03/27/2014 08:00 AM House COMMUNITY & REGIONAL AFFAIRS

        HB 238-PROCUREMENT PREF: AK GROWN FISH/AG PRODS                                                                     
                                                                                                                                
8:15:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced that the  final order of business would                                                               
be SPONSOR  SUBSTITUTE FOR HOUSE  BILL NO. 238, "An  Act relating                                                               
to   the  state   and  municipal   procurement  preferences   for                                                               
agricultural  products  harvested  in  the  state  and  fisheries                                                               
products  harvested  or  processed  in  the  state;  relating  to                                                               
legislative  oversight  of  those  procurement  preferences;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
8:15:27 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GERON TARR,  Alaska  State  Legislature, noted  a                                                               
trend in  Alaska for using  Alaska-grown produce  and Alaska-made                                                               
products.   This growing interest  in supporting  the agriculture                                                               
industry  is  evidenced by  new  farmer's  markets and  community                                                               
supported agriculture  (CSA) ventures,  she said.   She mentioned                                                               
Tim Meyers,  who is known  for his efforts  to farm in  the harsh                                                               
climate of  Bethel.   She added  that she  has been  working with                                                               
farmers in  Alaska, and she  helped start the  Anchorage Farmer's                                                               
Market and the  Alaska Organic Association.  She  and others have                                                               
been  considering   how  the  state  could   support  the  Alaska                                                               
agriculture industry,  "and today we are  talking about something                                                               
where we  can really do  it right."   Currently, there is  the "7                                                               
percent  statute"  whereby  if   an  Alaskan-grown  fisheries  or                                                               
agricultural product is within 7  percent of the price found from                                                               
Outside products,  then [the state]  can buy the  Alaska product.                                                               
However,  it  appears  that  7 percent  may  not  provide  enough                                                               
flexibility  to  really  capture  the  Alaska-grown  market,  she                                                               
stated.   "We spend $2.5  billion annually  on food," but  only 5                                                               
percent of that is spent on Alaskan  food, she added.  If it went                                                               
up to 30 percent, it could  grow Alaska's economy by $750,000 per                                                               
year, and this  bill is intended to increase  the opportunity for                                                               
Alaska schools, agencies, and municipalities  to buy more Alaska-                                                               
grown products.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  TARR said,  "If you  think of  a shopping  center                                                               
starting out,  you're looking  for anchor  tenants, and  once you                                                               
have  those  anchor  tenants,  then  you can  go  and  build  the                                                               
boutique stores."   In growing Alaska's  agriculture industry and                                                               
its food  security system,  these institutional  purchasers would                                                               
be the  anchor tenants  that would then  allow farmers  to expand                                                               
their operations  to then provide  items to local  grocery stores                                                               
and markets.  She said that SSHB  238 is a priority of the Alaska                                                               
Food Policy  Council.  The bill  had an audit provision  to track                                                               
purchasing by  state agencies "to  see what's happening  and give                                                               
us  an  opportunity to  work  more  closely with  departments  in                                                               
making those purchases," but Legislative  Budget and Audit (LB&A)                                                               
advisors  said   the  language  did   not  need  to  be   in  the                                                               
legislation;  a special  audit could  be requested  instead. That                                                               
change keeps the fiscal note at zero, she added.                                                                                
                                                                                                                                
8:21:22 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX said the money  would still be spent, whether the                                                               
audit is  in the  legislation or  done by  request.   "Isn't that                                                               
just  a way  of  avoiding  the finance  committee  as opposed  to                                                               
actually saving money?"                                                                                                         
                                                                                                                                
REPRESENTATIVE TARR said that LB&A  told her that it has capacity                                                               
with  existing staff,  and an  audit would  just be  part of  its                                                               
regular duties.                                                                                                                 
                                                                                                                                
8:22:19 AM                                                                                                                    
                                                                                                                                
CO-CHAIR NAGEAK  added that there will  be financial consequences                                                               
by going from 7 percent to 12 percent.                                                                                          
                                                                                                                                
REPRESENTATIVE TARR  said that the  effective date is  delayed to                                                               
2016,  which  will  provide  time to  work  with  departments  to                                                               
facilitate connections with farmers.   The financial impact would                                                               
be  seen in  the  department budget  requests  for the  following                                                               
year, she noted.  The  statutory change gives the departments the                                                               
opportunity to  pursue the Alaska products,  which could increase                                                               
their overall budget for food purchasing.                                                                                       
                                                                                                                                
8:24:07 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX said  she  feels  uncomfortable eliminating  the                                                               
fiscal  note and  skirting the  finance committee,  "and I  think                                                               
we're talking about a significant outlay of state dollars."                                                                     
                                                                                                                                
