Legislature(1999 - 2000)
04/18/2000 02:45 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE JOINT RESOLUTION NO. 34(FIN)
Proposing an amendment to the Constitution of the State
of Alaska relating to public corporations.
Co-Chair Therriault noted that the proposed resolution was
the companion piece to HJR 52, which the Committee
previously took action on. There was additonal language in
Secton 1, which allowed the Legislature to exclude
corporations. That language was not necessary and is not
included in the Senate version. Discussion followed among
Committee members regarding the legislation proposed by
Representative James.
SENATOR RICK HALFORD stated that the Alaska Constitution
provides for legislative confirmation of any board or
commission at the head of a principal department or
regulatory or quasi-judicial agency. That would include the
Board of Education, the Board of Game and all the
professional and regulatory boards, such as the Board of
Dispensing Opticians.
Senator Halford noted that in sharp contrast, public
corporations which manage much money in State assets, are
not subject to the provision. The corporations including
the Permanent Fund Corporation, Alaska Railroad and Alaska
Housing Finance Corporation, have a tremendous impact on all
Alaskans and our State's economy. Members are appointed at
the Governor's pleasure and removed in the same manner,
without legislative oversight.
Senator Halford stated that the amendment proposed in SJR 34
is a necessary addition to Alaska's Constitution. It would
ensure that the people who control Alaska's largest assets
are subject to a formal appointment, confirmation and
removal process, and not the whim of a newly elected
Governor.
He stated that the framers of the Constitution would have
passed this legislation if they had had the above named
entitities before them. The size and scope of these
corporations has gone far beyond the imagination anyone 20-
30 years ago could have envisioned. He believed that the
legislation would establish a better working relationship
between the Executive and Legislative Branches of
government.
Representative J. Davies disagreed that the founding fathers
would have written the Constitution differently. He stated
that the entities included, the Alaska Railroad and the
Alaska Permanent Fund, were set up to be private
corporations. The purpose in establishing them was not to
make them departments in the State of Alaska. One of the
rationales for setting them up the way in which they were,
was to have them separate from the government process so
that they could operate more like a business.
Representative J. Davies stressed that there was a reason
for making the separation, in that they are meant to be an
executive function. They are meant to execute the
operations of a business of the State. Otherwise, they
would have been set up as a department.
Senator Halford commented that when the constitutional
fathers did look at "high breds", they wanted them to have
some independence. They worked hard on the University of
Alaska while continuing to provide for confirmations.
Representative J. Davies argued that creating an educational
enterprise is different than creating a business enterprise.
Senator Halford replied that to protect the Railroad from
internal conflict, that protection was necessary. He argued
that how the Railroad deals with the Legislative branch is
currently a problem. He did not agree that government can
operate effectively and function in the way that private
business does. Senator Halford claimed that the Judiciary
review process belongs to the people.
Representative J. Davies inquired why not run them as a
department of the State. Senator Halford replied that in
the case of the Alaska Railroad, the State was attempting to
get involved into all the arguments. He believed that would
be determinental to the operation of the Railroad.
Representative J. Davies stated that making these boards
responsive to legislative confirmation would put politics
back into the corporate business structure. Senator Halford
noted that of the major appointments, only 2% have been
turned down. Most legislators generally agree to give the
Governor his choice. Representative J. Davies disagreed
with that statement, given votes the last six years. He
pointed out that on all the significant issues, there had
been controversy.
Representative J. Davies voiced concern that the State would
get into situations in which there would be discussions
regarding each of those appointments. He agreed that a
staggered appointment system would work, however, the cure
being proposed could be worse than the problem fixed.
(TAPE CHANGE, HFC 00 - 126, Side 2).
Representative J. Davies reiterated that the political
process functions well.
Representative Grussendorf asked what the resolution would
correct. Senator Halford stated that the ability to support
staggered terms to maintain an on going policy. He noted
that the last two governors had replaced the entire
Permanent Fund Board. He stated that was a mistake as
continuity is important and added that protection is tenuous
and noted that the Railroad is difficult to deal with
through the legislative branch only. Senator Halford spoke
to the confirmation process and the possibility of creating
a better working relationship.
Representative J. Davies agreed with the notion of
staggering the terms. He asked if there had been
consideration given how to accomplish the staggering of
terms without legislative appointment. Senator Halford
noted that a bill passed the legislature to do that and it
was vetoed by Governor Knowles. The ability to control
terms and placements is derived from the sharing of
appointment which comes through confirmation. There are
questions as to whether one can reach the enforceability in
staggered terms.
Representative J. Davies agreed that the law passed did not
work. He reiterated his question if there was a
constitutional method that would simply provide for
staggered terms. Senator Halford did not know.
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, voiced caution regarding the legislation. He advised
that there are technical problems with the resolution.
Initially, there are questions whether corporations other
than the Permanent Fund are separate corporations to
insulate the State from liability. He agreed that the
Permanent Fund should be included, however, Alaska
Industrial Development and Export Authority (AIDEA), Alaska
Housing Finance Corporation (AHFC) and the Alaska Railroad
Corporation (ARRC) all have their own separate assets. The
language of the resolution creates a "disconnect" between
what the drafter intended and what the language reports to
do. It does not reach the public corporation that manages
their own assets. To bring language into the Constitution
to manage State assets would be dangerous.
Mr. Baldwin added that when interpreting the Constitution,
the wording in Section 26, speaks to the governing entity of
a public corporation. Elsewhere, in Article 9, it speaks
about public corporation, debt exemption, in which you could
issue debt through a public corporation enterprise; that
language refers to a public corporation enterprise of a
State. He did not know if any entity could be "managing"
State assets and if the legislation would be applicable to
those members.
