Legislature(2013 - 2014)BARNES 124

04/01/2014 08:00 AM House COMMUNITY & REGIONAL AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 379 OIL & GAS PROPERTY TAX TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 238 PROCUREMENT PREF: AK GROWN FISH/AG PRODS TELECONFERENCED
Moved CSSSHB 238(CRA) Out of Committee
+= HB 317 TRAFFIC CONTROL DEVICES NEAR SCHOOLS TELECONFERENCED
Moved CSHB 317(CRA) Out of Committee
        HB 238-PROCUREMENT PREF: AK GROWN FISH/AG PRODS                                                                     
                                                                                                                                
9:10:30 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  announced that the  next order of  business would                                                              
be  the  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."                                                                                               
                                                                                                                                
9:11:21 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER  moved to adopt the CS to  SSHB 238, labeled                                                              
28-LS1167/N, as the working document.                                                                                           
                                                                                                                                
CO-CHAIR LEDOUX objected for purposes of discussion.                                                                            
                                                                                                                                
REPRESENTATIVE  GERAN TARR,  Alaska  State  Legislature, said  the                                                              
bill in  front of  the committee  contains the  changes that  were                                                              
adopted at  the last meeting.  She  said that the first  change to                                                              
HB 238  removes the  audit section,  and the  second change  moves                                                              
the  effective  date  up.   She  noted  that  there is  a  handout                                                              
related to the fiscal note.                                                                                                     
                                                                                                                                
9:12:46 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER  said  he  totally  supports  the  idea  of                                                              
supporting  Alaska industries.    He asked  if  a school  district                                                              
would be  required to purchase [Alaska]  products, as long  as the                                                              
price did  not exceed the  price of Outside  goods by  12 percent,                                                              
and then  that would increase  school costs.   He pointed  out the                                                              
issues of [base student allocations] and school funding.                                                                        
                                                                                                                                
REPRESENTATIVE  TARR said  that school food  purchases are  funded                                                              
by  the  Farms-to-School  program,  and  HB  238  merely  provides                                                              
purchasing  flexibility.   She  added, "We  would  hope that  with                                                              
that  additional  price flexibility  that  for products  that  are                                                              
available, they would purchase them."                                                                                           
                                                                                                                                
9:14:15 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER  asked  if  the  [Farms-to-School  program]                                                              
fund needs to be increased.                                                                                                     
                                                                                                                                
REPRESENTATIVE TARR  noted that the timeline she  just provided to                                                              
the committee  will show where  the costs might  show up.   In May                                                              
or June  of this  year, she said,  the bill  could be  signed into                                                              
law, and  then in the  summer and fall,  "we" would work  with the                                                              
Department of  Agriculture Farm  Service Agency and  its networks.                                                              
There are electronic  newsletters and the Alaska  Grown Booklet to                                                              
communicate  with purchasers and  sellers, she  said.   As budgets                                                              
are finalized  in the  fall-and if new  products and  vendors come                                                              
in through  the program-that  is  when there  might be changes  in                                                              
the budget.   But, she added, "it  could be true that  it's just a                                                              
shifting in  costs, where  some of the  purchasing is  now Alaska-                                                              
grown  products   that  replace   products  that  were   purchased                                                              
Outside."   There may not be an  overall increase from  HB 238, it                                                              
just might  be that [the  state] is paying  a little bit  more for                                                              
Alaska products, she explained.                                                                                                 
                                                                                                                                
9:15:45 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  said if [the state]  is paying a little  more for                                                              
the products, why would there not be an increase?                                                                               
                                                                                                                                
REPRESENTATIVE  TARR  said  it  would  be  part  of  overall  food                                                              
purchasing,  and the buyers  could shift  purchases so  that there                                                              
would not be an overall increase.                                                                                               
                                                                                                                                
9:16:36 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX asked about  the school  districts, because  they                                                              
would be  required to buy  those Alaska  items that are  less than                                                              
12 percent  over the cost of  non-Alaska foods-so it  would impact                                                              
those budgets.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  TARR said  it would  for  those particular  items,                                                              
but it would not  necessarily impact the overall budget.   "It may                                                              
mean  that  they  are  buying  Alaska-grown   products  that  they                                                              
weren't buying  before, because the  price was a  limiting factor.                                                              
It doesn't  necessarily mean  that they  didn't find  efficiencies                                                              
in their  other purchases  that allowed  them to just  essentially                                                              
cost shift around in their overall items that they buy."                                                                        
                                                                                                                                
9:17:26 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FOSTER  inquired as to  the position of  the school                                                              
districts regarding HB 238.                                                                                                     
                                                                                                                                
