Legislature(2017 - 2018)HOUSE FINANCE 519

04/19/2017 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+ HB 74 DRIVER'S LICENSE & ID CARDS & REAL ID ACT TELECONFERENCED
<Bill Hearing Canceled>
+ SB 34 DRIVER'S LICENSE & ID CARDS & REAL ID ACT TELECONFERENCED
<Bill Hearing Canceled>
<Pending Referral>
+ SB 97 PENSION OBLIGATION BONDS TELECONFERENCED
Heard & Held
+ HB 150 PAY, ALLOWANCES, BENEFITS FOR MILITIA MEM TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 90 OCC. LICENSING FEES; INVESTIGATION COSTS TELECONFERENCED
Moved CSHB 90(FIN) Out of Committee
+= HB 167 STATE AGENCY PERFORMANCE AUDITS TELECONFERENCED
Moved HB 167 Out of Committee
HOUSE BILL NO. 90                                                                                                             
     "An Act relating to occupational licensing fees;                                                                           
     relating to an occupational investigation surcharge;                                                                       
     and providing for an effective date."                                                                                      
                                                                                                                                
3:19:27 PM                                                                                                                    
                                                                                                                                
CRYSTAL   KOENEMAN,  STAFF   TO  REPRESENTATIVE   SAM  KITO,                                                                    
recapped that the bill intended  to spread the investigative                                                                    
charges to  all licensees and  work similar to  a surcharge,                                                                    
reducing  the   high  fee   fluctuations  that   some  board                                                                    
experienced  due to  investigative costs  and low  number of                                                                    
licensees.                                                                                                                      
                                                                                                                                
Representative Wilson  asked whether there  were individuals                                                                    
who  were  members of  more  than  one board.  Ms.  Koeneman                                                                    
answered  in the  affirmative.  Representative Wilson  asked                                                                    
whether  an individual  on two  boards paid  each individual                                                                    
licensing  fee. Ms.  Koeneman answered  in the  affirmative.                                                                    
Representative Wilson wanted to  ensure that the legislation                                                                    
did  not  impact  business   licensing  fees.  Ms.  Koeneman                                                                    
responded in  the affirmative and  added that the  bill only                                                                    
impacted professional licensing fees.                                                                                           
                                                                                                                                
3:22:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster OPENED Public Testimony.                                                                                        
                                                                                                                                
3:22:46 PM                                                                                                                    
                                                                                                                                
MARK  RICHARDS,  EXECUTIVE  DIRECTOR,  RESIDENT  HUNTERS  OR                                                                    
ALASKA, FAIRBANKS (via  teleconference), spoke in opposition                                                                    
of  HB 90.  He spoke  to  the Big  Game Commercial  Services                                                                    
Board  regarding  how   guiding  affected  resident  hunting                                                                    
opportunities  and the  wildlife resources.  He pointed  out                                                                    
that the board  was in debt due to  investigative costs that                                                                    
were  the second  or third  highest  out of  all boards.  He                                                                    
reported  that   the  Board  of  Nursing   had  the  highest                                                                    
investigative costs.  He pointed  to the discrepancy  in the                                                                    
costs  of investigations  per member  due to  differences in                                                                    
the number of licensees. Nurses  had 20 thousand members and                                                                    
its  portion  of  fees related  to  investigations  was  $47                                                                    
versus  two thousand  guide licensees  each  paying $316  of                                                                    
their fee towards investigations. He  stated that due to the                                                                    
nature of  the guiding  service that  involved "taking  of a                                                                    
public resource"  the activity  required a certain  level of                                                                    
enforcement  presence. Ninety  five  percent  of all  guides                                                                    
operated  within the  law, however  the bad  actors lead  to                                                                    
high investigatory costs. He elucidated  that under the bill                                                                    
the  nurses  would  pay  $300  thousand  more  in  increased                                                                    
licensing fees to help cover  the investigative costs of the                                                                    
Big  Game Commercial  Services Board.  The guide  board fees                                                                    
would  significantly decrease.  He  relayed  that the  guide                                                                    
board's concern that  the high cost of  guide licensing fees                                                                    
deterred illegal  behavior. He  emphasized that  by removing                                                                    
the  burden of  the high  fee some  guide's standards  would                                                                    
relax and lead to "bad behavior."   He urged members to vote                                                                    
in  opposition of  the bill  or  exempt the  board from  the                                                                    
provisions in the bill.                                                                                                         
                                                                                                                                
