Legislature(2017 - 2018)HOUSE FINANCE 519

02/05/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Moved CSHB 91(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 91                                                                                                             
     "An  Act relating  to fees  for certain  persons filing                                                                    
     disclosure statements or other  reports with the Alaska                                                                    
     Public  Offices  Commission;  relating   to  a  tax  on                                                                    
     legislative lobbyists;  and providing for  an effective                                                                    
1:33:59 PM                                                                                                                    
REPRESENTATIVE SAM KITO, SPONSOR,  shared that the intent of                                                                    
the legislation was to help  provide the resources needed by                                                                    
the Alaska Public  Offices Commission (APOC) to  do the work                                                                    
of  protecting the  public interest  by being  able to  have                                                                    
receipts to support their operations.  He said that the bill                                                                    
reflected  and  estimated  level of  receipt  collection  of                                                                    
approximately $250 thousand; the  receipts collected in past                                                                    
years had  been as much as  $113 thousand. He said  that the                                                                    
commission could only charge fees  as identified in statute;                                                                    
current fees  for registration for each  lobbyist client was                                                                    
$250,  which generated  $113 thousand  per year.  He relayed                                                                    
that  the  commission had  struggled  to  maintain staff  to                                                                    
provide necessary  audits. Auditing  each campaign  and each                                                                    
lobbyist  was  time  consuming  and  sometimes  resulted  in                                                                    
accumulating  penalties, which  were  then forgiven  because                                                                    
the  accumulation occurred  under  circumstances beyond  the                                                                    
auditees  control. The  additional  receipt authority  would                                                                    
help to  support operations  and would  aid in  righting the                                                                    
state's fiscal situation.                                                                                                       
1:37:10 PM                                                                                                                    
Vice-Chair Gara  understood the additional revenue  the bill                                                                    
would  raise, and  he supported  the bill.  He believed  the                                                                    
bill would  enable the commission  to hire staff  to operate                                                                    
APOC  efficiently. He  surmised that  implementation of  the                                                                    
bill would raise the cost  of running the commission to $245                                                                    
thousand per year.                                                                                                              
Representative  Kito  replied  that  at  present  there  was                                                                    
receipt  authority  available to  the  commission  of up  to                                                                    
$145,000.  He stated  that providing  the receipt  authority                                                                    
would  not  give the  commission  excess  authority and  the                                                                    
commission would  still need to  present to  the legislature                                                                    
before  adding additional  staff. Currently,  the commission                                                                    
did  not  have   the  authority  to  be   able  to  generate                                                                    
additional revenue.                                                                                                             
1:39:27 PM                                                                                                                    
Co-Chair  Foster noted  that  Representative Guttenberg  and                                                                    
Representative Pruitt had joined the meeting.                                                                                   
Vice-Chair  Gara  understood  the bill  would  increase  the                                                                    
receipt  authority of  designated  general  funds (DGF).  He                                                                    
asked about  the $220 thousand  under Personnel  Services on                                                                    
the fiscal note.                                                                                                                
CRYSTAL KOENEMAN,  STAFF, REPRESENTATIVE SAM  KITO, answered                                                                    
that the  fiscal note indicated  that funding  was necessary                                                                    
on the  personal services  line to  decrease the  vacancy in                                                                    
APOC; by reducing  the vacancy they would be  able to better                                                                    
provide service to the public.                                                                                                  
Representative Wilson  asked whether  the money  funds would                                                                    
be DGF.                                                                                                                         
1:41:26 PM                                                                                                                    
Representative  Kito answered  that the  funds would  be DGF                                                                    
and made available  to the level of the APOC.  He added that                                                                    
the if fund exceeded the  costs of facilitating the program,                                                                    
they could  return to  the legislature for  an audit  of the                                                                    
Representative  Wilson  asked  about  the  agency's  current                                                                    
receipt  authority.   She  asked  whether  the   bill  would                                                                    
increase the amount of receipt authority.                                                                                       
Representative   Kito  responded   increasing  the   receipt                                                                    
authority  would  allow  APOC  to  decrease  the  amount  of                                                                    