REPRESENTATIVE KITO  III noted that Legislative  Audit and Budget                                                               
performs hundreds of audits every  year, and this audit would not                                                               
be statutorily required and would likely not happen every year.                                                                 
                                                                                                                                
8:25:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR  said  she  had no  intent  to  eliminate  a                                                               
referral to  the finance  committee; the  request came  from LB&A                                                               
because "this is  what they do."  She agreed  that there might be                                                               
financial  implications in  a future  budget, but  she wants  the                                                               
time  to work  with  the  departments and  farmers  to see  where                                                               
relationships can  be built, and  then it  might be time  to look                                                               
for funding.                                                                                                                    
                                                                                                                                
8:26:43 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO III  moved to adopt Amendment  1, labeled 28-                                                               
LS1167\U.1,  Bullard, 3/24/14,  as follows  [original punctuation                                                               
provided]:                                                                                                                      
                                                                                                                                
     Page 1, line 3:                                                                                                            
       Delete "relating to legislative oversight of those                                                                     
     procurement preferences;"                                                                                                
                                                                                                                                
     Page 1, line 6, through page 3, line 2:                                                                                    
     Delete all material.                                                                                                       
                                                                                                                                
     Page 3, line 3:                                                                                                            
     Delete "Sec. 2"                                                                                                          
     Insert "Section 1"                                                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, lines 24 - 29:                                                                                                     
     Delete all material.                                                                                                       
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
     Page 3, line 30:                                                                                                           
     Delete "Sections 2 - 5 of this Act take"                                                                                   
     Insert "This Act takes"                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX objected for purposes of discussion.                                                                            
                                                                                                                                
REPRESENTATIVE  KITO  III  explained  that  Amendment  1  deletes                                                               
Section 1, which is the annual audit requirement.                                                                               
                                                                                                                                
8:28:02 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  withdrew her  objection to  Amendment 1.   There                                                               
being no further  objections, Amendment 1 was adopted.   She then                                                               
opened public testimony.                                                                                                        
                                                                                                                                
8:29:10 AM                                                                                                                    
                                                                                                                                
DANNY CONSENSTEIN,  State Executive Director, U.S.  Department of                                                               
Agriculture Farm Service Agency-Alaska, said  he also sits on the                                                               
Governor's Alaska  Food Resource Working Group,  which was formed                                                               
as  a result  of the  passage of  HCR 1  by the  legislature last                                                               
year.   He  said the  group provides  recommendations for  policy                                                               
changes that  can increase the  use of locally harvested  food by                                                               
state  and local  institutions, agencies,  and schools,  and SSHB
  is in  line  with  that purpose.    The  Alaska Food  Policy                                                               
Council was formed a few years  ago and has over 200 stakeholders                                                               
from  around Alaska.   Members  promote strengthening  the Alaska                                                               
food system  to better  serve Alaskans  by building  the economy,                                                               
improving health,  and providing  food security  and preparedness                                                               
in  terms  of  emergencies  and self-sufficiency.    One  of  the                                                               
priorities  of the  council  is the  enforcement  of the  [Alaska                                                               
food] statute.   If  there was  one thing the  state could  do to                                                               
build a  stronger food system, it  would be to act  as a stronger                                                               
purchaser, he  stated.  Once  the state provides the  demand, the                                                               
fishing industry and farmers can come in and meet that demand.                                                                  
                                                                                                                                
8:34:33 AM                                                                                                                    
                                                                                                                                
BRYCE  WRIGLEY, President,  Alaska Farm  Bureau, said  the Alaska                                                               
Farm  Bureau represents  about 350  farming families.   He  noted                                                               
that he  is a producer and  grower, and he owns  the Alaska Flour                                                               
Company.   One of the challenges  that farmers face is  access to                                                               
market.  He said  95 percent of people in Alaska  shop at the big                                                               
box  stores, and  the  distribution system  for  those stores  is                                                               
difficult  to break  into.   In order  to expand  the market  and                                                               
justify  an increasing  growing  and  processing capacity,  there                                                               
must be access to market.   He stated that the product preference                                                               
in SSHB  238 will create a  market that is outside  of the normal                                                               
distribution  channel,   which  is  important  for   Alaska  food                                                               
production.                                                                                                                     
                                                                                                                                
