Legislature(2005 - 2006)HOUSE FINANCE 519

04/21/2005 01:30 PM FINANCE

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
<Rescheduled from 4/20>
Heard & Held
Moved CSSSHB 31(FIN) Out of Committee
Heard & Held
<Bill Hearing Postponed>
<Bill Hearing Postponed to 4/22>
Bills Previously Heard/Scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 21, 2005                                                                                           
                         1:43 p.m.                                                                                              
CALL TO ORDER                                                                                                                 
Co-Chair Meyer called the House  Finance Committee meeting to                                                                   
order at 1:43:11 PM.                                                                                                          
MEMBERS PRESENT                                                                                                               
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Pete  Ecklund, Staff,  Co-Chair  Meyer;  Laura Achee,  Alaska                                                                   
Permanent   Fund  Corporation;   Devon  Mitchell,   Executive                                                                   
Director,  Alaska Municipal Bond  Bank Authority,  Department                                                                   
of  Revenue; Michael  Barnhill,  Assistant Attorney  General,                                                                   
Department  of Law;  Cody  Rice, Staff,  Representative  Carl                                                                   
Gatto;  Carl  Rose,  Alaska  Association  of  School  Boards;                                                                   
Representative Mark  Neuman; Eddy Jeans,  Director, Education                                                                   
Support   Services,  Department   of   Education  and   Early                                                                   
Development;  Representative   Peggy  Wilson;  Janet  Clarke,                                                                   
Assistant  Commissioner, Division  of Finance and  Management                                                                   
Services,  Department  of  Health and  Social  Services;  Jon                                                                   
Bittner, Staff, Representative  Tom Anderson; Dominic Lozano,                                                                   
Alaska   Firefighters   Association;   Eric   Tuott,   Alaska                                                                   
Firefighters  Association; Kevin  Smith, Executive  Director,                                                                   
Alaska Municipal League Joint Insurance Association                                                                             
PRESENT VIA TELECONFERENCE                                                                                                    
George  Vakalis, Assistant  Superintendent, Anchorage  School                                                                   
District;  Marleen Norton,  Human  Services, Municipality  of                                                                   
Anchorage; Rob Allen, Southeast Conference, Sitka                                                                               
HB 187    "An  Act  establishing  the Alaska  capital  income                                                                   
          account within the Alaska  permanent fund; relating                                                                   
          to deposits  into the account; relating  to certain                                                                   
          transfers regarding  the Amerada Hess settlement to                                                                   
          offset  the  effects  of inflation  on  the  Alaska                                                                   
          permanent  fund;  and  providing for  an  effective                                                                   
          HB 187 was heard and HELD in Committee for further                                                                    
HB 13     "An Act relating to reimbursement of municipal                                                                        
          bonds  for school construction;  and providing  for                                                                   
          an effective date."                                                                                                   
          HB 13 was heard and HELD in Committee for further                                                                     
HB 231    "An   Act    relating   to   the    definition   of                                                                   
          'municipality'  for   purposes  of  human  services                                                                   
          community matching grants."                                                                                           
          HB 231 was heard and  HELD in Committee for further                                                                   
HB 31     "An Act relating to the presumption of coverage                                                                       
          for  a workers' compensation  claim for  disability                                                                   
          as  a  result  of  certain   diseases  for  certain                                                                   
          CSSSHB 31 (FIN) was REPORTED out of Committee with                                                                    
          a  "no  recommendation"   recommendation  and  with                                                                   
          three  fiscal  impact  notes:  zero  note  #1  CED,                                                                   
          indeterminate note #2  ADM, and a new indeterminate                                                                   
          note by LWF.                                                                                                          
1:44:45 PM                                                                                                                    
HOUSE BILL NO. 187                                                                                                            
     "An Act  establishing the Alaska capital  income account                                                                   
     within the  Alaska permanent fund; relating  to deposits                                                                   
     into   the  account;  relating   to  certain   transfers                                                                   
     regarding  the Amerada  Hess  settlement  to offset  the                                                                   
     effects of  inflation on the Alaska permanent  fund; and                                                                   
     providing for an effective date."                                                                                          
Co-Chair  Chenault  MOVED to  ADOPT  the new  CS  for HB  187                                                                   
labeled 24-GH1070\F, Cook, 4/12/05.                                                                                             
Representative Hawker OBJECTED.                                                                                                 
PETE ECKLUND,  STAFF, CO-CHAIR MEYER, explained  that the new                                                                   
CS changes the  bill by taking the Amerada  Hess earnings and                                                                   
creating a  new fund  in the general  fund called  the Alaska                                                                   
Capital Income  Fund.  The  Amerada Hess bonding  proposal is                                                                   
not  moving  forward;  the  intention  of  this  bill  is  to                                                                   
transfer  those  funds  to  help  with  this  year's  capital                                                                   
budget.  He referred to a retroactivity clause on page 2.                                                                       
1:49:23 PM                                                                                                                    
Co-Chair  Meyer asked  for an explanation  of the  difference                                                                   
between this  version and the  original version of  the bill.                                                                   
Mr. Ecklund  replied that in  the original bill,  the account                                                                   
resided within  the earnings reserve  of the Permanent  Fund.                                                                   
That fund was renamed and the  money was moved to the general                                                                   
fund.   A  retroactivity  clause was  also  added.   Co-Chair                                                                   
Meyer inquired  if the amount  was $60 million.   Mr. Ecklund                                                                   
replied that it was.                                                                                                            