REPRESENTATIVE  TARR   said  she  worked  with  the   Division  of                                                              
Agriculture, which  is the sponsor of the  Farm-to-School program,                                                              
and it has been supportive of the bill.                                                                                         
                                                                                                                                
REPRESENTATIVE  HERRON asked  if the  calculation is  pre or  post                                                              
FOB.  If a school  district wants to buy a product  "and it is bid                                                              
FOB-in other words, you have to deliver it to us.... "                                                                          
                                                                                                                                
REPRESENTATIVE TARR said she assumes it would be pre FOB.                                                                       
                                                                                                                                
REPRESENTATIVE HERRON said there is a significant difference.                                                                   
                                                                                                                                
9:18:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON  asked if Representative Tarr  has "actually                                                              
looked at  what it costs  to buy product  outside of  the delivery                                                              
system  of  agricultural  products  harvested  in  the  state  and                                                              
fisheries products  harvested in the  state comparing when  we buy                                                              
it from outside.  Is that comparable?"                                                                                          
                                                                                                                                
REPRESENTATIVE  TARR said  large-scale purchases  tend to  be less                                                              
expensive through the  large companies like Cisco.   It has been a                                                              
challenge  for Alaskan  farmers  to  get into  those  distribution                                                              
chains  and be able  to provide  that reliable  amount each  week.                                                              
She recalled  the comments  that were made  [in the  last hearing]                                                              
that the hope is to build more reliability in the food system.                                                                  
                                                                                                                                
9:20:16 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  said this is not  a new program, it  just changes                                                              
the percentage  from 7  percent to 12  percent, "so  whatever it's                                                              
doing with the FOB,  et cetera, it's no change."   She asked where                                                              
the 12 percent figure came from.                                                                                                
                                                                                                                                
REPRESENTATIVE TARR  said it came from conversations  with farmers                                                              
regarding prices, and  this is a 5 percent increase,  which seemed                                                              
to  be a  reasonable  first step.    This was  a  priority of  the                                                              
Alaska Food  Policy Council, because it  views HB 238 as  a way to                                                              
achieve the  goal of  strengthening food  systems and  security in                                                              
Alaska and to increase Alaska-grown purchases.                                                                                  
                                                                                                                                
REPRESENTATIVE   HERRON  asked   if   Representative  Tarr   would                                                              
consider HB 238 as Alaskan-hire legislation.                                                                                    
                                                                                                                                
REPRESENTATIVE  TARR said she  had not thought  about it,  but she                                                              
does believe there are great opportunities and more Alaska hire.                                                                
                                                                                                                                
9:22:11 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD  said  she  does  not  want  to  increase                                                              
school  budgets.   She  said she  is a  huge  supporter of  Alaska                                                              
Grown, especially if  Alaska encounters a food crisis.   She noted                                                              
that  Alaska  food  is a  lot  fresher  and  healthier-and  tastes                                                              
better.  She said  she thinks HB 238 could decrease  shipping, and                                                              
that is important.   The legislation may increase  jobs in Alaska.                                                              
Her  understanding of  the bill,  she said,  is it  just allows  5                                                              
percent more flexibility to purchase Alaska-grown products.                                                                     
                                                                                                                                
REPRESENTATIVE  TARR  agreed, and  it  allows for  that  increased                                                              
price flexibility,  and we  will see if  the market can  meet that                                                              
demand, otherwise, foods will keep being purchased from Outside.                                                                
                                                                                                                                
9:23:35 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  stated that  if the program  works, there                                                              
is potential for the prices to decrease.                                                                                        
                                                                                                                                
REPRESENTATIVE  FOSTER noted that  HB 238  is supposed  to provide                                                              
more flexibility, but on page 1, Section 1(a), it says "shall".                                                                 
                                                                                                                                
REPRESENTATIVE  TARR  said,  "shall   to  the  extent  that  those                                                              
products  are  available,"  and   "that's  what  we're  trying  to                                                              
accomplish here  is creating more product availability  that would                                                              
fulfill the  needs of  those larger  institutional purchasers  and                                                              
by having  additional price flexibility  that can  help accomplish                                                              
that goal."                                                                                                                     
                                                                                                                                
9:24:37 AM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  gave an example  of a limited budget,  like $100,                                                              
and Alaska-grown  sweet potatoes  are 12  percent over  the market                                                              
price, and  then she  suggested prices  might increase  if Alaska-                                                              
grown food  can be  sold at 12  percent over  market price.   Then                                                              
municipalities   might  buy   less   Alaska-grown  products,   she                                                              
surmised.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  TARR  said  she  had  not  considered  that  as  a                                                              
potential  outcome.  The  Alaska-grown produce  that is  available                                                              
has  established  prices,  and   to  increase  prices  would  work                                                              
against  those  sellers.    She  believes  there  will  be  market                                                              
pressure to  keep prices reasonable,  but the prices  reflect that                                                              
Alaska-grown products come from smaller farms, she said.                                                                        
                                                                                                                                