3:26:26 PM                                                                                                                    
                                                                                                                                
AL  BRETT, SELF,  FAIRBANKS (via  teleconference), spoke  in                                                                    
opposition  of  HB  90.  He  communicated  his  unease  with                                                                    
allowing  the division  to  adjust  fees through  regulation                                                                    
versus statute. He  shared that he was a  registered Class A                                                                    
guide  and reported  that the  previous two  times the  fees                                                                    
were  raised   was  during  the   hunting  season   and  was                                                                    
inconvenient.  He  believed there  was  a  problem with  the                                                                    
government   controlling   businesses  and   resources.   He                                                                    
suggested that  investigations were a "civil  process" where                                                                    
grievances  were best  addressed in  civil court.  He opined                                                                    
that it  was unfair  for the state  to "intervene"  in civil                                                                    
issues "on boards related to occupations."                                                                                      
                                                                                                                                
3:28:55 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony.                                                                                        
                                                                                                                                
Representative Ortiz  asked how  Ms. Koeneman  would respond                                                                    
to  the  first  testifier.  Ms.  Koeneman  deferred  to  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED) to answer the question.                                                                                                 
                                                                                                                                
SARA  CHAMBERS,  ACTING   DIRECTOR,  ALCOHOL  AND  MARIJUANA                                                                    
CONTROL  OFFICE,  DEPARTMENT   OF  COMMERCE,  COMMUNITY  AND                                                                    
ECONOMIC  DEVELOPMENT,   responded  that  the   fee  setting                                                                    
process was codified  in statute and the bill  did not alter                                                                    
the  fundamental principle  that the  division set  fees "in                                                                    
concert  with the  boards  and the  programs  pay for  their                                                                    
expenses."  The investigative  process was  transparent with                                                                    
the  exception  of  items  that  were  necessary  to  remain                                                                    
confidential.  She  expounded that  the  bill  served as  an                                                                    
insurance  policy for  investigative  costs.  The state  had                                                                    
historically  struggled with  setting  licensing  fees in  a                                                                    
timely  manner  so  licensees  could   budget  to  cover  an                                                                    
increased  license   fee  expense.   She  deemed   that  the                                                                    
volatility     came     from    investigator's     statutory                                                                    
responsibility,   in  concert   with  a   board  to   pursue                                                                    
violations. The  division lacked  the resources  to actively                                                                    
seek out violations but had  a responsibility to investigate                                                                    
complaints.  She  related  that  the  amount  and  level  of                                                                    
investigations were  impossible to  anticipate. Some  of the                                                                    
state's licensing  programs had  investigative fees  of over                                                                    
$100  thousand   for  a  single  investigation   either  for                                                                    
violations or from challenges to a denied license.                                                                              
                                                                                                                                
3:33:08 PM                                                                                                                    
                                                                                                                                
Representative Ortiz understood the  concept of an insurance                                                                    
pool  and  understood  the  volatility   in  costs.  He  was                                                                    
specifically  concerned with  the testifier's  scenario that                                                                    
his board  would be charged  less and nurses more  under the                                                                    
bill. Ms. Chambers  relayed that the division  had done some                                                                    
modeling  and  determined  that   nurses  would  pay  $9  in                                                                    
additional  fees each  licensing period.  She detailed  that                                                                    
very few  boards would have  increased license fees  of over                                                                    
$50 every two years and  boards with extremely high fees and                                                                    
deficits such as  the midwifery and guide  boards would save                                                                    
several  hundred  dollars.  The  state  was  looking  "at  a                                                                    
greater  savings"  with  nominal  fee  increases  to  larger                                                                    
licensing programs that had investigative  costs but had the                                                                    
"economy  of   scale  to  spread  the   expense  across  its                                                                    
membership."                                                                                                                    
                                                                                                                                
Representative Kawasaki  appreciated the bill. He  asked how                                                                    
the  different boards  would change  their future  fees with                                                                    
the addition  of the surcharge. Ms.  Chambers indicated that                                                                    
the division  analyzed board's expenses and  revenue and set                                                                    
their  fees accordingly.  The investigative  costs would  be                                                                    
deducted  from  the  equation   and  allocated  through  the                                                                    
surcharge. The remainder  of the fees would be  set based on                                                                    
the  current  fee  analysis model.  The  investigative  fees                                                                    
would be allocated separately.                                                                                                  
                                                                                                                                