1:50:26 PM                                                                                                                    
Representative  Hawker addressed  his objection.   He  opined                                                                   
that there  is a critical  deficiency in both  bills, however                                                                   
the approach  in the  CS compounds the  problem.   Both bills                                                                   
would take  100 percent of  the earnings every  year, leaving                                                                   
nothing  in the  permanent  fund to  protect  its value  over                                                                   
time.   There is a need  to inflation proof  it.  The  new CS                                                                   
takes  the money  and moves  it into  the general  fund.   He                                                                   
opined that the Governor's bill  did a better job of allowing                                                                   
discretion  by  leaving  it  in the  permanent  fund.  It  is                                                                   
available for spending and the  value is kept. The Governor's                                                                   
approach needs a statutory percent  of market value (POMV) to                                                                   
guarantee the  continue growth  and availability at  a future                                                                   
date.   He argued  for a  POMV and taking  up the  Governor's                                                                   
bill with an amendment.                                                                                                         
1:54:54 PM                                                                                                                    
Mr.  Ecklund  termed  it  a policy  call  and  described  the                                                                   
outcome for both methods.                                                                                                       
Representative  Hawker observed that  the earnings  this year                                                                   
of $30  million, with a POMV,  would equal $21.9  million, an                                                                   
$8  million  difference,  which   is  the  inflation-proofing                                                                   
Co-Chair Meyer  noted there were  concerns going  that route.                                                                   
He did not disagree,  but opined it would not  hurt the value                                                                   
of the principal of the fund because  it is a one-time use of                                                                   
the  fund.   He stated  a  preference  to see  Representative                                                                   
Hawker's idea in  a separate bill.  He pointed  out that this                                                                   
money would be used for a one-time capital expenditure.                                                                         
1:57:53 PM                                                                                                                    
Mr. Ecklund noted  that with the proposed CS  the legislature                                                                   
could appropriate money back into the fund.                                                                                     
1:58:23 PM                                                                                                                    
Representative  Weyhrauch  questioned  Representative  Hawker                                                                   
about his proposed conceptual amendment.                                                                                        
Representative  Hawker said his  amendment refers to  the old                                                                   
bill, version A.                                                                                                                
Co-Chair  Meyer  asked  Representative  Hawker  if  he  would                                                                   
remove  his objection.   Representative  Hawker replied  that                                                                   
his amendment is too complex to address today.                                                                                  
Representative  Hawker WITHDREW  his OBJECTION  to adopt  the                                                                   
new CS.  There being NO OBJECTION, it was so ordered.                                                                           
2:00:53 PM                                                                                                                    
Representative  Croft asked if  the diversion of  $30 million                                                                   
is just for two years.  Mr. Ecklund  replied that there is no                                                                   
sunset date.   Representative Croft asked about  the interest                                                                   
rate.    Mr. Ecklund  thought  it  was  a 7  percent  return.                                                                   
Representative  Croft  agreed   it  was  between  7  and  7.5                                                                   
percent.  He asked why the amount stays at $30 million.                                                                         
LAURA  ACHEE, ALASKA  PERMANENT  FUND CORPORATION,  explained                                                                   
the rates  of return and the  projected returns.   The number                                                                   
remains the same because it is not inflation-proofed.                                                                           
Mr. Ecklund clarified that the  appropriation to the new fund                                                                   
does  not   happen  automatically.      It  still  takes   an                                                                   
appropriation  to take  those earnings  from Amerada  Hess to                                                                   
the new  Alaska Capital  Income Fund.   Representative  Croft                                                                   
summarized  that  it sets  up  the  mechanism, but  does  not                                                                   
prohibit nor guarantee future action.                                                                                           
2:04:29 PM                                                                                                                    
Representative Hawker  related that the language  of the bill                                                                   
states, "shall  be deposited in  the Alaska Capital  Interest                                                                   
Fund."   Co-Chair Meyer observed  that it would  not prohibit                                                                   
the legislature from adding a POMV concept.                                                                                     
Representative Croft  referred to page 2, line  25, and asked                                                                   
if  the  deposit is  diverted  for  all  time.   Mr.  Ecklund                                                                   
responded  that  under current  law  that transfer  does  not                                                                   
happen  without  an appropriation.    If  the CS  passes,  to                                                                   
capture  the FY  05 earnings,  last  year's operating  budget                                                                   
would have to  be amended.  Representative Croft  asked about                                                                   
inflation proofing in Section  2.  Mr. Ecklund explained that                                                                   
the  Amerada  Hess  "dead  money fund"  would  not  grow  any                                                                   
further.     Representative  Croft   opined  that   inflation                                                                   
proofing is more important.                                                                                                     
2:08:21 PM                                                                                                                    
Representative  Joule  asked   for  clarification  about  the                                                                   
Amerada Hess Settlement and HB  11, as it applies to interest                                                                   
earning.   Mr.  Ecklund replied  that the  Amerada Hess  fund                                                                   
does not grow,  other than the appropriation  of the interest                                                                   
earned back  into the fund.   Co-Chair Meyer replied  that HB
11 does not apply to the interest earned.                                                                                       
2:10:55 PM                                                                                                                    