Representative J. Davies asked if there was concern with the
phrase, "as defined by law". Mr. Baldwin responded that
there would not be any uniformity in accomplishing that.
Certain corporations would escape the provision for reasons
that are not rationale and would not be included in the
requirement that their board members be confirmed. Mr.
Baldwin pointed out that there is not guidance as to what is
"significant". That word does not appear much in the
Constitution as it is a difficult word to define.
Representative J. Davies asked if "as defined by law" was
used to define the word "significant". Mr. Baldwin did not
know and recommended that the language be tightened up to
establish the intent.
Vice Chair Bunde asked if the Permanent Fund Board would be
covered by the proposed legislation. He believed that other
entities were not as clear. Mr. Baldwin acknowledged that.
He asked that his testimony not be misconstrued to look like
this was a good idea. He added, it would become more of a
problem when moving beyond the Permanent Fund.
Representative Phillips inquired if the legislation would
cover the Commercial Fishing and Agriculture Bank (CFAB).
Mr. Baldwin stated that it was initially formed as a
production credit association. Representative Phillips
pointed out that they manage State assets. Mr. Baldwin did
not know. Representative Phillips noted that could bring
the Legislature into the banking business.
Senator Halford stated that in reference to the things that
Mr. Baldwin had pointed out, the drafters solution was for
each of those questions to be decided by the Legislature.
He reiterated that each case would be a negotiation between
the Legislative and the Executive Branch.
Representative J. Davies asked about concerns raised
regarding AIDEA and AHFC and how their assets are not
considered to be the State's but rather assets of the
corporation. Senator Halford replied that would depend upon
what State law defines. He stated that "as defined by law"
could be read to apply to that. The Court would interpret
in a constitutional amendment, the simplest version of what
the words meant.
Representative J. Davies advised that the concern is, if the
State passes a law that would clarify that those assets were
assets of the State, and hence, they would fall under this,
would there then be a risk of not having those liability
assets for liability protection purposes and separate from
the State. Senator Halford explained that is the discussion
that would occur at the time of the decision and added that
the confirmation question would decide the assets of the
State.
Representative Grussendorf asked which public corporations
would be included. Senator Halford responded that AIDEA,
AHFC, Alaska Railroad Corporation and the Permanent Fund.
He emphasized that all those boards deal with large amounts
of State assets.
Representative Grussendorf asked if there had been
complaints about how these corporations had managed their
portfolios. Senator Halford explained that from a business
point of view, he had received complaints regarding the
Alaska Railroad Corporation.
Representative Williams MOVED to report CS SJR 34 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes.
Representative Grussendorf OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Bunde, G. Davis, Phillips, Williams,
Austerman
OPPOSED: J. Davies, Grussendorf, Moses
Representative Foster, Co-Chair Mulder and Co-Chair
Therriault were not present for the vote.
The MOTION FAILED (5-3).
Representative Bunde noted that the Committee would need six
votes for passage out of Committee.
Representative Foster MOVED to RECONSIDER the passage of
moving the bill out of Committee. There being NO OBJECTION,
the bill was again before the Committee.
Representative Foster MOVED to report CS SJR 34 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
Representative Grussendorf OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: G. Davis, Foster, Moses, Williams, Austerman,
Bunde
OPPOSED: Grussendorf, Moses
Representative J. Davies, Co-Chair Therriault and Co-Chair
Mulder were not present for the vote.
The MOTION PASSED (6-2).
CS SJR 34 (FIN) was reported out of Committee with a "no
recommendation" and with a fiscal note by the Office of the
Lt. Governor dated 2/23/00.
HOUSE CS FOR CS FOR SENATE BILL NO. 34(L&C)
An Act relating to tattooing, body piercing, and ear
piercing; relating to other occupations regulated by
the Board of Barbers and Hairdressers; relating to fees
charged by the Board of Barbers and Hairdressers; and
providing for an effective date.
Representative Bunde pointed out that in previous testimony,
concern had been voiced if ear piercing should remain a part
of the legislation.
DIANA RHOADES, STAFF, SENATOR JOHNNY ELLIS, noted that
Senator Ellis was supportive of the draft committee
substitute before Committee members. She added that there
were two changes made in that draft which had been
previously discussed. The first was to guarantee that the
exam for sterilization and health and safety was written and
the second was a technical change made in the definition of
tattooing and permanent cosmetics.
Representative Foster MOVED that work draft #1-LS0279\X,
Lauterbach, 4/18/00, be the version of the legislation
before the Committee. There being NO OBJECTION, it was
adopted.
Representative J. Davies asked if the draft had removed ear
piercing. Ms. Rhoades noted that it had not been removed,
but that there would be amendment offered. Representative
Bunde advised that Co-Chair Therriault had voiced a concern
regarding removal of that language. Discussion followed
regarding removing ear piercing. Representative J. Davies
voiced concern that the bill recognized that this would be a
secondary level and that it did not require beaucratic
effort. Vice Chair Bunde suggested that the problem would
rest with the enforcement.
Representative J. Davies replied that the language would add
clarity regarding standards. Representative Phillips
interjected that there should not be regulations which cover
each jewelry store in the State.
(TAPE CHANGE, HFC 00 - 126, Side 1).
Representative Foster MOVED to report HCS CS SB 34 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CS SB 34 (FIN) was reported out of Committee with a "do
pass" recommendation and with fiscal notes by Department of
Environmental Conservation dated 4/14/00 and Department of
Community & Economic Development dated 4/14/00.
RECESSED
The Committee recessed at 4:20 p.m.
RECONVENED
The Committee reconvened at 6:15 p.m.
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