Representative  Thompson  reported receiving  feedback  from                                                                    
licensees that the investigators  were not familiar with the                                                                    
profession they  were investigating.  He commented  that the                                                                    
situation made  the investigations  longer. He  wondered how                                                                    
many investigators  were on staff  and if they  were trained                                                                    
in regards  to what  they investigated. Ms.  Chambers stated                                                                    
that  the  investigative  process  included  board  members,                                                                    
which  assured  appropriate  expertise. She  indicated  that                                                                    
many licensing programs lacked  boards. When investigating a                                                                    
licensure  program  with a  board,  the  division relied  on                                                                    
board  member  review by  an  advising  board member  before                                                                    
proceeding  with an  investigation. Rarely,  an area  was so                                                                    
specialized  an investigation  required expert  witnesses to                                                                    
speak to  the specialty. The division  requested the board's                                                                    
consent   before    an   expert   witness    was   retained.                                                                    
Representative Thompson was satisfied with her answer.                                                                          
                                                                                                                                
Representative  Wilson was  concerned  with  the person  who                                                                    
engaged in  an activity  without a  license yet  the board's                                                                    
licensees had  to pay for  the investigation. She  asked why                                                                    
the state  did not  pass the investigatory  costs on  to the                                                                    
offender instead  of the board. Ms.  Koeneman responded that                                                                    
she had  a good point.  She explained that when  the guiding                                                                    
statutes were  established the  licensees wanted  to protect                                                                    
their  industry through  regulation  of unlicensed  activity                                                                    
under   their   purview.   She  asserted   that   addressing                                                                    
unlicensed  activity  was a  larger  policy  call and  board                                                                    
members should  engage in the discussion  over relinquishing                                                                    
their duty.                                                                                                                     
                                                                                                                                
3:40:39 PM                                                                                                                    
                                                                                                                                
Representative  Wilson  clarified  that  she  did  not  want                                                                    
boards to  relinquish anything. She  was suggesting  that an                                                                    
unlicensed  individual  caught   engaging  in  the  licensed                                                                    
activity should  be held  responsible for  the investigatory                                                                    
costs and not the board.                                                                                                        
                                                                                                                                
REPRESENTATIVE SAM  KITO, thought that the  issue was "broad                                                                    
and complicated."  In attempting  to address  the unlicensed                                                                    
practice issue he  discovered that even if  the activity was                                                                    
covered  under  criminal  statutes, the  Department  of  Law                                                                    
(DOL) investigations would  still need to rely  on the DCCED                                                                    
investigators   for   their   expertise.  He   voiced   that                                                                    
Representative Wilson's inquiry was  a broader question that                                                                    
he contemplated would need to  be addressed as a second step                                                                    
after the  changes in HB  90 were implemented.  He commented                                                                    
that if  costs were  recovered from unlicensed  violators he                                                                    
wanted the revenue deposited into  the general fund (GF). He                                                                    
worried that an "adverse  motivation" might arise within the                                                                    
division  to pursue  unlicensed practice  if the  department                                                                    
knew the money was dedicated to its licensing fund.                                                                             
                                                                                                                                
Representative Wilson referred to  a chart in members packet                                                                    
titled, "FY  2016 Professional Licensing Statistics"  by the                                                                    
Division   of   Corporations,  Business   and   Professional                                                                    
Licensing [copy on file]. She  asked how much the bill would                                                                    
save  or  increase  the  guide  board  licensing  fees.  Ms.                                                                    
Koeneman responded  that the big game  guides currently paid                                                                    
$316  per licensing  period  and would  save  $261 in  their                                                                    
licensing  costs  under   the  bill.  Representative  Wilson                                                                    
stated that  when boards were  formed the costs to  run them                                                                    
were accessed and  paid by the board. She  declared that the                                                                    
bill  was a  "big policy  change." She  understood what  the                                                                    
sponsor  intended  to  accomplish  but  she  felt  that  the                                                                    
approach was penalizing the licensees  who were not breaking                                                                    
the law.  Ms. Koeneman  added that she  had reviewed  the FY                                                                    
2016 investigative  actions and  discovered that  22 percent                                                                    
was  due  to  unlicensed  activity and  88  percent  of  the                                                                    
investigations  were  from  licensees doing  their  job  and                                                                    
having  some missteps.  Representative  Wilson replied  that                                                                    
the licensees should pay as well.                                                                                               
                                                                                                                                
3:45:48 PM                                                                                                                    
                                                                                                                                
Representative  Kito added  that  spreading out  all of  the                                                                    
investigatory  costs  including   for  unlicensed  activity,                                                                    
benefitted  all boards  and the  public service.  He offered                                                                    
that the  lower costs decreased  the "barrier to  entry" for                                                                    
certain professions that had a small number of licensees.                                                                       
                                                                                                                                