Representative Hawker MOVED to  ADOPT Conceptual Amendment 1,                                                                   
which was drafted to incorporate the A version of HB 187:                                                                       
     Page 1, line 1, following "establishing the"                                                                               
    Delete "Alaska capital income"                                                                                              
    Insert "Amerada Hess earnings reserve"                                                                                      
     Page 2, line 14, following "deposited into the"                                                                            
    Delete "Alaska capital income"                                                                                              
    Insert "Amerada Hess earnings reserve"                                                                                      
     Page 2, line 18, following "(e) The"                                                                                       
    Delete "Alaska capital income"                                                                                              
    Insert "Amerada Hess earnings reserve"                                                                                      
     Page 2, line 19, following "Money in the"                                                                                  
    Delete "Alaska capital income"                                                                                              
    Insert "Amerada Hess earnings reserve"                                                                                      
     Page 2, line following line 23                                                                                             
     "(f) Appropriations from the Amerada Hess earnings                                                                         
     reserve account for a fiscal year may not exceed:                                                                          
     a.  five percent of the average of the combined market                                                                     
     value of the Amerada Hess earnings reserve account and                                                                     
     the value of the principal of the fund attributed to                                                                       
     the settlement of State v.  Amerada Hess, et al., 1 JU-                                                                    
     77-847 Civ. (Superior Court,  First Judicial District)                                                                     
     on June 30 for the first  five of the six fiscal years                                                                     
     immediately preceding that fiscal year.                                                                                    
     b.  the balance in the Amerada Hess earnings reserve                                                                       
Co-Chair Meyer OBJECTED for discussion purposes.                                                                                
2:12:31 PM                                                                                                                    
Representative Hawker explained  that the amendment calls the                                                                   
Alaska  Capital Income  Account  "the Amerada  Hess  earnings                                                                   
reserve  account",  and any  money  in  that account  may  be                                                                   
appropriated   for  any  valid   public  purpose,   including                                                                   
covering annual  debt service.  He explained  the methodology                                                                   
of the POMV  language in the  amendment.  He spoke  about the                                                                   
guidance of  the trustees  of the permanent  fund.   He noted                                                                   
that his  amendment would  reduce the  amount available  from                                                                   
$30  to  $22  million.    He  emphasized  the  importance  of                                                                   
protecting the  value of the  permanent fund.   The amendment                                                                   
would create  a sustainable fund  at the cost of  not funding                                                                   
all of the projects and would  allow for not overspending the                                                                   
fund.   He stated his willingness  to fund fewer  projects in                                                                   
order to maintain the integrity of the permanent fund.                                                                          
2:18:31 PM                                                                                                                    
Co-Chair Meyer asked Representative  Hawker if he agrees that                                                                   
a one-time draw  would not affect the long-term  viability of                                                                   
the fund.  Representative Hawker  replied that the fund would                                                                   
survive; however, the issue is  that the legislature violates                                                                   
the public trust by attacking the fund.                                                                                         
Representative  Kelly  inquired if  the  POMV approach  would                                                                   
permit  the money  in  the future  to be  used  as a  payment                                                                   
stream for  bonding.  Representative  Hawker replied  that it                                                                   
would.  It is an $8 million-a-year cost.                                                                                        
2:21:10 PM                                                                                                                    
Representative Croft restated  the effect of the amendment in                                                                   
bonding terms.                                                                                                                  
Representative  Kelly agreed with  the inflation  proofing of                                                                   
any  fund.   He  noted that  the  concept of  preserving  the                                                                   
corpus is attractive.                                                                                                           
Representative Hawker  suggested that this proposal  might be                                                                   
enacted  for a longer  period of  time.   He pointed  out the                                                                   
value  of  the fund  in  20  years  if it  is  not  inflation                                                                   
2:23:26 PM                                                                                                                    
Representative  Meyer suggested a  sunset date or  a separate                                                                   
bill to set up a POMV system.   He stated his intent to stick                                                                   
with the bill.                                                                                                                  
2:24:19 PM                                                                                                                    
At ease.                                                                                                                        
2:34:22 PM                                                                                                                    
Co-Chair Meyer  noted that during  the bread,  a conversation                                                                   
took place dealing with a possible compromise on the bill.                                                                      
Representative Hawker WITHDREW Conceptual Amendment 1.                                                                          
Mr.  Ecklund  referred  to page  2  and  discussed  inflation                                                                   
proofing  by   removing  subparagraph   (3)  of   Section  2.                                                                   
Representative  Croft agreed that  by removing that  section,                                                                   
Representative  Hawker's idea  that every  year Amerada  Hess                                                                   
could  earn money  and  then 5  percent  could  be spent,  is                                                                   
addressed.  The  net effect is that 3 percent  is left in the                                                                   
reserve, which is  inflation proofed.  The question  is where                                                                   
to  inflation proof.    He discussed  the  pros  and cons  of                                                                   
