Legislature(2003 - 2004)

2004-06-22 House Journal

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2004-06-22                     House Journal                      Page 4441
                                                                                                    
                                HOUSE JOURNAL                                                    
                                                                                                    
                          ALASKA STATE LEGISLATURE                                               
                                                                                                    
                          TWENTY-THIRD LEGISLATURE                                               
                                                                                                    
                            FIRST SPECIAL SESSION                                                
                                                                                                    
Juneau, Alaska                     Tuesday                    June 22, 2004                       
                                                                                                    
                                  First Day                                                    
                                                                                                    
                                                                                                    
                                                                                                    
Pursuant to the Governor's proclamation dated June 4, 2004, the House                               
was called to order by Speaker Kott at 10:29 a.m.                                                   
                                                                                                    
Roll call showed 31 members present.  Representatives Croft, Holm,                                  
Masek, and Meyer were absent and their presence was noted later.                                    
Representatives Fate, Heinze, and Wilson were absent and later                                      
excused (page 4444).  Representatives Moses and Wolf were absent.                                   
                                                                                                    
                                                                                                    
The invocation was offered by the Chaplain, Representative Kapsner.                                 
Representative Williams moved and asked unanimous consent that the                                  
invocation be spread on the journal.  There being no objection, it was                              
so ordered.                                                                                         
                                                                                                    
     Grant, O God, thy protection;                                                                  
     And in protection, strength;                                                                   
     And in strength, understanding;                                                                
     And in understanding, knowledge;                                                               
     And in knowledge, the knowledge of justice;                                                    
     And in the knowledge of justice, the love of it;                                               
     And in the love of it, the love of all things;                                                 
     And in the love of all things,                                                                 
     The love of You, God and all goodness.                                                         
     Amen.                                                                                          
                                                                                                    
The Pledge of Allegiance was led by Representative Kapsner.                                         
                                                                                                    

2004-06-22                     House Journal                      Page 4442
                        CERTIFICATION OF THE JOURNAL                                             
                                                                                                    
Representative Coghill moved and asked unanimous consent that the                                   
journal for the 120th and 121st legislative days, House Journal                                     
Supplement No. 7, and House and Senate Joint Journal Supplement                                     
No. 19 be approved as certified by the Chief Clerk.  There being no                                 
objection, it was so ordered.                                                                       
                                                                                                    
                         MESSAGES FROM THE GOVERNOR                                              
                                                                                                    
The following Governor's proclamation, dated June 4, 2004, was read:                                
                                                                                                    
"Under the authority of art. II, sec. 9, and art. III, sec. 17, of the Alaska                       
Constitution, and in the public interest, I call the Twenty-Third                                   
Legislature of the State of Alaska into its first special session at                                
Juneau, Alaska, in the legislative chambers on June 22, 2004, at                                    
10:00 a.m., to consider the following subjects:                                                     
                                                                                                    
     1. Relating to and limiting appropriations from the Alaska                                     
     Permanent Fund based on an averaged percent of the fund's                                      
     market value;                                                                                  
                                                                                                    
     2. Implementation of (1) of this proclamation, making                                          
     conforming amendments to the enabling Act of the Alaska                                        
     Permanent Fund Corporation, and relating to the determination of                               
     net income of the Mental Health Trust Fund;                                                    
                                                                                                    
     3. An Act authorizing an advisory vote at the 2004 general                                     
      election regarding sources of money available for appropriation;                             
                                                                                                    
     4. Relating to a limit on the Legislature's power to enact                                     
     appropriations authorizing the expenditure of public money;                                    
                                                                                                    
     5. An Act relating to the taxation and regulation of cigarettes                                
     and tobacco products;                                                                          
                                                                                                    
     6. An Act authorizing the issuance of general obligation bonds                                 
     to finance transportation and public education capital                                         
     improvement projects; and                                                                      
                                                                                                    

2004-06-22                     House Journal                      Page 4443
     7. Authorizing changes to workers' compensation statutes.                                      
                                                                                                    
                                  Done by,                                                         
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
**The presence of Representative Meyer was noted.                                                   
                                                                                                    
                 INTRODUCTION, FIRST READING, AND REFERENCE                                      
                            OF HOUSE RESOLUTIONS                                                 
                                                                                                    
HJR 101                                                                                           
HOUSE JOINT RESOLUTION NO. 101 by the House Rules                                                   
Committee by request of the Governor:                                                               
                                                                                                    
     Proposing amendments to the Constitution of the State of Alaska                                
     relating to and limiting appropriations from the Alaska permanent                              
     fund based on an averaged percent of the fund market value.                                    
                                                                                                    
was read the first time.                                                                            
                                                                                                    
HCR 16                                                                                            
Pursuant to the following:                                                                          
                                                                                                    
