Legislature(2017 - 2018)HOUSE FINANCE 519
03/13/2017 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB30 | |
| HB90 HOUSE BILL NO. 90 | |
| HB6 | |
| HB31 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 31 | TELECONFERENCED | |
| + | HB 90 | TELECONFERENCED | |
| + | SB 30 | TELECONFERENCED | |
| + | HB 6 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 90
"An Act relating to occupational licensing fees;
relating to an occupational investigation surcharge;
and providing for an effective date."
2:28:06 PM
REPRESENTATIVE SAM KITO, SPONSOR, introduced himself and
the bill.
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SAM KITO, explained
that HB 90 eased the burden of regulatory costs for
licensees governed under Title 8 regarding corporations,
business and professional licensing. The legislation
would remove investigative fees out of regulatory costs
paid by each licensee and spread the total cost of
investigation charges across all licensees regardless of
profession. The investigative surcharge was in lieu of the
current amount that licensees paid in their overall license
fee. The licensee would pay a licensing and administrative
fee and in addition, pay a separate investigative
surcharge. The Department of Commerce, Community and
Economic Development (DCCED) estimated the separate
surcharge at $55 for all licensees every two years. Some
boards would benefit greatly and conversely, others might
experience a slight increase. She knew that the licensing
issues pertained to working people that had an interest in
avoiding large fee increases and a level playing field
without barriers to entering a profession. She felt that
licensees wanted assurances from DCCED that it would
stabilize licensing fees. She elaborated that one of the
reasons for large fee spikes was due to investigative
costs, which were difficult to contain. If a professional
licensing program received a complaint leading to a complex
investigation, an enforcement action could exceed $100,000.
The scenario would cause devastating fee increases in
licensing programs with fewer licensees. She summarized
that the bill would spread investigative expenditures
across all 74,000 licensees.
2:32:33 PM
Representative Wilson appreciated the effort to resolve the
issue, but she wondered if the bill solved the issue
related to investigations. She wondered what really drove
the high cost of investigations Representative Kito
identified that the yearly total investigative costs were
relatively consistent at roughly $4 million. He recapped
that for smaller boards an investigation can significantly
increase their fees. Some boards were large and
investigative fees were spread out across members. He
commented that some boards with fewer members that
developed a large debt were at risk of losing their ability
to perform statutory board functions; one board did
temporarily shut down. Some of the boards with higher costs
caused fee increases to the point of being a barrier to
entry into the professions. He surmised that since
investigative costs were fairly consistent and the state
had a large number of licensees, spreading the costs out
was a small burden to the larger boards and eased the
burden on smaller boards. He reported that one challenge
that remained was how to ensure the state was maintaining
efficient use of the fee revenue while still carrying out
effective investigations. The issue was not addressed in
the bill. Currently, individual boards identified which
cases to consider and certain board members decided whether
to pursue further action. Subsequently, the investigative
result was communicated to the boards. He noted that the
solution in the bill was similar to an insurance model. The
goal was to protect public safety and have reasonable fees.
He learned that some of the large boards ran a surplus in
anticipation of an investigation, so the fees would remain
consistent. However, if the investigation costs were spread
out over all boards, the larger boards' fees may also
decrease. The larger pool for investigative costs created
fee stability that averaged out over years and prevented
large fee spikes. He felt that the larger boards could
eliminate their practice of maintaining a surplus.
2:37:28 PM
Representative Wilson questioned whether each board should
be responsible for its own costs and felt the issue was the
larger policy call. She wondered whether another issue was
whether the state decided to pursue investigations instead
of the board. She mentioned hearing from the Board of
Nursing, relaying that the board worked hard to keep its
costs down. Representative Kito responded that the
investigative process would not change. He offered that an
investigation was initiated by the public or through a
board member complaint. The exact same processes would be
used to implement investigations. The provision was related
to how costs were attributed to boards. He used the Board
of Midwifery as an example. A single investigation caused
fees to possibly skyrocket to $4.8 thousand biennially,
which was identified as a barrier to entry by the
Legislative Audit agency. An audit recommendation was to
merge the midwifery board with a larger board. However,
merging boards created members that lacked expertise in the
other profession and engaged members in professional issues
and functions they were not familiar with and possibly
involved them in the decision on whether an investigation
was warranted for a profession they did not belong to. How
professions were licensed was a big question, but he wanted
to ensure the professions were protecting public safety.
