Legislature(2003 - 2004)
04/30/2004 08:43 AM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CS FOR SENATE BILL NO. 203(FIN) am
An Act relating to administrative hearings, to hearing
officers, and to administrative law judges;
establishing the office of administrative hearings and
relating to that office; and providing for an effective
date.
Co-Chair Harris MOVED to ADOPT Work Draft #23-LS0903 Version
M, Cook, dated 4/7/04, as the version of legislation before
the Committee. There being NO OBJECTION, it was so ordered.
DAVE STANCLIFF, STAFF TO THE ADMINISTRATIVE REGULATION
REVIEW COMMITTEE, explained that the bill dates back five
years and developed from an effort to consolidate and
improve the public administrative hearing process. The bill
contains two concepts: that the public deserves timely,
efficient, and fair due-process oriented hearings when
contesting a state agency; and that there are inefficiencies
within state government. In other words, many types of
hearing officers are scattered throughout the state and have
many functions. The past two years of cooperative bipartisan
effort that included the Administration has culminated in a
well thought-out new system of hearings.
Mr. Stancliff explained that the crux of the bill is found
in the first eight pages. The central panel office will
house the hearing officers. By using the current hearing
officers and the existing functions, a more efficient
government would be created with less fiscal impact.
Mr. Stancliff stated that the second aspect of the bill
relates to reforms that occur outside the central panel
office. Hearing officers would be subject to new standards
and reforms, and the central panel office would report to
the House [and Senate] Finance Committees in the future.
Their budget would be a separate component under the
Department of Administration. He noted that twenty-seven
other states and some municipalities have formed central
panels in order to save money and serve the public better by
creating efficiencies.
Mr. Stancliff pointed out that the Office of Tax Appeals has
final jurisdiction, and it is already operating to deal with
oil tax issues. In this proposed committee substitute, the
Administration would move the Office of Tax Appeals
[Hearings and Appeals, Department of Administration] to the
central panel for greater efficiency. He noted that the oil
and gas industry was reluctant to change their office, which
was specifically dedicated to their issues. However, he had
worked with AOGA (Alaska Oil and Gas Association) to reach
accord with the final three amendments in the packet. He
asked the Committee to move the amendments.
Co-Chair Harris referred to one of the [16] fiscal notes and
asked if a new position would be created. Mr. Stancliff
responded that it would. Co-Chair Harris asked if Fiscal
Note #6 is still applicable.
ERIC SWANSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,
DEPARTMENT OF ADMINISTRATION, affirmed that Fiscal Note #6
would set up the funding structure and positions in the new
office of administrative hearings. Co-Chair Harris discussed
that it increases to $900 thousand in FY 06 and funding
sources would include the Permanent Fund Dividend fund, the
General Fund, child support enforcement, and interagency
receipts. He asked about the 9 new full-time positions. Mr.
Swanson clarified that these are transfers of positions that
currently exist in other agencies. The funding increase
occurs in the second year with the office coming together
after January 1, 2005. There is some earlier funding for the
Administrative Law Judge position that would oversee the
office.
Co-Chair Harris asked if the General Fund budget increased
by $260 thousand in FY 06, would it decrease elsewhere. Mr.
Swanson affirmed, and explained that most is General Fund
transfers from other agencies. The increase of $50 thousand
in General Funds in the first year would pay the first six
months' salary for the Administrative Law Judge. There might
also be start-up costs related to the new office, he said.
Co-Chair Harris commented that all the other fiscal note
decrements zero out Fiscal Note #6, except for the $50
thousand. He asked if the new office would use existing
personnel. Mr. Swanson said that the Administrative Law
Judge is a vacant position within the Office of Tax Appeals.
He was unsure if that position would be moved into the new
office, or deleted and a new position created. In any case,
the net effect would be no new positions.
Representative Joule asked if the current salary would carry
over if the current position were transferred. Mr. Swanson
replied that there would be no reclassifications. Any
vacancy would also be hired at the existing level or
classification.
Representative Stoltze commented on high profile tax issues.
Mr. Stancliff responded that there would be "cross-training"
and improved efficiency with the new panel structure.
Representative Stoltze asked if the Alaska judicial process
would remain in place. Mr. Stancliff said that it would not,
and pointed out that that process was subject to
constitutional questions with appointments in one branch of
government serving in another. The chief would be selected
by the Governor and confirmed by the Legislature, and the
chief would hire the central panel. The three amendments are
qualifications that the industry requested for the handling
of tax issues by the Administrative Law Judge.