     CS FOR HOUSE CONCURRENT RESOLUTION NO. 16(RLS)                                                 
     Proposing amendments to the Uniform Rules of the Alaska State                                  
     Legislature providing that the 2000 edition of "Mason's Manual of                              
     Legislative Procedure" shall implement the rules; relating to                                  
     meetings of subcommittees and conference committees; and                                       
     providing for an effective date for the amendments.                                            
                                                                                                    
Representative Rokeberg advised the members that the 2000 edition of                                
"Mason's Manual of Legislative Procedure" is in effect for the First                                
Special Session.                                                                                    
                                                                                                    
                                ANNOUNCEMENTS                                                    
                                                                                                    
Majority Caucus            Speaker's Chamber                11:00 a.m., 6/22                        
                                                                                                    

2004-06-22                     House Journal                      Page 4444
The Speaker stated that, without objection, the House would recess to                               
a call of the Chair; and so, the House recessed at 10:36 a.m.                                       
                                                                                                    
                                AFTER RECESS                                                     
                                                                                                    
The Speaker called the House back to order at 12:35 p.m.                                            
                                                                                                    
**The presence of Representative Masek was noted.                                                   
                                                                                                    
                                                                                                    
**Representative Coghill moved and asked unanimous consent that                                     
Representatives Fate, Heinze, and Wilson be excused from a call of                                  
the House today.  There being no objection, it was so ordered.                                      
                                                                                                    
                                                                                                    
**The presence of Representative Croft was noted.                                                   
                                                                                                    
                                                                                                    
                 INTRODUCTION, FIRST READING, AND REFERENCE                                      
                            OF HOUSE RESOLUTIONS                                                 
                                 (continued)                                                       
                                                                                                    
HJR 101                                                                                           
HOUSE JOINT RESOLUTION NO. 101 by the House Rules                                                   
Committee by request of the Governor:                                                               
                                                                                                    
     Proposing amendments to the Constitution of the State of Alaska                                
     relating to and limiting appropriations from the Alaska permanent                              
     fund based on an averaged percent of the fund market value.                                    
                                                                                                    
was referred to the Judiciary and Finance Committees.                                               
                                                                                                    
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Zero, Dept. of Revenue                                                                          
2.  Fiscal, Office of the Governor                                                                  
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    

2004-06-22                     House Journal                      Page 4445
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a joint resolution proposing                                        
amendments to the Alaska Constitution relating to and limiting                                      
appropriations from the Alaska Permanent Fund based on an averaged                                  
Percent of Market Value (POMV) approach.  The question presented                                    
to legislators by the joint resolution is whether to allow Alaskans to                              
decide if management of the Alaska Permanent Fund should be                                         
modernized to a POMV approach.  The POMV approach limits annual                                     
spending to five percent of the Alaska Permanent Fund's market value.                               
                                                                                                    
If adopted by the voters, the constitutional amendments in this joint                               
resolution would change the way in which amounts available for                                      
appropriation from the Alaska Permanent Fund are determined.  The                                   
joint resolution contains the same provisions as CS House Joint                                     
Resolution 26(FIN), which passed the House of Representatives                                       
during the second session of this Legislature.  Under the provisions of                             
this joint resolution, the Legislature could appropriate an amount that                             
would not exceed five percent of the averaged market values of the                                  
Alaska Permanent Fund for the first five of the six fiscal years                                    
immediately preceding the fiscal year in which the money is                                         
appropriated.  The provisions do not allocate the amount available for                              
appropriation for a specific purpose.                                                               
                                                                                                    
I remain convinced that Alaskans expect us to resolve the state's long-                             
term fiscal problem this year.  This resolution is an important part of                             
what must be a bi-partisan solution to the state's fiscal gap.                                      
                                                                                                    
I urge your prompt and favorable action on this measure.                                            
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
                                                                                                    
HJR 102                                                                                           
HOUSE JOINT RESOLUTION NO. 102 by the House Rules                                                   
Committee by request of the Governor:                                                               

2004-06-22                     House Journal                      Page 4446
     Proposing amendments to the Constitution of the State of Alaska                                
     relating to and limiting appropriations from the Alaska permanent                              
     fund based on an averaged percent of the fund market value and                                 
     relating to permanent fund dividend payments.                                                  
                                                                                                    
was read the first time and referred to the Judiciary and Finance                                   
Committees.                                                                                         
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Zero, Dept. of Revenue                                                                          
2.  Fiscal, Office of the Governor                                                                  
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a resolution proposing amendments to                                
the Alaska Constitution relating to and limiting appropriations from                                
the Alaska Permanent Fund based on an averaged percent of the fund's                                
market value.  Passage of this resolution by the Legislature gives                                  
Alaskans a voice on the issue of a long-term fiscal plan.  Voters would                             
have the ability to approve the resolution and bring certainty to                                   
Alaska's fiscal future for themselves and future generations of                                     
Alaskans.                                                                                           
                                                                                                    