MR. WRIGLEY  encouraged the committee  to view this effort  as an                                                               
investment, not a cost.   Food security is both strategically and                                                               
economically important.   Local food systems  will benefit Alaska                                                               
tremendously;  if each  family in  Alaska purchased  $5 of  local                                                               
food a  week, it would  result in $27 million  a year.   He said,                                                               
"We can grow a  lot more than what is consumed  in Alaska, and it                                                               
would  increase our  food security;  it  would increase  economic                                                               
activity, especially  in the rural  areas; and all  that together                                                               
would benefit the  rural areas as far  as development, stability,                                                               
[and] opportunity."   He said  he encouraged and  appreciated the                                                               
efforts to address this.                                                                                                        
                                                                                                                                
8:38:17 AM                                                                                                                    
                                                                                                                                
ALISON  ARIANS, Owner,  Rise and  Shine  Bakery, said  she is  in                                                               
Juneau  to advocate  for public  school  funding, but  supporting                                                               
locally-grown products  is very important  to her.  She  owns the                                                               
Rise and Shine  Bakery, and in the summer she  sells her bread at                                                               
the South Anchorage farmer's market.   Anchorage farmer's markets                                                               
have grown by leaps and bounds  in the last six years, she noted,                                                               
giving  many  more people  easy  access  to fresh,  locally-grown                                                               
food.  She co-owned the Glacier  Valley Farm CSA for three years,                                                               
but people  starting getting tired  of the same  vegetables every                                                               
week (cabbages, carrots,  potatoes, and beets), and  so she tried                                                               
to encourage  farmers to grow  different things, but  it required                                                               
infrastructure  and investment  and her  business was  too small.                                                               
The state, however, is a much  bigger customer, and SSHB 238 will                                                               
offer incentives  to try  new crops  and will  grow opportunities                                                               
for farmers,  she stated.   She added  that she has  been hearing                                                               
about all the new and creative  ways that schools have been using                                                               
Alaska-grown products,  and she finds  it exciting to be  able to                                                               
use  Alaska foods  in  our schools.    She said  to  keep up  the                                                               
momentum of this growing movement.                                                                                              
                                                                                                                                
8:40:55 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KITO III suggested  changing the effective date of                                                               
SSHB 238 so that schools,  municipalities, and agencies can begin                                                               
to  use the  new  percentage this  next fiscal  year.   He  moved                                                               
Conceptual Amendment 2, as follows:                                                                                             
                                                                                                                                
     Page 3, line 30, delete "2016" and insert "2015"                                                                           
                                                                                                                                
CO-CHAIR  LEDOUX objected  for  discussion and  then removed  her                                                               
objection.  She then asked about the lack of a fiscal note.                                                                     
                                                                                                                                
8:42:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR said [there is no fiscal note].                                                                             
                                                                                                                                
CO-CHAIR LEDOUX said she will hold  the bill.  It has significant                                                               
financial implications and should have a fiscal note.                                                                           
                                                                                                                                
REPRESENTATIVE TARR  said she has  been working with  Kris Curtis                                                               
of  Legislative Budget  and Audit  who  felt that  a fiscal  note                                                               
would be unnecessary  once the audit provision  was removed, "but                                                               
we will quickly work with her and get that remedied."                                                                           
                                                                                                                                
CO-CHAIR LEDOUX said the bill  should have a fiscal note, because                                                               
the  7  percent  to  12  percent  increase  will  have  financial                                                               
implications.                                                                                                                   
                                                                                                                                
8:43:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER asked  if  schools have  testified on  the                                                               
impacts of SSHB 238.                                                                                                            
                                                                                                                                
REPRESENTATIVE  TARR said  she has  talked to  the Farm-to-School                                                               
program.   Like  for all  other agencies,  the legislation  would                                                               
just  provide  more   flexibility  when  purchasing  Alaska-grown                                                               
products.    The Farm-to-School  program  already  has a  special                                                               
grant, and  it is  in the  budget to  be reauthorized  next year.                                                               
There is  a set  amount of  money to spend  on that  program, so,                                                               
within  that  budget,  SSHB  238 simply  allows  the  program  to                                                               
consider additional products.  She  gave an example of a product,                                                               
potatoes for  instance, that might  be 10 percent  more expensive                                                               
than Outside  potatoes, and now  the program would be  allowed to                                                               
choose  Alaska  potatoes.    It   would  not  require  additional                                                               
funding, she clarified.                                                                                                         
                                                                                                                                
8:44:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TARR  said that  SSHB 238  does not  require state                                                               
agencies to  purchase the more  expensive products, it  will just                                                               
provide the  flexibility to  do so.   At this  time, there  is no                                                               
price tag, but  it is a step toward providing  Alaskans with more                                                               
market access.                                                                                                                  
                                                                                                                                
CO-CHAIR LEDOUX closed public testimony.                                                                                        
                                                                                                                                
[SSHB 238 was held over.]