general fund that they were expending.                                                                                          
Representative  Wilson wanted  to make  sure that  the money                                                                    
from  an  increase  in  the   fees  would  be  used  as  the                                                                    
legislation intended.  She referred  to Page  1 of  the bill                                                                    
and  asked  about "non-group"  entities  and  how much  they                                                                    
would pay in registration fees.                                                                                                 
Representative  Kito answered  that all  entities would  pay                                                                    
the same registration fees.                                                                                                     
Ms. Koeneman  elaborated that any  non-group entity  with an                                                                    
annual operating budget  of $250, or less,  would be exempt.                                                                    
They  would  be able  to  fundraise  to take  in  additional                                                                    
monies  but  if their  annual  operating  expense was  under                                                                    
$250, they would be exempt.                                                                                                     
Representative Wilson  understood that the language  did not                                                                    
pertain to volunteer groups, without operating expenses.                                                                        
Ms.  Koeneman  replied  in  the  affirmative;  the  language                                                                    
included personal services and office space.                                                                                    
Representative Kawasaki  spoke to  people that may  not have                                                                    
the ability  to pay  if the fee  was increased.  He wondered                                                                    
whether the fees could be waived.                                                                                               
1:45:27 PM                                                                                                                    
Representative Kito  answered that  there was a  currently a                                                                    
process whereby  a candidate could  file an  exempt campaign                                                                    
where they were not subject to  any of the fees that applies                                                                    
to candidates.  He understood that  the election  filing fee                                                                    
would still  need to be paid  but they would be  exempt from                                                                    
paying the registration fee to APOC.                                                                                            
Representative  Kawasaki  asked  for  clarification  on  the                                                                    
answer from APOC.                                                                                                               
HEATHER HEBDON, ALASKA  PUBLIC OFFICES COMMISSION, ANCHORAGE                                                                    
(via teleconference),  asked for Representative  Kawasaki to                                                                    
repeat the question.                                                                                                            
Representative Kawasaki complied.                                                                                               
Ms. Hebdon  replied that  there was  a provision  in statute                                                                    
that  allowed for  an exempt  campaign;  campaigns that  had                                                                    
limited financial  activity of  less than $5,000  during the                                                                    
duration of  the campaign could file  an exemption statement                                                                    
and not have to report. She  said that the exemption was not                                                                    
available  on  a  statewide  level and  only  applied  to  a                                                                    
municipal or judicial retention candidate.                                                                                      
Representative Kawasaki  asked whether anyone had  ever come                                                                    
to  APOC wanting  to file  but had  been unable  to pay  the                                                                    
filing fee.                                                                                                                     
Ms. Hebdon answered that it was  a new fee, which meant that                                                                    
there was not history of such a circumstance.                                                                                   
1:48:05 PM                                                                                                                    
Representative Ortiz asked whether  there had been a further                                                                    
reduction in appropriated APOC funds since FY16.                                                                                
Ms. Hebdon  replied that  the agency had  received a  cut in                                                                    
program authority the previous  session, from $242.6 million                                                                    
to  $143.3  million.  She  said   that  the  fees  had  been                                                                    
unrealized as  there had not  been fees in statute  to allow                                                                    
receipt authority up to the full $242.6 million.                                                                                
Representative Ortiz  surmised that the agency  had remained                                                                    
flat  funded  since FY16,  and  receipt  authority had  been                                                                    
reduced for receipts that had never been collected anyway.                                                                      
Ms. Hebdon answered in the affirmative.                                                                                         
Representative  Ortiz  asked  how   long  the  current  $250                                                                    
lobbying registration fee been in place.                                                                                        
Ms. Hebdon  did not know  the origination date, but  the fee                                                                    
had been increased to $250 in 2003.                                                                                             
1:50:25 PM                                                                                                                    
Representative Guttenberg offered  a hypothetical of someone                                                                    
exceeding  the $250  in operating  expenses, but  in in-kind                                                                    
donations, he  wondered where  this would  fit in  under the                                                                    
Ms. Hebdon did  not believe the hypothetical  was the proper                                                                    