The resolution outlines a long-term fiscal plan that 1) changes the                                 
structure of the Alaska Permanent Fund to an endowment model; 2)                                    
limits the annual payout from the Alaska Permanent Fund to five                                     
percent of the fund's value; 3) allocates the annual payout of 50                                   
percent to dividends, 45 percent to public education, including K-12                                
and the University, and five percent to communities.  Individual                                    
dividends would be guaranteed to be at least $1,000 or 50 percent of                                
the annual payout, whichever is higher.  I believe that these allocations                           
reflect the priorities of a majority of the public for the use of the                               
Alaska Permanent Fund.                                                                              
                                                                                                    
The resolution is based on provisions of CS House Joint Resolution                                  
26(FIN), which passed the House during the second session of this                                   

2004-06-22                     House Journal                      Page 4447
Legislature.  Under the provisions of this resolution, the Alaska                                   
Permanent Fund is converted to the Percent of Market Value or                                       
"POMV" endowment model.  An annual payout of five percent of the                                    
value of the fund is set.                                                                           
                                                                                                    
                                                                                                    
POMV is an accepted method for managing funds.  Anchorage,                                          
Fairbanks, the North Slope Borough, and Sitka residents have voted to                               
use the POMV model for their municipal trust accounts.  Private                                     
foundations like the Ford Foundation and about 83 percent of colleges                               
use some form of a POMV payout method.                                                              
                                                                                                    
                                                                                                    
These allocation provisions have a ten-year "sunset" to allow the                                   
Legislature and the voters an opportunity to revisit them to ensure that                            
the allocations continue to meet state needs.                                                       
                                                                                                    
                                                                                                    
I urge your prompt and favorable action on this legislation.                                        
                                                                                                    
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
                                                                                                    
HJR 103                                                                                           
HOUSE JOINT RESOLUTION NO. 103 by the House Rules                                                   
Committee by request of the Governor:                                                               
                                                                                                    
     Proposing amendments to the Constitution of the State of Alaska                                
     relating to an appropriation limit.                                                            
                                                                                                    
was read the first time and referred to the Judiciary and Finance                                   
Committees.                                                                                         
                                                                                                    
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    

2004-06-22                     House Journal                      Page 4448
1.  Fiscal, Office of the Governor                                                                  
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a resolution relating to an appropriation                           
or "spending" limit.  This resolution gives voters the chance to directly                           
voice their opinion on a spending limit at the ballot box.  A spending                              
limit is an integral part of the transition to a long-range fiscal plan for                         
Alaska.                                                                                             
                                                                                                    
The model for this resolution is the version of Committee Substitute                                
House Joint Resolution 9 (CSHJR 9) as it passed the House in the                                    
regular session (CSHJR 9(FIN) am).  There are some technical                                        
changes, which were recommended by the Department of Law.                                           
Specifically, in the list of appropriations excluded from the                                       
appropriation limit, references to "state lease debt" have been changed                             
to "capital leases" to more accurately reflect the description of these                             
obligations in governmental accounting.  Other technical changes were                               
made to more clearly provide that the "excluded" appropriations are to                              
be excluded from the appropriation limit itself as well as from                                     
calculation of the appropriation limit.                                                             
                                                                                                    
The resolution presents the public with the opportunity to approve a                                
spending limit with enough "teeth" in it to be effective.  If approved by                           
the Legislature and passed by the voters, it will prevent government                                
spending from growing too large, too fast.  Alaskans want spending                                  
controlled to produce a leaner, more efficient, effective state                                     
government.  Passage of the resolution sends the signal the Legislature                             
has heard the message and will allow Alaskans to vote on the issue.                                 
                                                                                                    
I urge your prompt and favorable action on this resolution.                                         
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    

2004-06-22                     House Journal                      Page 4449
                 INTRODUCTION, FIRST READING, AND REFERENCE                                      
                               OF HOUSE BILLS                                                    
                                                                                                    
HB 1001                                                                                           
HOUSE BILL NO. 1001 by the House Rules Committee by request of                                      
the Governor, entitled:                                                                             
                                                                                                    
     "An Act relating to taxes on cigarettes and tobacco products, to                               
     tax stamps on cigarettes, to forfeiture of cigarettes and of property                          
     used in the manufacture, transportation, possession, or sale of                                
     unstamped cigarettes, to accounting for and use of part of the                                 
     proceeds of the additional cigarette tax, and to licenses and                                  
     licensees under the Cigarette Tax Act; relating to unfair cigarette                            
     sales; and providing for an effective date."                                                   
                                                                                                    
was read the first time and referred to the Labor & Commerce and                                    
Finance Committees.                                                                                 
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Fiscal, Dept. of Public Safety                                                                  
2.  Fiscal, Dept. of Revenue                                                                        
                                                                                                    