removing Section 2.                                                                                                             
2:39:15 PM                                                                                                                    
Representative   Hawker  addressed   Representative   Croft's                                                                   
concern and said  what is currently inflation  proofed is the                                                                   
principal of the  fund, not the whole value of  the fund.  He                                                                   
noted that is taken  care of in Section 3,  "income earned on                                                                   
the  Amerada Hess  settlement shall  be treated  in the  same                                                                   
manner as  other income."   He suggested that  removing lines                                                                   
14-17 would  solve the problem.   Mr. Ecklund  concurred that                                                                   
if lines 14-17 were removed, the  whole principal of the fund                                                                   
would be inflation proofed.                                                                                                     
Representative  Hawker welcomed  further expert testimony  on                                                                   
the subject.                                                                                                                    
Representative Kelly suggested  that legislative legal take a                                                                   
look at it.                                                                                                                     
2:45:04 PM                                                                                                                    
Ms.  Achee  restated  Representative  Hawker's  question:  if                                                                   
lines 14-17  on page 2 were  removed, would the  Amerada Hess                                                                   
principal again be  inflation proofed as it  currently is and                                                                   
would  the  $30  million  amount  increase.    Representative                                                                   
Hawker  explained  that  the amount  taken  out  for  another                                                                   
purpose must go  down.  He suggested a review  by legislative                                                                   
2:46:42 PM                                                                                                                    
DEVON  MITCHELL, EXECUTIVE  DIRECTOR,  ALASKA MUNICIPAL  BOND                                                                   
BANK  AUTHORITY, DEPARTMENT  OF  REVENUE,  spoke of  modeling                                                                   
with  inflation  proofing.   With  a realized  earnings  rate                                                                   
assumption  of 7.04  percent  and an  inflation  rate of  2.6                                                                   
percent, the  inflation proofing  for 2005-06 would  be about                                                                   
$11 million  each year.  He  agreed that the  largest benefit                                                                   
would be in the future.                                                                                                         
Representative  Hawker asked if  $22 million rather  than $16                                                                   
million  is  the correct  amount.    Mr. Mitchell  said  yes.                                                                   
Representative  Hawker  argued  that  this is  why  the  POMV                                                                   
method makes  sense.   Mr. Mitchell  responded that  it would                                                                   
inflation proof the entire fund balance.                                                                                        
2:49:20 PM                                                                                                                    
MICHAEL BARNHILL,  ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF                                                                   
LAW,  noted that  all the  options  previously mentioned  are                                                                   
HB 187 was HELD in Committee for further consideration.                                                                         
2:50:14 PM                                                                                                                    
HOUSE BILL NO. 13                                                                                                             
     "An Act relating to reimbursement of municipal bonds                                                                       
     for school construction; and providing for an effective                                                                    
CODY RICE, STAFF,  REPRESENTATIVE CARL GATTO,  explained that                                                                   
the  purpose of  HB 13  is to  reauthorize  school bond  debt                                                                   
reimbursement.   In  the Health  and  Social Services  (HESS)                                                                   
Committee it was  amended to be contingent upon  a minimum of                                                                   
a  $100  million direct  appropriation  to  qualifying  areas                                                                   
primarily in  rural Alaska.  This  program is an  exact model                                                                   
of the  previous program,  with the  exception of the  direct                                                                   
appropriation.  It allows  for  legislative authorization  to                                                                   
reimburse   local  districts   for  up   to  70  percent   of                                                                   
construction  costs for  qualifying schools,  and 60  percent                                                                   
for schools that don't meet the standards.                                                                                      
Representative Joule asked how  long it would go and if there                                                                   
is a  cap.   Mr. Rice  replied that  there is  no cap and  it                                                                   
would be  in effect  until July 1,  2006.  It  is up  to each                                                                   
locality  to  determine the  amount  of  the bonding  at  the                                                                   
Vice-Chair  Stoltze speculated  that if  no local bonds  were                                                                   
passed, a $100  million direct grant would remain.   Mr. Rice                                                                   
said that  is correct,  however, bond  debt reimbursement  is                                                                   
contingent  upon legislative  approval.   Vice-Chair  Stoltze                                                                   
asked about a HESS amendment regarding  student population of                                                                   
1,000.  Mr.  Rice said he does  not know.  He  explained that                                                                   
the  intent of  that amendment  was stated  to replicate  the                                                                   
conditions of  the previous  bond package.    He  pointed out                                                                   
that another difference  in the HESS amendment  is the length                                                                   
of the window.                                                                                                                  
2:57:14 PM                                                                                                                    
Mr.  Rice noted  that Representative  Gatto  did not  support                                                                   
direct appropriations.                                                                                                          
2:58:12 PM                                                                                                                    
CARL  ROSE,  ALASKA  ASSOCIATION  OF  ALASKA  SCHOOL  BOARDS,                                                                   
stated support  for the  bill.  He  addressed a concern  that                                                                   
the reimbursement  program be extended.   He referred  to the                                                                   
needs  of the  Alaska  School Board,  which  resulted in  two                                                                   
resolutions,  one to extend  the bonded indebtedness  program                                                                   
and  the  other  to  insure  that   the  capital  improvement                                                                   
priority list  is followed.  He  opined that $100  million is                                                                   