definition of non-group entity.  She said a non-group entity                                                                    
was defined  as a  person, other  than an  individual, whose                                                                    
primary purpose  was to influence an  election. Those people                                                                    
had to  meet certain criteria  and could not  participate in                                                                    
business  activities, they  did  not  have shareholders  and                                                                    
were   independent   from    the   influence   of   business                                                                    
corporations. She said  that to her knowledge  only one non-                                                                    
group  entity  had  ever  registered  with  APOC,  but  that                                                                    
Citizens  United had  rendered the  definition obsolete  and                                                                    
groups  no longer  had to  go through  the steps  to achieve                                                                    
non-group status,  instead they registered as  an entity and                                                                    
could make unlimited independent expenditures.                                                                                  
1:52:46 PM                                                                                                                    
Vice-Chair  Gara did  not believe  in holding  a bill  for a                                                                    
technical  question that  could be  fixed on  the floor.  He                                                                    
pointed  to an  exemption on  Page 2,  line 3  for municipal                                                                    
office holders.  He surmised  that APOC did  not have  a fee                                                                    
for Tribal office holders.                                                                                                      
Ms. Hebdon answered that the  office did not regulate Tribal                                                                    
Vice-Chair Gara  surmised that village office  holders would                                                                    
not be charged a fee.                                                                                                           
Ms. Hebdon answered in the affirmative.                                                                                         
Vice-Chair Gara  spoke to the  fee for a  lobbying contract.                                                                    
He understood  that the  fee was for  each contract  and not                                                                    
per lobbyist.                                                                                                                   
Ms.  Hebdon replied  in  the affirmative;  the  fee was  per                                                                    
Representative Wilson  surmised that  a group  of volunteers                                                                    
that raised  $3,500 for  a local  election would  be charged                                                                    
the same  fee as a  larger organization that raised  tens of                                                                    
thousands of dollars.                                                                                                           
Ms. Hebdon answered in the affirmative.                                                                                         
Representative  explained that  the fee  was not  a tax.  He                                                                    
said registering  to participate  in the process  would cost                                                                    
the same for  small or large entities. He said  that the fee                                                                    
was  nominal  at $100  and  would  not  apply to  those  who                                                                    
qualifies for an exemption.                                                                                                     
Representative Wilson  thought that  the tier  for lobbyists                                                                    
was  questionable. She  asked whether  it would  take longer                                                                    
for  APOC  to track  a  donation  of $100,000,  rather  than                                                                    
1:57:25 PM                                                                                                                    
Ms.  Hebdon answered  that the  amount  did not  necessarily                                                                    
change the number  of reports submitted, but  it changed the                                                                    
amount of audit hours tracking the transactional history.                                                                       
Representative  Wilson   asked  why  the  amount   had  been                                                                    
selected for the lobbyist tiers.                                                                                                
Representative Wilson answered that  the lobbying side began                                                                    
at $250 per  client. He believed that the  $100 was nominal,                                                                    
but $250 was not for  an organization raising only $1000 was                                                                    
not. The ranges  of client volume reviewed by  APOC fit more                                                                    
effectively to  have a tiered  structure for  lobbyists that                                                                    
allowed a nominal fee to  be identified for clients spending                                                                    
less money to lobby the legislature.                                                                                            
1:59:07 PM                                                                                                                    
Co-Chair  Seaton   asked  whether   independent  expenditure                                                                    
groups  were not  covered in  the bill  because of  Citizens                                                                    
Ms. Hebdon  believed they  would be  covered under  the term                                                                    
Co-Chair Seaton  asked whether  the term  "non-group entity"                                                                    
did not apply because every  non-group entity would be under                                                                    
the definition of a "group." definition of a group.                                                                             
Ms. Hebdon  answered that, technically, it  would be defined                                                                    
as a person, which included a group.                                                                                            
Co-Chair  Seaton expressed  curiosity about  fees not  being                                                                    
collected because a credit or debit card could not be used.                                                                     
Ms.  Hebdon   answered  that  the  issue   had  been  fixed;                                                                    
lobbyists could  now use a  credit card. The issue  had been                                                                    
that  the   agency  had  lacked  a   programmer  to  process                                                                    