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18 of the Alaska                                        
Constitution, I am transmitting a bill that increases the cigarette excise                          
tax by $1.00 a pack and makes other changes in our current statutes.                                
The tax on "other tobacco products" such as smokeless tobacco would                                 
be increased from 75 percent to 100 percent of the wholesale cost.                                  
                                                                                                    
Passage of these tax increases is supported by the health benefits                                  
alone.  Tobacco is the number one preventable cause of death,                                       
disability, and chronic illness in Alaska.  It is public health enemy                               
number one.  I want these tax increases to reduce consumption of                                    
tobacco products in Alaska.  Such a decrease will benefit adult                                     
smokers who decide to quit, teenagers and pre-teens who decide to                                   

2004-06-22                     House Journal                      Page 4450
quit or not start smoking, and Alaskans that choose not to smoke but                                
suffer the ill effects of second hand smoke.                                                        
                                                                                                    
Current estimates are that passage of the cigarette tax should result in a                          
15 percent drop in illegal teen smoking.  A 15 percent drop in youth                                
smoking rates from current levels translates into 1,800 lives saved                                 
from premature death due to tobacco addiction.  My hope is that even                                
more Alaska teens decide not to try smoking or break their addiction                                
to cigarettes.                                                                                      
                                                                                                    
Among current adult smokers, 3,500 will quit smoking because of the                                 
tax, and of those, 800 will be saved from a smoking-caused death.                                   
Smoking among expectant mothers would also be reduced                                               
significantly; resulting in 850 babies being spared from exposure to                                
maternal smoking prior to delivery during the next five years.                                      
                                                                                                    
Alaska Natives should particularly benefit from reduced smoking.                                    
While smoking rates are declining within the U.S. general population,                               
the rate of smoking is unchanged among Alaska Native adults and, at                                 
44 percent, is almost double that of non-Natives.  Currently, 44                                    
percent of Alaska Native high school students smoke almost four                                     
times the rate among non-Native students.  Lung cancer, the leading                                 
cause of cancer deaths, is increasing at an alarming rate among Alaska                              
Natives of both sexes.  Cardiovascular disease, including heart disease                             
and stroke, is also linked with tobacco use, and kills approximately                                
120 Alaska Natives each year.                                                                       
                                                                                                    
In order to ensure we achieve these health benefits, I have included                                
language that earmarks part of the tax revenues for the smoking                                     
education, tobacco use prevention, and tobacco control program.  At                                 
the level I have included, Alaska would become one of five states that                              
fund tobacco cessation programs at or above the level recommended                                   
by the Centers for Disease Control.                                                                 
                                                                                                    
I have also included a significant increase in the tax on smokeless                                 
tobacco.  Other forms of tobacco such as chew or cigars also present                                
serious risks to the health of users.  For example, smokeless tobacco                               
users may be up to twice as likely as non-users to die from heart                                   
disease and other cardiovascular conditions due to increased blood                                  
pressure.                                                                                           
                                                                                                    

2004-06-22                     House Journal                      Page 4451
There is also an important fiscal benefit in this bill.  The new revenues                           
generated by the tax increases will help reimburse a portion of the                                 
approximately $270 million in annual costs for direct medical                                       
expenses and lost productivity attributed to tobacco use in Alaska.                                 
The financial burden all Alaskans are stuck with because some                                       
Alaskans smoke should be reduced.   This bill targets users and asks                                
them to pay a bit more of the costs they impose on all Alaskans.  I                                 
believe many Alaskans would argue they should not be stuck with any                                 
costs for someone else's voluntary choice to use a dangerous product.                               
                                                                                                    
Given the health impact, cost savings, and revenue to be generated                                  
from the proposed tobacco tax, I urge your support for this legislation.                            
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
HB 1002                                                                                           
HOUSE BILL NO. 1002 by the House Rules Committee by request of                                      
the Governor, entitled:                                                                             
                                                                                                    
     "An Act providing for a special deposit for workers' compensation                              
     insurers; relating to assigned risk pools and workers'                                         
     compensation insurers; relating to the board of governors of the                               
     Alaska Insurance Guaranty Association; stating the intent of the                               
     legislature, and setting out limitations, concerning the                                       
     interpretation, construction, and implementation of workers'                                   
     compensation laws; relating to restructuring the Alaska workers'                               
     compensation system; eliminating the Alaska Workers'                                           
     Compensation Board; establishing a division of workers'                                        
     compensation within the Department of Labor and Workforce                                      
     Development and assigning certain Alaska Workers'                                              
     Compensation Board functions to the division and the Department                                
     of Labor and Workforce Development; establishing a Workers'                                    
     Compensation Appeals Commission; assigning certain functions                                   
     of the Alaska Workers' Compensation Board to the Workers'                                      
     Compensation Appeals Commission and the office of                                              
     administrative hearings; relating to agreements that discharge                                 
     workers' compensation liability; providing for administrative law                              