about $42 million shy of the current  major maintenance list.                                                                   
He related that  there is no way of knowing  about the amount                                                                   
of money that  will be passed  in local bonds.  He  termed it                                                                   
an equity  question and said  not all  needs are going  to be                                                                   
3:00:42 PM                                                                                                                    
GEORGE  VAKALIS, ASSISTANT  SUPERINTENDENT, ANCHORAGE  SCHOOL                                                                   
DISTRICT,  (via teleconference)  spoke of  the many  needs of                                                                   
Alaskan school districts.   One of the biggest  incentives to                                                                   
meet some of  these needs is the debt  reimbursement program.                                                                   
He spoke in support of HB 13.                                                                                                   
Co-Chair Chenault  asked what the  amount of the  total needs                                                                   
is.  Mr. Vakalis responded that Mr. Jeans has the list.                                                                         
3:03:11 PM                                                                                                                    
EDDY JEANS, DIRECTOR, EDUCATION  SUPPORT SERVICES, DEPARTMENT                                                                   
OF EDUCATION  AND EARLY DEVELOPMENT,  reported that  there is                                                                   
about $73  million on Anchorage's  needs list, but  that does                                                                   
not address all  their needs.  Co-Chair Chenault  asked for a                                                                   
dollar  amount regarding  MatSu  Valley's needs.   Mr.  Jeans                                                                   
replied  $8.9  million for  Settlers  Bay, $172,000  for  the                                                                   
Colony track, and $2.4 million  for Wasilla High renovations,                                                                   
and one more, which he did not have the numbers for.                                                                            
3:05:00 PM                                                                                                                    
Representative Kelly asked for  Fairbanks numbers.  Mr. Jeans                                                                   
replied that those were not submitted to the department.                                                                        
Co-Chair  Meyer  asked how  many  schools qualify  under  the                                                                   
70/30 program.   Mr. Jeans replied that most  of the projects                                                                   
on the new construction list are in rural Alaska.                                                                               
Representative  Kelly spoke  of  a concern  about his  area's                                                                   
numbers.   Mr. Jeans explained  how the numbers  are obtained                                                                   
for the department's list.                                                                                                      
3:06:56 PM                                                                                                                    
Co-Chair Chenault  asked if new  schools in the  MatSu Valley                                                                   
could  fall  under   this  program.    Mr.   Jeans  said  any                                                                   
municipality  could  submit a  request  for  review, but  the                                                                   
question is whether  they would qualify for  70 percent based                                                                   
on need, or 60 percent based on want.                                                                                           
3:07:57 PM                                                                                                                    
REPRESENTATIVE  MARK NEWMAN, spoke  about the MatSu  Valley's                                                                   
needs and increasing  enrollment.  The school  board has just                                                                   
proposed  $6 million  in bonds  for an  elementary school,  a                                                                   
high school, and for the expansion of Wasilla High School.                                                                      
3:11:16 PM                                                                                                                    
Co-Chair Chenault suggested that  it is a worthwhile bill but                                                                   
a few  more issues need  to be looked  at first before  it is                                                                   
passed from committee.                                                                                                          
HB 13 was HELD in Committee for further consideration.                                                                          
3:12:41 PM                                                                                                                    
HOUSE BILL NO. 231                                                                                                            
     "An Act relating to the definition of 'municipality'                                                                       
     for purposes of human services community matching                                                                          
REPRESENTATIVE PEGGY  WILSON explained that HB  231 addresses                                                                   
human services  community matching grants, which  total about                                                                   
$1.2  million  annually.    Qualified   communities  have  to                                                                   
provide  a 35  percent match  to  receive a  grant, and  only                                                                   
three communities  are now qualified.   This bill  would make                                                                   
it  possible for  other communities  to  form consortiums  to                                                                   
pool  money   to  receive  these   grants.    Any   group  of                                                                   
communities totaling  35,000 could apply.  She  referred to a                                                                   
Talking Points handout (copy on  file.)  It is not the intent                                                                   
of  the   bill  to   take  away   from  the  original   three                                                                   
communities.  The  deadline for applying for  these grants is                                                                   
October.  She described the process,  which would not go into                                                                   
effect until 2007.  The Southeast  Conference would assist in                                                                   
the development of consortiums.                                                                                                 
3:17:43 PM                                                                                                                    
Co-Chair Meyer asked  for clarification of the  intent of the                                                                   
bill.   Representative  Wilson repeated  that it  is not  the                                                                   
intent to take away services from anyone else.                                                                                  
Representative    Croft   asked    about   geographic    area                                                                   
definitions.     Representative   Wilson  replied   that  the                                                                   
geographic areas were purposely  not defined.  Representative                                                                   
Croft   asked    whether   diverse    areas   could    apply.                                                                   
Representative  Wilson  said that  is fine.    Representative                                                                   
Croft  asked if  the  bill  might delay  harming  communities                                                                   
receiving current services.                                                                                                     
Co-Chair Meyer clarified  that the intent is  to increase the                                                                   
amount appropriated in the future.                                                                                              
3:20:49 PM                                                                                                                    