Representative  Thompson  remembered   that  previously  the                                                                    
legislature  passed laws  requiring fees  recovered from  an                                                                    
offender would  cover the cost  of the licensees'  fees. Ms.                                                                    
Chambers answered that if the  legislation was passed it did                                                                    
not pertain to Title 8, which contained licensing statutes.                                                                     
                                                                                                                                
Vice-Chair  Gara was  aware  that a  number  of people  with                                                                    
business licenses  were not  tied to a  board. He  asked for                                                                    
confirmation  that   the  costs  would  not   be  spread  to                                                                    
individuals  that  were  not   regulated  by  a  board.  Ms.                                                                    
Chambers indicated  the state had 43  licensing programs but                                                                    
only  22 operated  under boards.  However, all  professional                                                                    
licensees  were required  to pay  into the  proposed system.                                                                    
She   exemplified   that    construction   contractors   had                                                                    
professional licensure  but did  not have  a board  and were                                                                    
required to pay  into the new system.  Vice-Chair Gara asked                                                                    
whether  there was  an error  in  the bill.  He referred  to                                                                    
section 7  of the bill  [page 4,  line 8] that  addressed an                                                                    
investigation surcharge added to  AS 08.01.065 and cited (a)                                                                    
(2). He did not see (a)  (2) in existing statute but deduced                                                                    
that it  was a reference to  the new provision in  the bill.                                                                    
Ms. Koeneman responded in the affirmative.                                                                                      
                                                                                                                                
3:49:38 PM                                                                                                                    
                                                                                                                                
Representative Kito clarified that  the bill included all of                                                                    
the professions regulated under  Title 8 that included those                                                                    
with a board  or exclusively a license. He  used the example                                                                    
of acupuncturists in the scenario  of a professional license                                                                    
without a board.                                                                                                                
                                                                                                                                
Representative  Ortiz  had  some  of the  same  concerns  as                                                                    
Representative   Wilson.   He  clarified   that   unlicensed                                                                    
activity  comprised of  22  percent  of investigations.  Ms.                                                                    
Koeneman responded in  the affirmative. Representative Ortiz                                                                    
asked  if the  position was  that  the passage  of the  bill                                                                    
brought greater good  for the law abiding  licensees but did                                                                    
not impact  whether the "bad  actors had a greater  stake or                                                                    
lesser stake  in the  issue." Ms.  Koeneman agreed  with his                                                                    
statement.                                                                                                                      
                                                                                                                                
Representative Wilson was concerned  that under existing law                                                                    
a  mechanism did  not exist  to  collect investigatory  fees                                                                    
unless  a  case  was  a criminal  one.  She  reiterated  her                                                                    
previous  concerns   and  still  had  a   problem  with  the                                                                    
legislation. She added  that if no one was  found guilty the                                                                    
board  still  had  to  pay   the  investigative  costs.  Ms.                                                                    
Koeneman relayed that  currently there was a  $5000 fine for                                                                    
licensed activity  in AS 08.01.102. However,  the fine would                                                                    
not  cover  the entire  costs  and  was deposited  into  the                                                                    
general fund.                                                                                                                   
                                                                                                                                
Ms. Chambers  interjected that even  though a board  and the                                                                    
division  was  able  to  charge  fines  for  unlicensed  and                                                                    
licensed  violations, the  finds did  not cover  any of  the                                                                    
investigatory expenses  because the  fees went into  GF. She                                                                    
addressed    Representative    Kito's   remarks    regarding                                                                    
incentivizing the  division to enforce  unlicensed activity.                                                                    
She  did  not  think  that  increased  fees  for  unlicensed                                                                    
activity deterred negative behavior.  She shared that all of                                                                    
the boards were in favor of the legislation.                                                                                    
                                                                                                                                
3:54:53 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  suggested that  if the  issue was                                                                    
an easy one to fix it  would have been dealt with years ago.                                                                    
He  wondered whether  DOL  assumed the  cost  of a  criminal                                                                    
licensing investigation. Ms.  Koeneman deferred the question                                                                    
to the division.                                                                                                                
                                                                                                                                