2004-06-22                     House Journal                      Page 4452
     judges in workers' compensation proceedings; relating to workers'                              
     compensation awards; relating to an employer's failure to insure                               
     and keep insured or provide security; providing for appeals from                               
     compensation orders; relating to workers' compensation                                         
     proceedings; providing for supreme court jurisdiction of appeals                               
     from the Workers' Compensation Appeals Commission; providing                                   
     for a maximum amount for the cost-of-living adjustment for                                     
     workers' compensation benefits; providing for administrative                                   
     penalties for employers uninsured or without adequate security for                             
     workers' compensation; relating to fraudulent acts or false or                                 
     misleading statements in worker's compensation; and providing                                  
     for an effective date."                                                                        
                                                                                                    
was read the first time and referred to the Labor & Commerce                                        
Committee.                                                                                          
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Indeterminate, Dept. of Administration                                                          
2.  Fiscal, Dept. of Administration                                                                 
3.  Fiscal, Alaska Court System                                                                     
4.  Fiscal, Dept. of Labor & Workforce Development                                                  
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a bill relating to the workers'                                     
compensation system.  This bill is based on the many discussions and                                
hearings conducted during the Second Session of the Twenty-Third                                    
Alaska State Legislature on Senate Bill 311.  The bill preserves lay                                
participation in the workers' compensation system, while increasing                                 
consistency in decision making and strengthening enforcement.  It                                   
seeks to improve the market for existing workers' compensation                                      
insurers and attract new insurers, without immediate reductions in                                  
benefits to injured Alaskan workers.                                                                
                                                                                                    
Despite the Legislature's best efforts over the years, our current                                  
workers' compensation system has not proven responsive to the                                       

2004-06-22                     House Journal                      Page 4453
pressures caused by a growing, changing workforce and increasing                                    
costs.  In order to respond to complaints about the delay in hearings,                              
the Legislature has steadily increased the number of members of the                                 
current Alaska Workers' Compensation Board (board) to make up                                       
more hearing panels, and removed the requirement that a fully                                       
balanced panel be available for hearings.  What was originally a three-                             
member board has grown to include 14 volunteer members residing                                     
around the state.  The original three-member board heard all claims;                                
now panels, whose composition can vary in as many as 300                                            
combinations, hear claims.  As a result, the consistency of a single                                
three-member board has been lost.  The increased size of the board                                  
makes it difficult to assemble as a body for holding meetings and                                   
adopting regulations.  While I appreciate the dedication, public                                    
service, and hard work that the board members and division of                                       
workers' compensation (division) staff provide, many members of the                                 
board lack legal training or background, and division hearing officers                              
are not required to be lawyers.  The division is also hampered by the                               
design of the "unified board" system.  The division has no authority to                             
respond aggressively and quickly to non-compliance and fraud -- and                                 
the board itself is now too unwieldy to take such action in any but                                 
singular cases.                                                                                     
                                                                                                    
This bill would replace the current system with one more like the most                              
common form of workers' compensation system in the rest of the                                      
United States.  Three new components of the system will bring more                                  
consistency and predictability in decisions, and more agility and power                             
of enforcement: (1) a Workers' Compensation Appeals Commission                                      
(commission); (2) qualified and experienced administrative law                                      
judges; and (3) an accountable division director with additional                                    
administrative authority and duties.  The only change to benefits                                   
remains the cap on the cost-of-living adjustment paid to out-of-state                               
claimants.  While claimants who reside in areas with a lower cost of                                
living than Alaska's would continue to receive an adjustment, those                                 
residing in a higher cost-of-living area would be capped at the amount                              
paid to in-state claimants.  Otherwise, the bill does not alter benefits                            
available to injured workers or the method of delivering them.                                      
                                                                                                    
Under the bill, an administrative law judge in the office of                                        
administrative hearings in the Department of Administration would                                   
conduct initial hearings on disputes.  Last session the Legislature                                 

2004-06-22                     House Journal                      Page 4454
overwhelmingly approved of the use of independent administrative                                    
law judges centrally located in an office of administrative hearings and                            
supervised by a chief administrative law judge to hear and adjudicate                               
administrative hearings.  Among other qualifications, all                                           
administrative law judges must be admitted to practice law in Alaska,                               
and have been admitted in Alaska for at least two years.  They are                                  
subject to a code of hearing officer conduct.  The bill requires that the                           
administrative law judges who are appointed to conduct workers'                                     
compensation hearings have specific expertise in the area of workers'                               
compensation.                                                                                       
                                                                                                    