Representative  Hawker related  that  there is  no intent  to                                                                   
take funding  away, presuming  the same  level of funding  is                                                                   
maintained.  He  suggested that more funding  would be needed                                                                   
in  the future.   Representative  Wilson  said that  decision                                                                   
would be made in a HESS subcommittee.   Representative Hawker                                                                   
disagreed with  the zero fiscal note.   Representative Wilson                                                                   
referred   Representative   Hawker   to   the   second   page                                                                   
explanation of the fiscal note.                                                                                                 
Co-Chair  Meyer  suggested another  option.    Representative                                                                   
Wilson said some of it has already been done.                                                                                   
3:22:40 PM                                                                                                                    
Representative  Joule  asked about  population  requirements.                                                                   
Ms. Wilson implied that the numbers could be changed.                                                                           
3:24:25 PM                                                                                                                    
MARLEEN NORTON,  HUMAN SERVICES,  MUNICIPALITY OF  ANCHORAGE,                                                                   
ANCHORAGE, (via teleconference)  spoke to the user's matching                                                                   
grants.   She requested that  sufficient funding  be provided                                                                   
for services.                                                                                                                   
3:27:18 PM                                                                                                                    
ROB ALLEN, SOUTHEAST CONFERENCE,  SITKA, (via teleconference)                                                                   
spoke in support  of the legislation.  It adds  an additional                                                                   
category to  the definition of  areas that would  be eligible                                                                   
to receive state grant funds for  human services.  He pointed                                                                   
out that the population of Southeast  Alaska is declining and                                                                   
fewer   contributions   are  flowing   to   nonprofits   from                                                                   
businesses and communities.  He  urged passage and support of                                                                   
the bill.                                                                                                                       
3:30:14 PM                                                                                                                    
JANET  CLARKE, ASSISTANT  COMMISSIONER,  DIVISION OF  FINANCE                                                                   
AND  MANAGEMENT SERVICES,  DEPARTMENT  OF  HEALTH AND  SOCIAL                                                                   
SERVICES,  addressed  the  fiscal  note.   There  is  nothing                                                                   
mandating holding  harmless of the grantees.   Representative                                                                   
Hawker agreed.                                                                                                                  
Ms.  Clarke  provided  the  history  of  the  program.    The                                                                   
original program was established  in the 1980's and the block                                                                   
grants went  to only Anchorage  and Fairbanks.  In  the early                                                                   
1990's,   with  the   downturn  in   state  revenues,   then-                                                                   
Representative Boyer  put the program  in statute and  it was                                                                   
developed.   At  that  point,  no other  community  qualified                                                                   
except Anchorage and Fairbanks.                                                                                                 
Ms. Clarke  referred to  the fiscal note  related to  the CRA                                                                   
version of  the legislation  (#2), which  would impact  in FY                                                                   
07.  She noted  the two scenarios provided by  the note.  Ms.                                                                   
Clarke referenced page 3.  The  department made the program a                                                                   
statewide program,  which would  cover the entire  population                                                                   
of  the State.    Page  4 of  the  fiscal note  provides  the                                                                   
opposite view, which would need  an additional appropriation.                                                                   
3:35:57 PM                                                                                                                    
Representative  Hawker asked  about  the grant  history.   He                                                                   
pointed  out that  the program  had  been targeted.   It  was                                                                   
codified in  1992.  He noted  that two years ago,  the grants                                                                   
had  been zeroed  out.   He asked  how  that reconciled  with                                                                   
expansion of the program.                                                                                                       
3:37:34 PM                                                                                                                    
Ms.  Clarke  related  that governors  and  commissioners  can                                                                   
change  their minds  and they  do  support the  bill at  this                                                                   
Representative Hawker  inquired about diminishing  the amount                                                                   
going  to  the communities.    Ms.  Clarke replied  that  the                                                                   
department is neutral  on that subject.  The  original intent                                                                   
of  the social  services  block grant  has  changed with  the                                                                   
advent of  Mat-Su.   When the programs  were at their  budget                                                                   
height, there were many designated  grants.  Today, there are                                                                   
no designated grants.                                                                                                           
Representative  Hawker  asked  for  clarification  of  "none"                                                                   
going to the state.   Ms. Clarke replied that  there are none                                                                   
in the  operating budget.   Representative Hawker  noted that                                                                   
$1.5  billion dollars  is  in the  Department  of Health  and                                                                   
Social Services budget  this year.  He requested  a statewide                                                                   
breakdown.   Ms. Clarke replied  that there is a  breakout of                                                                   
the community  grants in the  amount of $150  million dollars                                                                   
in the grant book analysis.                                                                                                     
Representative Hawker asked if  scenario 1 or 2 is the intent                                                                   
of the  bill.   Representative Wilson  replied the  intent is                                                                   
not to make anything worse for  other areas at the benefit of                                                                   
her  district.    Representative   Hawker  observed  that  is                                                                   
scenario  2.   He asked,  with  limited financial  resources,                                                                   
where the dollars would come from.                                                                                              
Representative Wilson  commented that services  have been cut                                                                   
