Legislature(2005 - 2006)
05/04/2005 04:45 PM Senate FIN
| Audio | Topic |
|---|---|
| Start | |
| SB46 | |
| HB61 | |
| HB33 | |
| HB149 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR HOUSE BILL NO. 33(FIN)
"An Act relating to required notification of the Department of
Commerce, Community, and Economic Development, economic effect
statements, and regulatory flexibility analyses regarding the
adoption of regulations that may govern the conduct of small
businesses; relating to a private cause of action, regulation
invalidation, and judicial review related to required
notification, economic effect statements, and regulatory
flexibility analyses for the adoption of regulations that may
govern the conduct of small businesses; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
MICHAEL PAWLOWSKI, Staff to Representative Kevin Meyer, the bill's
sponsor, explained that the basis for this bill was the federal
Regulatory Flexibility Act of 1980. That Act directed regulatory
agencies to "first consider the economic effect" a regulation would
incur on small businesses, and secondly "consider an alternative
method of achieving the same statutory or regulatory goal". While
this Act has been in effect for 25-years, President George Bush has
furthered "the Small Business Regulatory Reform Act as a model for
states to adopt to consider ways of lowering the burden of state
regulations on small businesses."
Mr. Pawlowski characterized this bill as being "loosely patterned
after the model legislation that the Office of Small Business
Administration made available for states". A "significant and
detailed process" has been conducted "to bring it into alliance and
to make it work for the State of Alaska". It would direct four
designated state agencies "to consider the economic impact of their
regulations on small business". Consideration should be given to
such things as "the cost of compliance" and to determine other
methods through which to accomplish such compliance. The Department
of Commerce, Community and Economic Development would be asked to
take the "lead advisory role, essentially a small business advocate
position" in this endeavor "to provide a check in the regulatory
process and a voice for the needs of small businesses".
Mr. Pawlowski noted that Members' packets contain a letter of
support from the Alaska State Chamber of Commerce, dated March 15,
2005 [copy on file] and addressed to Representative Meyer.
Co-Chair Wilken voiced his support for the effort and intent of the
legislation. However, he questioned the need to add a $100,000 a
year position to coordinate the program, as reflected in the April
15, 2005 fiscal note #11 from the Department of Commerce, Community
and Economic Development. He opined that the Department should be
able to conduct this effort through its "normal course of everyday
business".
Mr. Pawlowski informed the Committee that several fiscal notes were
added to the bill during its deliberations in the House of
Representatives. One of those notes was as high as $217,000.
Representative Meyer "was taken aback" at the agencies' position
that "the expertise" that would be required to conduct this program
was currently unavailable in the departments. While current
department personnel "are really dedicated to achieving the
statutory goals that are put on them, and, as the same time they
come up with regulations …. the thought process of what that small
business is going to have to go through to meet the demands of the
regulations doesn't happen". The Governor's Office "felt very
strongly that an adequately funded and very strong position to be
that small business advocate would make this program successful
given the experience in the current regulatory format".
Mr. Pawlowski conveyed that utilizing small business license fees
to fund this position had been discussed but not advanced, as not
doing so would "demonstrate" to small businesses "that the State
was giving back to small businesses from the fees that they were
paying into the State". Representative Meyer supported that
decision and believes that the position is necessary.
Co-Chair Green asked for an example of how the program would work.
6:14:55 PM
Mr. Pawlowski directed Members to a flowchart titled "Steps in the
Regulation Adoption Process Under HB33" [copy on file], which
depicts how the process would be conducted. The basis for the
flowchart is the current "Drafting Manual for Administrative
Regulations". The shaded portions on the chart indicate the steps
that would be added to the process by the adoption of this bill.
Mr. Pawlowski noted that the Department of Transportation and
Public Facilities is not designated as one of the four agencies to
which this legislation would apply as the manner in which that
Department conducts its business is deemed as being "outside of the
intent of the bill". A standard has been designated, as reflected
in Sec. 1(i)(3) on page four lines 20-23 that would apply to "the
regulations that govern the conduct of small businesses; that means
the manner in which a small business conducts its business
activities". The issue pertinent to the bill is exampled by a
recent Department of Health and Social Services regulations
pertaining to child care centers that describe such things as the
size of the required trashcans; the size of the waste paper baskets
that those trashcans must contain; and provisions requiring that a
toy that has gone into the mouth of a child must be sanitized
before it could be used by another child. The question is what how
much money it would cost a childcare center, serving 30 children
for example, to adhere to all the regulations. That is what governs
the conduct standard "that would trigger when this review would be
necessary".
