding for the shellfish hatchery in Seward were not included in the Governor's budget. We are trying several
means to fund these, but it is difficult to get changes made so late in the process. Always let your legislators know your
specific needs early on in the session.
HB 547
There have been some statements that this bill would cut people out of the PFD program; that is not true. All current absences
are still allowed under HB 547. If a person chooses not to return to the state they would cut themselves out of the PFD
program by their personal choice. We have just received the preliminary analysis from the Permanent Fund Division, which
looked at 112 randomly selected records from individuals claiming extraordinary absences. The results of the random sample
showed that of the 27 dependants who accompanied someone else who was receiving their PFD under another allowable
absence category, 23 took residency elsewhere at the end of their PFD extended absence claim. Of the 31 full-time college
student absences, 18 took residence elsewhere. Of the 34 on active duty military, 26 took residency elsewhere and 2 are still
on active duty. Of the 10 with medical absences, 6 took residency elsewhere. Of the 10 remaining cases that were reviewed
and fell into the other miscellaneous allowable absence categories, 4 had taken residency elsewhere. Basing a projection on
this sample, $35,710,219 would not have been sent Outside; that money would have been distributed to the rest of the
physically resident PFD recipients in Alaska. Below is a copy of the Point of View article I wrote for the Homer News that
further explains HB 547.
POINT OF VIEW ON HB 547
The Alaska Permanent Fund and the Dividend (PFD) program are two of the best creations of the people of Alaska. The
PFD was created to allow residents to share in the oil revenue saved in the Permanent Fund, and today the PFD program is a
cornerstone of the economy and a vital part of many Alaskan's income. I introduced HB 547 to address the obvious abuse of
the PFD program, to provide an incentive to Alaskans to return home, and to improve the program and maximize the benefits
to Alaska residents. As with any act of government, the PFD program has evolved. Currently, the PFD program allows any
resident to be absent for 180 days per year. The legislature has also established numerous extraordinary absences, which
allow people to be absent for more than 180 days and still qualify for a dividend. Each year, new allowable absences and time
durations are added to the list. For example, last year, a bill allowed families to leave for 3 extra years if a member of the
family is caring for a terminally ill non-Alaskan relative (up to a first cousin relationship). This year, there is a bill to extend that
absence for a person caring for a non-terminal, severely injured relative. No one can deny that aging family members and
medical emergencies are difficult situations, however, every year the number of checks for allowable extended absences
grows. Today, allowable absences include: minor accompanying a PFD holder, full-time college, active duty military, medical
treatment, congressional employment, state employment, care for ill family, care for terminally ill, settlement of an estate,
Merchant Marine, and attendance at secondary school. Last year, 24,045 PFD checks were sent outside of Alaska. That is
up 3,423 checks from 1999, and equates to more than $20 million in PFD's being sent out of the state each year and thereby
being removed from the Alaskan economy. HB 547, introduced last week in the State Affairs committee, retains all of the
current allowable absences, but mandates that a person must return to Alaska for 185 days of the year following their
absences before receiving their PFD checks. The idea for HB 547 was brought to me last year from a constituent military
family that observed abuse of the PFD system by people they knew were not going to return to Alaska after their military
career. HB 547 would give an incentive to these highly skilled people and their families to return to our communities and
schools. HB 547 also addresses the problem of the "brain drain" that occurs when our students choose to attend college
out-of-state and then do not return. Several PFD checks in a lump sum might provide an incentive for their return after
college. Since I introduced HB 547, I have received several comments that interest should accrue on the PFD checks while
they are held in trust. I have also received comments that college students need the PFD for current expenses. I offered both
of these ideas for discussion in the State Affairs Committee, but there was no support for either, and the bill was moved on to
the Finance Committee without any changes. I do not believe that there is currently enough support to move HB 547 out of
this committee, but I do think that it is in the state's best interest to continue this discussion, and I am hopeful that a solution
addressing all of the concerns will emerge next legislative session. Please continue to develop and send me your suggestions to
address the 'brain drain' and to protect the integrity of our Permanent Fund Dividend program.
VISIT WITH CONGRESSMAN YOUNG
US Congressman Don Young was in Juneau last week. During a question and answer session with legislators, I encouraged
his opposition to the possibility of federally permitted fish farms outside of state waters boundaries. NOAA has recently
suggested such a strategy, which would circumvent the state moratorium on finfish aquaculture. I provided Congressman
Young with the written details of this plan, which would greatly interfere with Alaska’s robust capture fisheries.
FISCAL SOLUTIONS
The House is working towards a solution to the state’s budget deficit, in the form of a long-term fiscal plan. The ideas which I
believe will receive the most thorough consideration are: four different forms of POMV, municipal dividend program (HB
431), tobacco tax (HB 538/SB 368), education employment tax (HB 236/SB 137), income tax with credit for property tax
(HB 470), and a constitutional spending limit (HJR 3/SJR 3); each proposal is still being refined. I estimate it will be another
two weeks before votes are taken on the floor on any of these bills.
WAYS AND MEANS
This week we will be exploring changes to the oil severance taxes, including discussion of changing the Economic Limit Factor
(ELF). The ELF allows a lower or zero production tax on wells and fields that are producing at lower rates. The creation of
this tax break was based on the increased per barrel costs for drilling and production facilities of low volume fields. However,
implementation of a satellite field strategy has allowed wells drilled from the same existing platform and using the same
production facilities to qualify for the reduced or zero tax. I believe that some of the Committee members will be looking at
reasonable modification of the ELF terms as part of a fiscal solution. Those hearings will be April 14th and 16th beginning at 7
am.