Representative Wilson agreed the issue had existed for many
years and appreciated the sponsor's effort. She was trying
to determine if the proposed bill was the solution. She
asked whether the boards were notified of the legislation
and how the provisions would impact each board.
Representative Kito responded that his office had been
communicating with some of the boards. Some were
supportive, and others had expressed concern about
increasing fees. He noted that information was included in
the member's bill packets regarding the new fee schedule
["Division of Corporations, Business and Professional
Licensing Professional Licensing Fee Changes and Program
Investigation Costs Comparisons" (as of January 1, 2017)
(copy on file).]
Representative Wilson hoped to hear feedback from the
boards. She observed that the bill was a big policy shift
that affected the boards. Ms. Koeneman relayed that DCCED
was engaged in discussions with the boards regarding HB 90
and boards were meeting and proposing action.
2:43:19 PM
Co-Chair Foster suggested Representative Wilson work with
Representative Kito's office on the issue.
Co-Chair Seaton was concerned about investigations related
to non-licensed individuals, which resulted in a cost to
law abiding licensed individuals. He asked how the issue
was handled within the system. Representative Kito answered
that the question pertained to unlicensed practice and
whether the board should have to pay for the
investigations. He elaborated that if the state made
unlicensed practice a crime, the Department of Law would
investigate, but it was likely the DCCED investigators
would still be drawn in because of their expertise. He had
not collected information identifying how many of the
complaints were a result of unlicensed practice or other
activities related to a licensed practice. He hoped to
pursue unlicensed practice as a separate issue next year.
Co-Chair Seaton voiced that one board the committee had
heard from had high fees due to investigations related to
unlicensed individuals. He suggested that the legislature
consider a remedy that included cost recovery from the
unlicensed individuals. He thought the scenario could lower
licensing fees. Representative Kito answered he would keep
the issue at the forefront of their work.
Vice-Chair Gara asked whether the cost impact of the one
fee proposal on all the boards was accessed by the
department. Representative Kito answered that the
information was included in members' packets. [Document
cited earlier.]
Ms. Koeneman added that DCCED performed the analysis and
the fee was $55 every two years. Vice-Chair Gara asked for
the number of boards. Ms. Koeneman replied there were 43
boards. Vice-Chair Gara did not believe that the sponsor
should perform an analysis on every board. Ms. Koeneman
answered that if board action was required to proceed, a
board meeting was necessary, which could add additional
costs for the boards. Vice-Chair Gara spoke to a recent
committee hearing on a midwifery bill. He referred to a
conversation regarding penalties for violations. He asked
whether there was a uniform penalty structure for boards.
Ms. Koeneman replied that AS 08.01.075 outlined the
disciplinary powers of a board and subsection 8 specified
that the fine not exceed $5,000. In addition, AS 08.01.102
authorized that DCCED could issue a citation for unlicensed
practice or activity but did not specify a dollar amount.
Vice-Chair Gara asked whether the penalty structure also
included cost recovery for the state. Ms. Koeneman replied
in the negative.
2:50:03 PM
Representative Kito interjected that one issue involving
cost recovery for investigations was that penalty proceeds
were deposited into the general fund (GF), which he
preferred. He worried that collecting penalties to support
the licensing program opened the possibility that
investigations could be used to fund the licensing program.
He favored using the licensing fees to fund the programs.
Vice-Chair Gara clarified that he had only inquired whether
the costs were recovered in general. Representative Kito
replied that he would examine the issue over the interim.
Ms. Koeneman added that DOL raised concerns with the issue
of raising penalties to cover the full investigative costs.
Representative Guttenberg spoke to investigations of people
practicing without a license and how it impacted the cost
to a specific board. He suggested parity for a board when
the investigative cost were recovered and deposited into
GF. He asked whether the sponsor considered some type of
cost recovery allocation from GF to a board. He stated that
the system was broken and believed the bill contained a
decent solution.