Representative Stoltze thought that it was a major shift to
have the Legislature confirm the position because it was a
judicial position. Mr. Stancliff agreed that it is a
departure, but he emphasized that the tax work on oil issues
would retain the current standards and statutes, and the
position would have final decision-making authority. He said
that with all those adjustments, the need for the judicial
counsel appointment had become less important.
Representative Co-Chair Williams MOVED to ADOPT Amendment
#1. Co-Chair Harris OBJECTED for purposes of discussion.
Amendment #1 reads:
Page 31, lines 6-10
Delete all existing language and replace with:
*Sec 67. AS43.05.420 is amended to read:
(b) A person conducting a proceeding authorized under AS
43.05.405-AS43.05.499 shall have at least four years of
professional experience as a tax attorney, or be a certified
public accountant practicing in the area of tax, or a tax
administrator.
This amendment is being offered to insure that the high
quality of standards of expertise developed in the original
tax appeals office remain in place as the Central Panel
absorbs and executes those adjudicatory functions.
Mr. Stancliff explained that the amendment was negotiated
between the bill sponsors, the Administration and AOGA. It
deals specifically with the expertise that would be required
by the person taking up the tax appeal issues. He read the
language.
Co-Chair Harris WITHDREW his OBJECTION. Amendment #1 was
adopted.
Co-Chair Williams MOVED to ADOPT Amendment #2. Co-Chair
Harris OBJECTED.
Amendment #2 reads:
Add a new section that reads as follows and re-number all
other sections accordingly:
Code of conduct
The following fundamental canons of conduct shall be
included in the code adopted by the Chief Administrative Law
Judge:
An administrative law judge or hearing officer shall in the
carrying out of their official duties:
1) uphold the integrity and independence of the office.
2) avoid impropriety and the appearance of impropriety.
3) shall perform the duties of the office impartially
and diligently.
4) shall conduct unofficial activities so as to
minimize the risk of conflict with the obligations
of the office.
5) shall refrain from inappropriate activity in seeking
employment with another agency or employer or in
seeking reappointment.
Mr. Stancliff explained that Amendment #2 is part of the
adjustments important to uphold the integrity of all the
administrative judges. The code of conduct is modeled after
existing judicial canon, and the industry is comfortable
with the language.
Co-Chair Harris WITHDREW his OBJECTION. Amendment #2 was
adopted.
Co-Chair Williams MOVED to ADOPT Amendment #3. Co-Chair
Harris OBJECTED.
Amendment #3 reads:
Page 30, line 29,
After the word "section" remove the period and add:
"however AS44.64.070 does apply to such hearings."
Mr. Stancliff explained that the amendment provides for
preemption ability. If a person felt that a conflict existed
and wanted a new hearing officer, one would be appointed.
The oil industry requested this amendment and asked that the
provision of refusal apply to their tax appeals officer. It
is an important technical change.
Co-Chair Harris WITHDREW his OBJECTION. Amendment #3 was
adopted.
Representative Croft observed that the amendment is not only
technical but also substantive. Industry representatives in
an oil tax appeal could now replace a judge they didn't
like. Mr. Stancliff agreed that it is substantive regarding
that change, but technical in terms of conforming to the
existing provisions in the central panel. During
negotiations on the legislation, Amendment #3 helped the oil
industry accept not having judicial counsel involved in the
appointments.
Representative Croft commented on the level of expertise
required in Amendment #1. He questioned if, by granting the
power to preempt a judge or hearing office, it would create
a limited pool of administrative law judges fitting the
qualifications to hear tax appeals. Mr. Stancliff replied
that a situation of a very small pool could arise. However,
the bill would not prevent the Administration from arranging
for a contract-hearing officer with those credentials, and
that was felt to be enough of a safety valve.
Representative Croft asked if workers' compensation is
excluded from the bill's provisions. Mr. Stancliff affirmed.
Representative Croft noted that the proposal to combine
hearing officers makes a lot of sense. He thought that tax
and workers compensation are two specialized areas, and
asked if there are other major exclusions from the bill. Mr.
Stancliff affirmed, and said that there were discussions of
the areas where expertise is more critical. Ratemaking cases
are not included under this jurisdiction.
Representative Foster MOVED to report HCS CSSB 203(FIN) out
of Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HCS CSSB 203(FIN) was REPORTED out of Committee with a "do
pass" recommendation and sixteen fiscal impact notes.
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