SHALLOW NATURAL GAS UPDATES
All of the House Shallow Natural Gas bills are now in the House Resources Committee (see below for details). The Resource
Co-Chair, Representative Masek, has indicated that the bills will be heard in order of priority: HB 395, HB 531, and HB
364. Feel free to call my office for updates on Committee schedules. HB 395 (Harris, Stotze, Gatto, Seaton). HB 395 was
heard on Wednesday the 7th in the Resources Committee. Although some constituents still had concern that this bill did not
go far enough to protect private property and water resources, this bill does codify significant increased protections for both
individuals and the environment. DNR and AOGCC have commented that the bill is workable from their perspectives. Minor
technical changes were proposed to the bill; there will be more time for public comment at the next hearing. I anticipate this
bill will move from the Resources Committee this week. HB 395 addresses water quality, notification, bonding, and public
complaint resolution issues, and repeals the Commissioner of DNR’s override authority of local ordinances. HB 531 (House
Resources) HB 531 is the companion bill to SB 312 (see below). Rep. Masek has indicated that a new draft resembling the
original intent of the bill will be heard sometime this week. The bifurcation concept promoted in the Oil and Gas Committee
version of the bill will most likely be removed. This is the concept that would have split Alaska into two basic leasing areas:
rural and urban. Rural areas, lands not in an incorporated borough, would still be available for the current Shallow Natural
Gas program and the incentives it provides. Urban areas (those lands within incorporated boroughs) would have to be leased
under the new “gas-only” program envisioned by the original bill. This bill still only applies to those areas outside of current
Area Wide Lease Sales. SB 312 (Senate Resources) was not heard this past week and still sits in Senate Resources. This
bill ends the Shallow Natural Gas lease program of much controversy and replaces it with a “gas-only” leasing program that
requires a best-interest-finding, public notice and public comment review process. This new program corrects the problems of
the Shallow Natural Gas program but fails to address the concerns surrounding the leases that have already been issued. SB
312 was heard and held in Senate Resources on February 23rd. SSHB 364- Homer Shallow Natural Gas Leases- This bill
was moved out of the Oil and Gas Committee last week, but will probably not be heard in the House Resources Committee
until next week sometime, as the Committee is focusing work on the other two bills discussed above. I hope to get the
Finance Committee referral removed since this bill now has a zero fiscal note. As I indicated in past newsletters, this Sponsor
Substitute, as amended, preempts the reissuance and extension of the recently issued Shallow Natural Gas leases in the Homer
area if the leases are not proven economically viable by the end of their three-year term. The bill also establishes a moratorium
on future Shallow Natural Gas leases in the Homer area. This is a much less expensive and more politically feasible way of
safeguarding the interests of local residents.
HOUSE FISHERIES
The House Special Committee on Fisheries heard HB 458, which is a relatively straightforward bill allowing individuals to
purchase one-day commercial fishing crewmember licenses for a fee of $30. The bill is an attempt to promote the idea that
some individuals may be interested in enjoying a commercial fishing experience for a day. Supporters of the bill feel that the
cost of a yearly crewmember license deters people from pursuing this type of adventure. Many fishermen testified that this
licensing option would give them new possibilities in hiring crew and augmenting their income. The Committee amended the
bill to include a 3-day license for a fee of $50 and moved the bill from Committee. If passed this session, you could see these
short-term licenses available as early as July 1st. SB 273, the ASMI bill was also moved from Committee. This bill,
sponsored by our Senator Gary Stevens, and recommended by the Joint Legislative Salmon Industry Task Force, has
changed significantly since it was introduced into the legislature. As is, if the processors vote to increase their assessment to
.5% then the harvester assessment (salmon marketing tax) is repealed and the processors gain control of a seven member
board. If the processors do not vote to increase their self-assessment, the salmon marketing tax remains and a board of nine,
including four harvesters, is created. Although I do have some concerns about giving processors a voting majority of the
seven-member board, I supported the bill because increasing the funding to ASMI and decreasing the board size are
extremely important to the future of the Institute. The Committee ran out of time to continue work on SB 347, an act
establishing a moratorium on new vessel participation in the Gulf of Alaska groundfish fishery. I have introduced a new version
of this bill for discussion purposes. My version would base the moratorium on participants in the fishery rather than vessels. I
have heard that there may even be another version introduced this week that would represent a compromise between the two
concepts, establishing a moratorium on both vessels and participants and requiring both permits to fish during the moratorium
years. We will continue this discussion in Committee on Wednesday, April 14th. This bill represents a very large policy call
as it might set the precedence for permanently limiting this and other fisheries on the basis of vessel ownership rather than
participation. The sudden need to limit new entry into this fishery comes from the impending federal Gulf of Alaska groundfish
rationalization, but the Committee is apprehensive in making the policy decision to limit new vessels in the short time that we
have. New numbers from CFEC and the Department of Fish and Game show that the number of vessels participating in the
fishery is 1,017 and the number of interim-use permits in the fishery is 1,329; therefore the increased fishing effort from
enacting a moratorium on participants, rather than vessels, may be negligible.
BILL ACCESS SYSTEM
All bills can be found on the State’s BASIS system. You can
see what committee a bill is in, when it will be heard, how
committee members voted, and much more. You can access the
system from the website below:
LIVE ON THE WEB
Remember that you can hear most committee hearings or tune into just about any legislative session, present or past, by going to Gavel to Gavel, which transmits TV and public radio broadcasts of the state legislature as they occur. Gavel to Gavel also has an online archive of past meetings. Click on the link below to connect to Gavel to Gavel:
If you need to contact the staff please click on one of the links below:
Lauren Radcliffe,
Cameron Yourkowski,
Chris Knight,
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