2:54:01 PM
Ms. Koeneman replied that if there was a mechanism in place
for the fines to reimburse the board, more than likely it
would come through the operating budget process and the
legislature could possibly allocate some funds back to the
boards.
Representative Thompson relayed hearing about incompetence
by state board investigators that resulted in longer than
necessary investigations which added costs onto the
profession. He favored a cost recovery process for the
boards. He believed HB 90 was a good solution. He worried
about boards currently with large defaults that increased
its fees. He asked whether the one fee system would be
charged in concert with fees related to a large deficit.
Ms. Koeneman answered in the affirmative and added that the
boards with deficits were required to pay their deficits
before participating in the bill. She agreed it would hurt
to pay off the deficits, but it would be in the best
interest in the long-term. She reported that the Medical
Board accrued investigative costs of $632 thousand over the
biennium. The Nursing Board had $909 thousand in
investigative costs for FY 14 and FY 15. The Big Game
Commercial Service Board accrued investigative costs of
$559 thousand. She surmised that in the long run the costs
would level off and create a more predictable cost
structure for all boards.
2:58:18 PM
Representative Pruitt spoke to a handout ["Division of
Corporations, Business and Professional Licensing,
Professional Licensing Fee Changes and Program
Investigation Costs Comparisons as of January 1, 2017"
(copy on file)]. He remarked on the large income disparity
among the different professions. He identified the Board of
Barbers and Hairdressers and cited the professions as
examples of lower income occupations. He asked how to
justify increasing fees for some boards and penalizing them
for mistakes and incompetence by the state when managing
boards' fees. He agreed that a solution was needed but
disagreed with the provisions in HB 90. Representative Kito
answered that at first glance the solution seemed unfair
due to the income inequities. However, he likened the
solution to an insurance policy and pointed to how
automobile insurance works as an example of the benefits of
HB 90. He offered that the Board of Barbers and
Hairdressers may not receive a benefit in the current year,
but perhaps there would be an investigation in the future
that would have significantly increased their fees. He
communicated that rather than every board paying for 30
percent to over 50 percent of their investigations,
everyone paid a smaller percentage and all boards had
access to the investigative services.
Ms. Koeneman added that in FY 12 and FY 13 the Board of
Barbers and Hairdressers had only paid $59 thousand for
investigations but the amount rose to $131 thousand in FY
14 and FY 15. The board's surplus was diminishing; one more
large investigation would likely increase their fees. She
expected that the bill would level off fees.
Representative Pruitt countered that if the provision was
likened to insurance, a person paid less if they were
accident free. He surmised that there should be different
levels of payment versus one fee, for boards with lower
costs; lower cost boards should pay less. He stated that
currently there was pressure on the legislature and DCCED
for prudent use of investigations to contain costs. He
opined that the pressure was necessary to keep the
investigatory process in check. He wondered how the bill
ensured the efficient use of investigations.
3:06:01 PM
Ms. Koeneman answered that there would be 74,000 licensed
individuals to collectively weigh in on the department's
regulatory process and the amount of the surcharge, which
would maintain pressure on the department.
Representative Kito interjected that one of his concerns
was a board that made decisions regarding whether to
proceed with an investigation based on fees increasing. He
believed the scenario was an example of inappropriate
pressure; if the state did not investigate a person
practicing inappropriately the state was failing its
mission. He related that investigators were overworked and
responded to public or licensee complaints. He had not
heard of investigators "trying to drum up work for
investigations." He reiterated that the investigatory
process would remain the same. He did not believe that
currently boards made investigatory decisions based on
possible fee increases.
Co-Chair Seaton OPENED public testimony.
SUSAN TERWILLIGER, PRESIDENT, MIDWIVES ASSOCIATION OF
ALASKA, ANCHORAGE (via teleconference), spoke in strong
support of the legislation. She voiced that the bill was
beneficial for the consumers of midwifery care. She shared
that midwifes attended the births of people in all
different occupations. She hoped the bill would pass.
Co-Chair Seaton CLOSED public testimony.
HB 90 was HEARD and HELD in committee for further
consideration.