The commission would replace the Superior Court at the appeals level.                               
The commission is composed of five members: one attorney                                            
experienced in the practice of workers' compensation law (who will be                               
an employee of the Department of Labor and Workforce                                                
Development) and four lay, volunteer members.  The lay, volunteer                                   
members would be appointed from both labor and industry and for any                                 
given matter, one from each side would sit on the appeal together with                              
the attorney member of the commission.  The commission's decisions                                  
would be binding legal precedent unless and until overturned on                                     
appeal to the Alaska Supreme Court.                                                                 
                                                                                                    
This bill also adds new duties and accountability to the administration                             
of the system.  Currently, the director has little authority to act because                         
all power rests in the board.  This bill would establish a division of                              
workers' compensation in the department.  The director, appointed by                                
the commissioner, would be personally accountable for the                                           
performance of the division.  The director would have expanded                                      
authority to administer the second injury fund (AS 23.30.040), obtain                               
stop work orders, investigate uninsured employers, seek civil penalties                             
for an employer's failure to insure workers, investigate complaints of                              
fraud in workers' compensation, propose regulations to the                                          
commissioner, intervene in cases and file appeals, supervise                                        
rehabilitation of injured workers, and administer the Alaska Workers'                               
Compensation Act.  The director's formal decisions may be appealed                                  
to the commission.                                                                                  
                                                                                                    
The bill also provides a powerful tool to further the department's                                  
current approach of "zero tolerance" for employers that fail to carry                               
legally required workers' compensation liability insurance.  Under this                             

2004-06-22                     House Journal                      Page 4455
bill, the department gains authority to levy civil penalties against                                
employers whose choice to operate without the required insurance                                    
coverage places their employee's financial and physical well being at                               
risk.  Such employers also gain an unfair competitive advantage over                                
employers who act responsibly by complying with the law and                                         
purchasing insurance.                                                                               
                                                                                                    
                                                                                                    
The bill also authorizes, for the first time, the director to investigate                           
fraud in workers' compensation.  Until now, Alaska has relied on                                    
insurers to investigate fraud in workers' compensation claims, with the                             
result that investigations are not necessarily consistent with the                                  
public's interest is preventing workers' compensation fraud, as opposed                             
to an insurer's monetary interest in a particular case.  The cost of fraud                          
is borne by the public in the increased cost of the system--it has an                               
interest in preventing a range of fraudulent acts, such as obtaining                                
payments beyond the benefit amount allowed, kickbacks, and                                          
threatening witnesses, that is not limited to obtaining reimbursement                               
of benefits from a single dishonest claimant.                                                       
                                                                                                    
                                                                                                    
The bill would also revise AS 21, the insurance code, regarding how                                 
the state regulates the workers' compensation insurance industry.                                   
Under the bill, insurers that transact workers' compensation insurance                              
would be required to maintain in this state special deposits of cash or                             
securities for the protection of persons covered by workers'                                        
compensation insurance.  In addition, insurers must provide collateral                              
in this state for their assumed share of the assigned risk pool.  This                              
revision provides additional protection in the event of insurer                                     
insolvency.                                                                                         
                                                                                                    
                                                                                                    
The Alaska Insurance Guaranty Association's Board of Governors                                      
would be modified to include representatives from employers, labor,                                 
and insurance licensees.  This change will expand the expertise of the                              
Board of Governors to better address workers' compensation market                                   
issues.                                                                                             
                                                                                                    
Finally, the assigned risk pool is altered to ensure that it is self-                               
funding, instead of relying on periodic assessments against insurers                                

2004-06-22                     House Journal                      Page 4456
and consumers.  The current pool is unable to generate sufficient                                   
premium to pay the claims made against it.  The additional burden on                                
insurance companies is a factor making the Alaska workers'                                          
compensation insurance market unattractive to insurers.  Eliminating                                
the cap on the assigned risk pool surcharge, and mandating a self-                                  
funding pool, should increase deposits available to protect insureds,                               
improve the market for Alaska insurance companies, and ensure that                                  
employers have access to workers' compensation insurance.                                           
                                                                                                    
This bill represents a major step forward in modernization of the                                   
Alaska workers' compensation system and addressing the significant                                  
workers' compensation crisis in Alaska.  This bill would                                            
professionalize the hearing process through the use of administrative                               
law judges located in the office of administrative hearings.  This will                             
improve the process of making workers' compensation decisions,                                      
increase predictability in the hearings, and strengthen enforcement                                 
powers of the division.  These features should make Alaska more                                     
attractive for businesses to remain here or to relocate their operations                            
to this state.                                                                                      
                                                                                                    
I urge your prompt and favorable action on this measure.                                            
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
HB 1003                                                                                           
HOUSE BILL NO. 1003 by the House Rules Committee by request of                                      
the Governor, entitled:                                                                             
                                                                                                    