to  parts of  the  state and  to  municipalities  due to  the                                                                   
elimination of  revenue sharing.   This type of  economy puts                                                                   
more stress on  families and communities, and  human services                                                                   
needs definitely need to be met throughout the state.                                                                           
3:42:18 PM                                                                                                                    
Representative  Hawker asked which  area to the  money should                                                                   
be  taken  from.   Representative  Wilson  replied  from  the                                                                   
personal  care   attendant  area,  which   needs  sideboards.                                                                   
Representative  Hawker   agreed.    So  much   is  driven  by                                                                   
abandoned  revenue  sharing.    He  stated  appreciation  for                                                                   
Representative Wilson's perspective.                                                                                            
Vice-Chair Stoltze recalled that  many cuts have been made to                                                                   
communities statewide.  Representative  Wilson responded that                                                                   
in  Southeast Alaska,  services  such as  Catholic  Community                                                                   
Services had to be cut, which left a large void.                                                                                
Representative  Hawker  made a  suggestion  about the  fiscal                                                                   
note; have  a two-scenario fiscal  note with a  clear intent.                                                                   
Ms. Clarke said  that could be done.    Representative Hawker                                                                   
noted this year's  5 percent increase for PERS and  TRS.  Ms.                                                                   
Clarke deferred to the wishes of the finance committee.                                                                         
3:46:54 PM                                                                                                                    
Representative Weyhrauch MOVED  to ADOPT Amendment 1, on page                                                                   
1, line  8, to delete 35,000  and insert 50,000.   Vice-Chair                                                                   
Stoltze OBJECTED for discussion purposes.                                                                                       
Representative  Wilson stated  her support  for the  original                                                                   
Vice-Chair Stoltze WITHDREW his  objection to adopt Amendment                                                                   
1.  There being NO OBJECTION, it was so ordered.                                                                                
3:48:20 PM                                                                                                                    
Ms. Clarke clarified that several  regions of the state would                                                                   
not qualify at 50,000 population.   It would cost $400,000 to                                                                   
hold the current participants harmless.                                                                                         
Representative  Wilson  explained  how the  consortium  would                                                                   
3:49:54 PM                                                                                                                    
Vice-Chair Stoltze  set the bill aside.   HB 231 was  HELD in                                                                   
Committee for further consideration.                                                                                            
3:50:29 PM                                                                                                                    
HOUSE BILL NO. 31                                                                                                             
     "An Act relating to the presumption of coverage for a                                                                      
     workers' compensation claim for disability as a result                                                                     
     of certain diseases for certain occupations."                                                                              
JON  BITTNER, STAFF,  REPRESENTATIVE TOM  ANDERSON, read  the                                                                   
sponsor statement (copy on file.)   He shared examples of the                                                                   
dangers of being  a firefighter and the  increased likelihood                                                                   
of  contracting  cancer.    HB  31  provides  presumption  of                                                                   
coverage for  first responders and firefighter,  shifting the                                                                   
burden of  proof from them to  their employers.   He referred                                                                   
to a  study in the committee  members' packets,  which showed                                                                   
no  significant fiscal  impact  in other  states.   He  urged                                                                   
support of the bill.                                                                                                            
Vice-Chair Stoltze  asked who  this legislation covers.   Mr.                                                                   
Bittner replied  that the intent  of the sponsor is  to cover                                                                   
as many first  responders as possible, but  all firefighters.                                                                   
There  is a  new  presumption  on page  2,  line 27-8,  which                                                                   
states  coverage for  police  officers and  emergency  rescue                                                                   
3:53:54 PM                                                                                                                    
Representative Hawker  MOVED to ADOPT  the new CS for  HB 31,                                                                   
labeled 24-LS0225\I.   There  being NO  OBJECTION, it  was so                                                                   
Mr. Bittner  related two changes in  the new CS.  On  page 2,                                                                   
line  3, "cardiovascular  events"  replaces "heart  disease".                                                                   
On page 2, line 26, the firefighter  has to prove exposure to                                                                   
a know carcinogen.                                                                                                              
3:56:14 PM                                                                                                                    
Representative Hawker  stated full support for  the intent of                                                                   
the  bill.   He  wondered  about  voluntary  self-destructive                                                                   
behavior.   He  referred  to line  10,  regarding  a list  of                                                                   
evidence  of such  behavior and  asked  if that  list is  too                                                                   
limited.  Mr. Bittner noted that  the list is specific to the                                                                   
exclusions.   Representative  Weyhrauch pointed  out that  it                                                                   
reads as  a presumption of coverage  and the burden  of proof                                                                   
is on the insurance company or municipality.                                                                                    
3:59:51 PM                                                                                                                    
Representative  Hawker  asked  if  the  intent  is  to  limit                                                                   
coverage for  these specific examples.   Mr. Bittner  related                                                                   
that these  are the specific  issues mentioned  when drafting                                                                   
the bill.   Representative  Weyhrauch suggested  the wording,                                                                   
"the evidence may include but not be limited to".                                                                               
Representative    Hawker   concurred   with    Representative                                                                   
Weyhrauch,  but noted  that  the  list is  very  broad.   Mr.                                                                   
Bittner  said one  of the  fears was  to make  it too  broad.                                                                   