electronic payments.                                                                                                            
Co-Chair Seaton asked for  verification that that electronic                                                                    
payment process included candidate payments.                                                                                    
Ms.  Hebdon answered  that currently  the  only people  that                                                                    
paid fees to APOC were lobbyists.                                                                                               
Co-Chair Seaton  understood that if the  bill passed, anyone                                                                    
paying fees to APOC could do so with a credit card.                                                                             
2:03:13 PM                                                                                                                    
Ms. Hebdon answered in the affirmative.                                                                                         
Representative  Kawasaki   asked  how  the  fees   would  be                                                                    
assessed on  individuals that were paid  monthly, salary and                                                                    
Ms. Hebdon deferred to the  sponsor. Currently everyone paid                                                                    
the same  fee regardless  of how  they were  compensated. He                                                                    
said  that  APOC  would entertain  regualtion  in  order  to                                                                    
clarify any nuances.                                                                                                            
Representative   Pruitt   asked   for  the   definition   of                                                                    
"representational lobbyist."                                                                                                    
2:06:27 PM                                                                                                                    
Ms.  Hebdon replied  that  representational lobbyists  filed                                                                    
registration  but did  not submit  reports  and received  no                                                                    
compensation  or fees  other than  reimbursement for  travel                                                                    
and personal living expenses.                                                                                                   
Vice-Chair  Gara  asked whether  a  lobbyist  on a  contract                                                                    
could avoid the fee.                                                                                                            
Ms. Hebdon answered that they  would pay a fee regardless of                                                                    
Representative Kito  understood there  was a  conceptual and                                                                    
other amendment. He did not object to either.                                                                                   
2:08:53 PM                                                                                                                    
Representative Kawasaki MOVED to ADOPT Amendment 1:                                                                             
     Page 3, lines 2-5:                                                                                                         
          Delete all material and insert:                                                                                       
               "(1) $150 for a contract with a value of                                                                     
          less than $10,000;                                                                                                
               (2) $350 for a contract with a value of at                                                                   
          least $10,000 but less than $25,000;                                                                              
               (3) $650 for a contract with a value of at                                                                   
          least $25,000 but less than $45,000; and                                                                          
               (4) $850 for a contract with a value of                                                                      
          $45,000 or more."                                                                                                 
Representative Wilson OBJECTED for discussion.                                                                                  
Representative Kawasaki  explained that the  amendment would                                                                    
keep the original  concept of a progressive  system being in                                                                    
place for contracts.                                                                                                            
Representative Wilson  wondered how  the sponsor  felt about                                                                    
the figures in the amendment.                                                                                                   
Representative Kito  replied that he  had not worked  on the                                                                    
numbers in the  amendment, but he did not  disagree with the                                                                    
concept.  He agreed  that there  were lobbying  clients that                                                                    
did not  spend as much  in Juneau  and believed that  it was                                                                    
appropriate to be  sure that they were  not making excessive                                                                    
payments to come to Juneau.                                                                                                     
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
Co-Chair  Foster MOVED  to ADOPT  Conceptual Amendment  2 to                                                                    
alter  the bill's  effective date  from January  1, 2018  to                                                                    
January 1, 2019.                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
2:13:06 PM                                                                                                                    
Representative  Pruitt offered  Conceptual  Amendment 3.  He                                                                    
explained the requirement that APOC  have an office in every                                                                    
senate  district was  not currently  enforced  and was  also                                                                    
unnecessary. He moved that  the statutory language requiring                                                                    
an  APOC office  in every  senate district  be removed  from                                                                    
Co-Chair Seaton OBJECTED for discussion.                                                                                        
2:14:17 PM                                                                                                                    
AT EASE                                                                                                                         
2:14:51 PM                                                                                                                    
Representative Pruitt WITHDREW the conceptual amendment.                                                                        
Vice-Chair   Gara  reviewed   the  fiscal   note  from   the                                                                    