ANGELA BIRT,  CHIEF INVESTIGATOR -  CORPORATIONS, BUSINESSES                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
ANCHORAGE  (via  teleconference),   answered  that  a  small                                                                    
portion   of  the   caseloads  became   criminal  and   were                                                                    
prosecuted through  the Office  of Special  Prosecutions and                                                                    
Appeals without charges to the  division. She furthered that                                                                    
civil  prosecutions  through   DOL  and  any  Administrative                                                                    
Hearings  costs  were  part  of  the  board's  investigative                                                                    
costs. Representative  Guttenberg clarified his  question by                                                                    
restating it.  Ms. Birt responded that  typically a criminal                                                                    
case began  with DOL and the  board was not charged  for the                                                                    
criminal component. She explained  that at the conclusion of                                                                    
the  criminal case  statute allowed  board punishments.  She                                                                    
exemplified  that the  Big  Game  Commercial Services  Board                                                                    
could  fine up  to two  times the  criminal conviction.  She                                                                    
stated   that   she  was   less   familiar   of  the   route                                                                    
Representative Guttenberg had described.                                                                                        
                                                                                                                                
3:58:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster MOVED to ADOPT Amendment 1:                                                                                     
                                                                                                                                
     Page 1, line 11, following "chapter"                                                                                       
     Insert  ";  the  regulations    may   provide    for  a                                                                    
     reduction   in   the amount   of the  surcharge imposed                                                                    
     under this paragraph for a  licensee who is required by                                                                    
     law  to  hold and  maintain  one  license in  order  to                                                                    
     qualify for and maintain another license"                                                                                  
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Ms.  Koeneman  explained  the  amendment.  She  stated  that                                                                    
Amendment  1   allowed  for  the  department   to  reduce  a                                                                    
surcharge imposed under the bill  if a licensee was required                                                                    
to hold  and maintain  another license  in order  to qualify                                                                    
for a license. She exemplified that  in order for a nurse to                                                                    
hold an  Advanced Practice Registered  Nurse License  it was                                                                    
necessary  to  maintain  a  Registered  Nurse  license.  She                                                                    
reported that  the situation affected  960 licensees  out of                                                                    
11 thousand registered nurses.                                                                                                  
                                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
4:00:21 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara relayed  that there  was one  fiscal impact                                                                    
note in  the amount of $3.4  thousand from DCCED FN  1 (CED)                                                                    
for   the  implementation   of  regulations,   postage,  and                                                                    
printing.                                                                                                                       
                                                                                                                                
Co-Chair  Seaton  MOVED  to  report CSHB  90  (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Wilson OBJECTED.                                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN  FAVOR:  Gara,  Guttenberg,  Kawasaki,  Ortiz,  Thompson,                                                                    
Seaton, Foster                                                                                                                  
OPPOSED: Tilton, Wilson, Grenn, Pruitt                                                                                          
                                                                                                                                
The MOTION PASSED (7/4).                                                                                                        
                                                                                                                                
CSHB  90 (FIN)  was REPORTED  OUT  of Committee  with a  "do                                                                    
pass" recommendation and with  a previously published fiscal                                                                    
impact note: FN1 (CED).                                                                                                         
                                                                                                                                
4:04:36 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:06:47 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster  reviewed the agenda for  the following day.                                                                    
He recessed  the meeting to a  call of the chair  [Note: the                                                                    
meeting never reconvened].                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
REAL ID Act - Transmittal Letter - Rep. Edgmon.pdf HFIN 4/19/2017 1:30:00 PM
HB 74
CS HB 74 (STA) Sectional Analysis.pdf HFIN 4/19/2017 1:30:00 PM
HB 74
SB97 Sponsor Statement 04.08.2017.pdf HFIN 4/19/2017 1:30:00 PM
SB 97
SB97 Sectional Analysis ver D 04.08.2017.pdf HFIN 4/19/2017 1:30:00 PM
SB 97
HB150 Additional Document - 2017 Military Pay Chart 3.14.17.pdf HFIN 4/19/2017 1:30:00 PM
HB 150
HB150 Additional Document-Sockeye Fire Spreadsheet from DMVA 3.14.17.pdf HFIN 4/19/2017 1:30:00 PM
HB 150
HB150 Sponsor Statement 3.14.17.pdf HFIN 4/19/2017 1:30:00 PM
HB 150
HB150 Supporting Document-Letter DMVA 3.14.17.pdf HFIN 4/19/2017 1:30:00 PM
HB 150
HB 74 HFIN DPS Regarding REAL ID -signed.pdf HFIN 4/19/2017 1:30:00 PM
HB 74
CSHB 74 House Finance REAL ID Presentation 4.19 FINAL v2.pdf HFIN 4/19/2017 1:30:00 PM
HB 74
HB 90 - Amendment #1.pdf HFIN 4/19/2017 1:30:00 PM
HB 90
HB 90 Testimony Letter.pdf HFIN 4/19/2017 1:30:00 PM
HB 90