     "An Act relating to the income of and appropriations from the                                  
     Alaska permanent fund under art. IX, sec. 15(b), Constitution of                               
     the State of Alaska, and making conforming amendments; relating                                
     to permanent fund dividend payments of at least $1,000; relating                               
     to the determination of net income of the mental health trust fund;                            
     and providing for an effective date."                                                          
                                                                                                    
was read the first time and referred to the Finance Committee.                                      
                                                                                                    

2004-06-22                     House Journal                      Page 4457
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Zero, Dept. of Revenue                                                                          
                                                                                                    
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am                          
transmitting a bill relating to the income of and appropriations from                               
the Alaska permanent fund under art. IX, sec. 15(b), Constitution of                                
the State of Alaska, and making conforming amendments.  This bill is                                
substantially the same as CSHB 298(FIN) am, which passed the House                                  
during the second regular session, but with a few new provisions.                                   
                                                                                                    
                                                                                                    
I have separately transmitted to you a joint resolution proposing a                                 
"percent of market value" (POMV) amendment to the Alaska                                            
Constitution.  This bill would make conforming amendments to the                                    
enabling act of the Alaska Permanent Fund Corporation necessary to                                  
implement that amendment.  This bill also would make allocations of                                 
the amount available for appropriation from the permanent fund after                                
the POMV amendment is adopted.  These allocations make provision                                    
for aid to municipalities and other communities, public education, and                              
the permanent fund dividend.  The allocation provisions would give                                  
moral force to the legislature's intent to pay for these important public                           
purposes.  A new provision has been added that would adjust the                                     
allocation of amounts available for appropriation from the permanent                                
fund so that the dividend will be kept at $1,000 or more each year.                                 
The bill also contains provisions that will conform the mental health                               
trust fund revenue availability and accounting provisions to those                                  
proposed for the permanent fund.  The mental health trust fund is                                   
invested by the Alaska Permanent Fund Corporation and it will be                                    
more efficient if the computation of revenue available for                                          
appropriation is consistent for both funds.                                                         
                                                                                                    
                                                                                                    
I believe that this bill provides a vehicle the legislature can use to                              
resolve how the POMV amendment would be implemented.  By                                            

2004-06-22                     House Journal                      Page 4458
placing the implementing provisions in statute, the legislature retains                             
the power to make necessary adjustments to meet unforeseeable                                       
events.                                                                                             
                                                                                                    
I urge your prompt and favorable consideration of this bill.                                        
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
                                                                                                    
HB 1004                                                                                           
HOUSE BILL NO. 1004 by the House Rules Committee by request of                                      
the Governor, entitled:                                                                             
                                                                                                    
     "An Act providing for and relating to the issuance of general                                  
     obligation bonds for the purpose of paying the cost of design,                                 
     construction, and major maintenance of facilities at the University                            
     of Alaska; and providing for an effective date."                                               
                                                                                                    
was read the first time and referred to the Finance Committee.                                      
                                                                                                    
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Fiscal, Dept. of Revenue                                                                        
                                                                                                    
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of article III, section 18, of the Alaska                                       
Constitution, I am transmitting a bill authorizing the issuance of                                  
general obligation bonds to finance capital improvement projects for                                
the University of Alaska.  Great progress has been made with our                                    
university system.  Student enrollment is at the highest level ever.                                
(Increase of 14.5 percent system wide between 2000 and 2004).                                       
Research activities are also at an all-time high, and have increased by                             

2004-06-22                     House Journal                      Page 4459
more than 75 percent since fiscal year 1999.  These successes are                                   
based on the state's on-going commitment to the university.  This bill                              
builds upon, and reinforces this commitment, while realizing the harsh                              
reality of the limits forced on the state by the present fiscal situation.                          
                                                                                                    
                                                                                                    
The projects in this bill address a number of the University of Alaska's                            
critical infrastructure needs.  The projects include improvements to the                            
integrated science facility at the University of Alaska, Anchorage to                               
provide crucial science classroom and instructional labs.                                           
                                                                                                    
                                                                                                    
Also included are projects that address essential life safety, renovation,                          
and equipment priorities.  These include Americans with Disabilities                                
Act and life safety issues, as well as crucial equipment and space                                  
renovation needs.  Basic information technology upgrades and                                        
replacement of academic and instructional equipment is included.                                    
Designed and construction, such as for the Biological and                                           
Computational Science Facility on the Fairbanks campus, will support                                
the continued successful expansion of the state and university's                                    
research and development agenda.                                                                    
                                                                                                    
                                                                                                    
New construction, such as for the Biological and Computational                                      
Facility on the Fairbanks campus, will support the continued                                        
successful expansion of the state and university's research and                                     
development agenda.                                                                                 
                                                                                                    