Department of  Administration, OMB Component Number  70. The                                                                    
note  reflected  operating  expenditures of  $226.6  through                                                                    
Representative Wilson pointed  to Page 2 of  the fiscal note                                                                    
related to  the vacancy  rate. She understood  that although                                                                    
the agency did  not have the authority to use  the funds for                                                                    
personal  services, the  fiscal note  implied that  maybe it                                                                    
could;  she   expressed  confusion  about  the   vacancy  as                                                                    
addressed in the fiscal note.                                                                                                   
2:17:18 PM                                                                                                                    
Ms.  Hebdon relayed  that  the agency  would  be looking  at                                                                    
adding at least one more position.                                                                                              
Representative Wilson  wondered how a change  in the vacancy                                                                    
rate would affect the legislation.                                                                                              
Representative  Kito   answered  that  the   department  was                                                                    
authorized a certain  number of positions not  funded to the                                                                    
full level  of positions. He  said that if the  vacancy rate                                                                    
were reduced it  would create an opportunity for  one of the                                                                    
positions  to be  filled utilizing  the  receipts that  were                                                                    
Representative Wilson  felt that vacancy rates  were usually                                                                    
addressed  in appropriation  bills. She  expressed confusion                                                                    
about the 2 positions reflected in the note.                                                                                    
2:19:16 PM                                                                                                                    
Representative Kito  answered that adding 2  positions would                                                                    
increase the  PCN count, but  they would still not  have the                                                                    
funding to fill  the position. If the  filled positions were                                                                    
existing PCNs,  the vacancy rate  would remain the  same. He                                                                    
related  that the  challenge was  that a  certain number  of                                                                    
PCNs had been  authorized but there was not  funding to fund                                                                    
the PCNs.                                                                                                                       
Representative Wilson  wanted assurances  that the  bill was                                                                    
not acting as an appropriation bill.                                                                                            
2:20:42 PM                                                                                                                    
Co-Chair  Seaton explained  that  if the  bill passed  there                                                                    
would be $220,500 appropriated  for personal services within                                                                    
APOC.  He asserted  that  the bill  did  not circumvent  the                                                                    
appropriation process.                                                                                                          
Representative Wilson understood.                                                                                               
2:22:45 PM                                                                                                                    
ALEXEI  PAINTER,  ANALYST,   LEGISLATIVE  FINANCE  DIVISION,                                                                    
shared  that   the  fiscal  note   in  itself  was   not  an                                                                    
appropriation, but typically  fiscal notes were incorporated                                                                    
into the  operating budget  during conference  committee. He                                                                    
stated that  the additional funding  included in  the fiscal                                                                    
note would be added into the budget were the bill to pass.                                                                      
Representative  Wilson  understood. She  maintained  concern                                                                    
that the  vacancy rate  was being  discussed under  the bill                                                                    
rather than in the operating budget process.                                                                                    
Mr. Painter  answered that the  budgeted vacancy  rate would                                                                    
not  necessarily   change.  However,  currently   there  was                                                                    
funding for  5 of the 7  positions. The bill would  give the                                                                    
funding for the remaining 2 positions.                                                                                          
2:24:55 PM                                                                                                                    
Vice-Chair Gara understood that  there were vacancy factors,                                                                    
and then  there were  vacancies of  positions that  could be                                                                    
funded.  He  did not  recognize  the  discussion of  vacancy                                                                    
factor  in the  fiscal note  that Representative  Wilson had                                                                    
Co-Chair  Seaton  MOVED  to  REPORT   CSHB  91(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
Representative Wilson  OBJECTED. She expressed  concern with                                                                    
the tier levels for lobbyists. She WITHDREW her OBJECTION.                                                                      
CSHB 91(FIN) was REPORTED out of committee with a "do pass"                                                                     
recommendation and with                                                                                                         
2:27:30 PM                                                                                                                    
AT EASE                                                                                                                         
2:31:28 PM                                                                                                                    

Document Name Date/Time Subjects
HB 91 Amendment #1.pdf HFIN 2/5/2018 1:30:00 PM
HB 91
HB 79 DOL 02.05.18.pdf HFIN 2/5/2018 1:30:00 PM
HB 79
HB 79 Legal Opinion.pdf HFIN 2/5/2018 1:30:00 PM
HB 79