Mr. Pawlowski explained that this legislation would incur a change
in the process when the agency making the regulation would consult
with the Department of Law in that regard as reflected at Step 4 on
the aforementioned flowchart. The change would be that the agency
must also notify the person holding the new position requested in
fiscal note #11, in the Department of Commerce, Community and
Economic Development, who would then assist and advise throughout
the public comment process. Then the agency, assisted by the person
from Department of Commerce, Community and Economic Development,
would utilize information obtained from the public comment process
and other information from their files to follow the nine Economic
Effect Statement criteria added by this bill and depicted in the
large shaded area on the flowchart. This criterion is specified as
follows.
Economic Effects Statement:
· Estimate of small businesses effected.
· Proposed recordkeeping and admin. Costs.
· Statement of economic effect.
· Description of alternate methods.
Regulatory Flexibility Analysis: (examine)
· Less stringent compliance or reporting requirements.
· Less stringent compliance or reporting deadlines.
· Consolidation or simplification of compliance or reporting.
· Establishment of performance standards to replace design or
operational standards.
· Exemption of small businesses.
Mr. Pawlowski stated that the alternative methods included in the
Economic Effect Statement "would be achieved by working through the
Regulatory Flexibility Analysis", whose components have been
utilized for 25-years at the federal level. The development of less
stringent compliance or reporting deadlines could be accomplished
by simply allowing a business to report annually, quarterly,
monthly, or biannually depending on the size of the business.
Mr. Pawlowski stated that poorly written regulations would be
resubmitted to the Legislature for further reworking. "HB 33 is
about trying to do it right in the first place."
6:20:05 PM
Co-Chair Wilken recalled that Senator Gene Therriault had, in the
last few years, submitted legislation that had inserted the
Legislature into the flow chart process.
Co-Chair Green asked whether that legislation had pertained to the
Administrative Regulation Review process.
Co-Chair Wilken could not recall the exact bill number, but did
recall that it had allowed the Legislature to be included in the
process by the inclusion of a Regulations Review Committee. He
questioned the reason that that recently added step was not
reflected in the flowchart.
Mr. Pawlowski affirmed that legislation establishing the
Administrative Regulation Review process was adopted two years
prior. Further clarification of its inclusion was conducted the
previous Session. That step is reflected on the chart at Step 11.
He noted that the bill's sponsor feels that HB 33 is necessary
because, rather than taking "the word" of the Administrative
Regulation Review Committee, this legislation would provide written
documentation based on the nine aforementioned guidelines that the
regulations pertaining to small businesses would be analyzed to the
benefit of small businesses.
Co-Chair Wilken acknowledged.
6:22:49 PM
STEVE WEAVER, Assistant Attorney General, Legislation & Regulations
Section, Office of the Attorney General, Department of Law, shared
that the Governor Frank Murkowski Administration supports the bill.
The impact of regulations on small businesses "has been an
important issue" to the Governor for quite a while. The legislation
has, as a result of its Legislative hearings, evolved into a very
workable bill for the State. The Small Business Advocate position
that would be created in the Department of Community and Economic
Development "would be very helpful in the process" as it would
assist the agencies "to put considerations of small business
impacts into the process in a consistent fashion; to provide a one
stop shopping source for that, and to avoid more costly alternative
processes such as hiring outside consultants which agencies might
need to do otherwise. The emphasis was on making this bill as cost
effective as possible for the Administration."
6:24:20 PM
Co-Chair Green voiced acceptance of the Small Business Advocacy
position. However, she noted that legislative mandates such as the
requirement that businesses must have insurance coverage, impacts
businesses across the state, regardless of their size. Another
broad size requirement is exampled by licensing fees.
6:25:30 PM
Co-Chair Green inquired as to whether the emphasis on small
businesses is due to the fact that there is a Small Business
Administration.
Mr. Pawlowski replied that the emphasis on small business, which is
defined as a business with 100 or less employees, would affect more
than 170,000 people in the State. "That's over half of the State's
workforce." The emphasis is due to the fact that "small businesses
typically do not have the resources to be involved in the
regulatory process. They don't have the ability or attention to pay
or the time to pay; their workforce is spread relatively thin. A
large business would have the time to devote to it."
Mr. Pawlowski noted that such things as user fees would not be
affected by this legislation. Continuing, he noted that the
Medicaid and Medicare cost reimbursement regulations are excluded
from the legislation, for "when the Legislature directs something
as a cost containment provision" to, for instance, the Department
of Health and Social Services, it might "save up to $15 million
dollars a year", and a one-day delay in the issuance of those
regulations could cost the State between $40,000 and $57,000. The
cost benefits to a business would not be that extreme.
6:26:34 PM
Co-Chair Green voiced appreciation for the explanation.
The bill was ordered HELD in Committee.
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