The bill requires that sections one through seven of the bill only take                             
effect once the Lieutenant Governor has certified a long-range fiscal                               
plan has been adopted as specified in the bill and the bonds have been                              
approved by the voters.                                                                             
                                                                                                    
I urge your prompt and favorable action on this legislation.                                        
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    

2004-06-22                     House Journal                      Page 4460
HB 1005                                                                                           
HOUSE BILL NO. 1005 by the House Rules Committee by request of                                      
the Governor, entitled:                                                                             
                                                                                                    
     "An Act providing for and relating to the issuance of general                                  
     obligation bonds for the purpose of paying the cost of state surface                           
     transportation projects; and providing for an effective date."                                 
                                                                                                    
was read the first time and referred to the Finance Committee.                                      
                                                                                                    
The following fiscal note(s) apply:                                                                 
                                                                                                    
1.  Fiscal, Dept. of Revenue                                                                        
                                                                                                    
The Governor's transmittal letter dated June 21, 2004, follows:                                     
                                                                                                    
"Dear Speaker Kott:                                                                                 
                                                                                                    
Under the authority of art. III, sec. 18, of the Alaska Constitution, I am                          
transmitting a bill authorizing the issuance of general obligation bonds                            
to finance surface transportation capital improvement projects.                                     
                                                                                                    
The projects included in this bill address a variety of important surface                           
transportation needs across the state, ranging from congestion relief in                            
Anchorage and Fairbanks, to safety improvements, betterment of                                      
driving conditions, and access to critical resource and industrial                                  
projects.  Some of these upgrades are being included to facilitate                                  
transfer to local ownership.                                                                        
                                                                                                    
Investment in transportation pays both short- and long-term dividends                               
to the state's economy.  Immediately, it would put Alaskans to work in                              
the design and construction of these surface transportation projects.                               
Long-term, it ensures that workers and commodities can move                                         
efficiently, and enables new economic activity to occur that in turn                                
creates new family-wage jobs.   As such, I consider this bond package                               
a stimulus to the state's economy, and part of the budget solution.                                 
                                                                                                    
One key advantage of this bill is that it provides an additional level of                           
transportation financing during a period of reduced federal funding for                             
highways.  Since statehood, the flow of federal dollars has typically                               

2004-06-22                     House Journal                      Page 4461
grown each year, but since 2002 this trend has changed and we now                                   
face two consecutive years of decline in federal funding levels.                                    
Supplementing the state's capital program with general obligation                                   
bond money would ensure that the state's infrastructure would keep                                  
pace with growth in traffic and other uses.                                                         
                                                                                                    
I view this bond package as an important plank in the state's long-                                 
range financial plan.  Ensuring that we have a sufficient and effective                             
surface transportation system is an important duty of the legislative                               
and executive branches.  The bill also requires that the money in the                               
bond package only be available once a constitutional amendment                                      
establishing the percent of market value approach to determining                                    
amounts available for appropriation from the Alaska Permanent Fund,                                 
and the bonds, have been approved by the voters.                                                    
                                                                                                    
I welcome your support for this important measure.                                                  
                                                                                                    
                                 Sincerely yours,                                                   
                                 /s/                                                                
                                 Frank H. Murkowski                                                 
                                  Governor"                                                        
                                                                                                    
                                                                                                    
**The presence of Representative Holm was noted.                                                    
                                                                                                    
                                 ENROLLMENT                                                      
                                                                                                    
HCR 16                                                                                            
The following was enrolled, signed by the Speaker and Chief Clerk,                                  
President and Secretary of the Senate, and the engrossed and enrolled                               
copies were transmitted to the Office of the Governor at 12:30 p.m.,                                
June 22, 2004:                                                                                      
                                                                                                    
     CS FOR HOUSE CONCURRENT RESOLUTION NO. 16(RLS)                                                 
     Proposing amendments to the Uniform Rules of the Alaska State                                  
     Legislature providing that the 2000 edition of "Mason's Manual of                              
     Legislative Procedure" shall implement the rules; relating to                                  
     meetings of subcommittees and conference committees; and                                       
     providing for an effective date for the amendments.                                            
                                                                                                    

2004-06-22                     House Journal                      Page 4462
                                ANNOUNCEMENTS                                                    
                                                                                                    
House committee schedules are published daily under separate cover.                                 
                                                                                                    
Majority Caucus            Speaker's Chamber                 1:30 p.m., 6/22                        
                                                                                                    
                                 ADJOURNMENT                                                     
                                                                                                    
Representative Coghill moved and asked unanimous consent that the                                   
House adjourn until 2:00 p.m., June 23, 2004.  There being no                                       
objection, the House adjourned at 12:50 p.m.                                                        
                                                                                                    
                                               Suzi Lowell                                          
                                               Chief Clerk