Representative Weyhrauch gave  an example of smoke inhaled on                                                                   
another fire department job.                                                                                                    
4:03:38 PM                                                                                                                    
Co-Chair Chenault agreed that  the list is too wide and would                                                                   
exclude  many  valid  claims.   Representative  Kelly  voiced                                                                   
concern about the cost of workers'  compensation.  He pointed                                                                   
out that most first responders are covered by OSHA.                                                                             
4:06:12 PM                                                                                                                    
Representative Hawker  concluded that he is  comfortable with                                                                   
the language.                                                                                                                   
4:06:46 PM                                                                                                                    
DOMINIC  LOZANO,  ALASKA  FIREFIGHTERS  ASSOCIATION,  related                                                                   
that HB  31 provides  a much-needed  safety  net.  He  shared                                                                   
statistics  about the dangerous  profession of  firefighting.                                                                   
Thirty-eight  other  states  have  this coverage.    He  gave                                                                   
examples  of claims  filed involving  cancer.   He  mentioned                                                                   
studies  regarding   the  higher   incidence  of   cancer  in                                                                   
firefighters.   He  shared studies  from  various states.  He                                                                   
predicted that  Alaska would  have 1,000 claims  a year.   He                                                                   
spoke in support of HB 31.                                                                                                      
4:13:32 PM                                                                                                                    
ERIC  TUOTT, ALASKA  FIREFIGHTERS  ASSOCIATION, testified  in                                                                   
support of HB 31.  He addressed  concerns brought up earlier.                                                                   
He noted  that the bill  is modeled after Washington  state's                                                                   
law.   He referred to the  clause about tobacco  products and                                                                   
addressed a concern  about numbers and screening  for cancer.                                                                   
He pointed  out that  coverage  under Section  C is only  for                                                                   
first  responders, and  the  numbers would  be  limited.   He                                                                   
explained the criteria for qualifying for a claim.                                                                              
4:18:27 PM                                                                                                                    
Mr. Tuott  addressed a  concern by  Representative Kelly  and                                                                   
OSHA controls.   He pointed out that public  safety employees                                                                   
do  not have  OSHA coverage.   He  referenced the  contagious                                                                   
disease portion  of the  bill.  Holding  an EMT license  does                                                                   
not qualify someone for this coverage.                                                                                          
4:20:48 PM                                                                                                                    
Mr.  Tuott addressed  why  this legislation  is  needed.   He                                                                   
referred  to  page  1,  line 9,  where  it  states  that  the                                                                   
presumption of  coverage may be rebutted by  preponderance of                                                                   
the  evidence.     The  language   is  restricted   to  first                                                                   
responders and  applies to claims  that are already  awarded.                                                                   
He urged passage of the bill.                                                                                                   
4:23:10 PM                                                                                                                    
KEVIN  SMITH,  EXECUTIVE DIRECTOR,  ALASKA  MUNICIPAL  LEAGUE                                                                   
JOINT  INSURANCE  ASSOCIATION,  related concerns  about  rate                                                                   
increases.    He  explained who  is  represented  by  workers                                                                   
compensation and addressed complications  of the program.  He                                                                   
pointed  out that  compensation  for these  diseases  already                                                                   
exists.   He suggested  that lifestyle is  a factor  in these                                                                   
diseases.   He said that  a medical exam  is costly  and does                                                                   
not preclude  developing cancer  later on.   He came  up with                                                                   
the number  9,050 as  the total  number of firefighters  that                                                                   
would qualify for the coverage.                                                                                                 
4:30:01 PM                                                                                                                    
Representative  Croft asked  who  should have  the burden  of                                                                   
proof.   For example, he suggested  it would be  difficult to                                                                   
know which  contact led to AIDS.   He opined that it  is fair                                                                   
to cover AIDS  and the burden  of proof should not  be on the                                                                   
first responder.                                                                                                                
Mr. Smith responded that ideally  it would be nice to provide                                                                   
this coverage.  He opined it is  easier now to prove, but the                                                                   
liability is  unfunded.  Representative Croft  suggested that                                                                   
first responders  should be covered.  Mr. Smith  talked about                                                                   
the expense of the worker's compensation system.                                                                                
4:34:24 PM                                                                                                                    
Representative Kelly  asked if the  incidence is so  low, how                                                                   
would  there  be  a  10-20  percent   increase.    Mr.  Smith                                                                   
explained that  NCCI uses national  figures.  He  spoke about                                                                   
the expense of an individual claim.                                                                                             
4:36:18 PM                                                                                                                    
Representative Hawker moved to  report CSSSHB 31 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal impact notes.   There being NO OBJECTION,                                                                   
it was so ordered.                                                                                                              
CSSSHB  31 (FIN) was  REPORTED  out of Committee  with  a "no                                                                   
recommendation" recommendation  and with three  fiscal impact                                                                   
notes: zero  note #1  CED, indeterminate note  #2 ADM,  and a                                                                   
new indeterminate note by LWF.                                                                                                  
The meeting was adjourned at 4:36 PM                                                                                            

Document Name Date/Time Subjects