REPRESENTATIVE  KITO  III said  that  it seems  like  HB 238  will                                                              
provide  an  opportunity  for  smaller  Alaska  businesses  to  be                                                              
competitive.                                                                                                                    
                                                                                                                                
9:27:50 AM                                                                                                                    
                                                                                                                                
DANNY  CONSENSTEIN,  State Director,  Department  of  Agriculture,                                                              
Farm Service  Agency Alaska and  member of the Alaska  Food Policy                                                              
Council,  said the  Alaska Food  Policy  Council has  the goal  of                                                              
strengthening  food  stability  in  the  state.    He  noted  that                                                              
probably 95 percent  of foods Alaskans eat come from  Outside.  If                                                              
Alaska purchased  more Alaskan food,  the economic  benefits would                                                              
include  job  opportunities, supporting  small  entrepreneurs  who                                                              
are in  the food business,  and keeping  more food dollars  in the                                                              
community, he  added.  He noted  the health benefits and  spoke of                                                              
the  costs  of  health-related  diseases  and the  lack  of  fresh                                                              
vegetables  in  village markets.    He  said  the bill  will  have                                                              
educational benefits  as school children  can see that  food comes                                                              
from the  ground, not  from a package.   He said  that one  out of                                                              
five children  go to  school hungry,  and Alaska  is not  prepared                                                              
for emergencies,  so  there is lack  of food  security because  of                                                              
the lack of a food  system.  The bill is just one  little piece of                                                              
building  a  stronger food  system  by  having  the state  play  a                                                              
larger role  as a purchaser,  he noted.   If the state  can become                                                              
more  of a  driver,  then  it can  create  more  of a  market  for                                                              
Alaska-grown food,  and, thus, there  will be incentive  to expand                                                              
and to add new  entrants.  As the supply increases,  there will be                                                              
an economy  of scale,  he said,  and prices will  come down.   The                                                              
larger  vegetable   producers  in  Alaska  will   currently  match                                                              
outside prices,  and "so why wouldn't  a state agency or  a school                                                              
district purchase that?"                                                                                                        
                                                                                                                                
9:34:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHRIS  TUCK, Alaska  State  Legislature,  recalled                                                              
some  of the  past agricultural  resolutions  in the  legislature,                                                              
and  on this  subject  alone, every  single  member  in the  House                                                              
spoke, because  it is a passionate  issue and something  where all                                                              
Alaskans want to see  more done.  He said this is  a step in right                                                              
direction, to  sustain the state  and to provide  better nutrition                                                              
in  Alaska  schools.    He noted  that  attempts  for  local  hire                                                              
preferences have  been found unconstitutional, but  one thing that                                                              
has been  successful is Alaska's  procurement policies  for Alaska                                                              
businesses.   This step is  to make sure  that products  grown and                                                              
produced in Alaska  have a preference with state  procurement, and                                                              
such policies  have been proven and  tested.  He said  he likes HB
238; Alaska needs to be self-reliant with food.                                                                                 
                                                                                                                                
9:37:20 AM                                                                                                                    
                                                                                                                                
CO-CHAIR   LEDOUX  closed   public  testimony   and  removed   her                                                              
objection, therefore Version N was before the committee.                                                                        
                                                                                                                                
CO-CHAIR NAGEAK moved  to report the committee  substitute to SSHB
238,  labeled  28-LS1167/N,  out   of  committee  with  individual                                                              
recommendations  and the accompanying  fiscal notes.   There being                                                              
no  objection,  CSSSHB  238(CRA)   was  reported  from  the  House                                                              
Community and Regional Affairs Standing Committee.                                                                              

Document Name Date/Time Subjects
HB 379.pdf HCRA 4/1/2014 8:00:00 AM
HB 379
HB 379 Sponsor Statement.pdf HCRA 4/1/2014 8:00:00 AM
HB 379
HB 379 Sectional Analysis.pdf HCRA 4/1/2014 8:00:00 AM
HB 379
HB 379 Letter of Support.pdf HCRA 4/1/2014 8:00:00 AM
HB 379
HB 379 13 Tax.pdf HCRA 4/1/2014 8:00:00 AM
HB 379
HB 238 ver N.pdf HCRA 4/1/2014 8:00:00 AM
HB 238