Legislature(2005 - 2006)CAPITOL 106
04/04/2006 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB461 | |
| HB290 | |
| HB496 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 496 | TELECONFERENCED | |
| += | HB 461 | TELECONFERENCED | |
| += | HB 290 | TELECONFERENCED | |
| += | HB 438 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 461-LEGISLATIVE DISCLOSURES 8:08:25 AM CHAIR SEATON announced that the first order of business was HOUSE BILL NO. 461, "An Act relating to disclosure to the Alaska Public Offices Commission of information about certain income received as compensation for personal services by legislators, public members of the Select Committee on Legislative Ethics, and legislative directors subject to the provisions of law setting standards of conduct for legislative branch officers and employees; and providing for an effective date." 8:08:34 AM REPRESENTATIVE GARDNER offered a synopsis of HB 461, as sponsor. She stated that there are disclosure laws in place related to legislators. She said, however, that there is a loophole: legislators can report income, but they don't have to report what they did for that income. She said that is incomplete information that does not allow the voting public enough information upon which to make determinations about what kind of work the legislature is doing. That in turn, she added, affects the public's judgment about legislators' interests and focus. The proposed legislation would remove that loophole, requiring legislators to describe "in broad terms" the work they do and the approximate amount of time spent on that work. 8:09:59 AM REPRESENTATIVE GATTO asked Representative Gardner to illustrate the meaning of "disclosure in broad terms." 8:10:12 AM REPRESENTATIVE GARDNER said, for example, if a legislator owned a business and "had a $10,000-a-year support contract with somebody," he/she would disclose that amount, as well as saying, "I provide text support [and] problem solving, and I expect it to take me five hours a month." 8:10:52 AM REPRESENTATIVE GATTO asked if it would be enough to say, "I work for an oil company," or if the person would have to say, "I'm a cook for the oil company," or be even more specific and say what meal he/she cooks. REPRESENTATIVE GARDNER noted that if a person is an employee, then that would be reported differently. If the person in question was doing contract work for the oil company, he/she could disclose how many meals are provided and over what period of time. 8:11:50 AM CHAIR SEATON clarified that the bill does not address all employment or businesses, but solely personal services. He offered an example. 8:12:50 AM REPRESENTATIVE GATTO directed attention to the phrase "income in excess of $5,000", shown on page 2, [line 3], of the bill, and he said he interprets that to mean "in your lifetime." 8:13:07 AM REPRESENTATIVE GARDNER responded: This is current law; ... this is what we already have to report to [the Alaska Public Offices Commission (APOC)]. All my bill does is simply say [that] to say I earn $5,000 for consulting work is not enough. You have to give a brief description of what kind of consulting work you're doing. CHAIR SEATON stated his understanding that the $5,000 refers to an annual amount, because it pertains to the APOC report. 8:13:53 AM CHAIR SEATON noted that an amendment would be made on page 2, line 4, [after "personal services"], adding: "and as to a dividend received from a limited liability corporation as compensation for personal services". He said he mentioned this well ahead of offering the amendment so that the public would know about the concept. 8:15:10 AM BROOKE MILES, Executive Director, Alaska Public Offices Commission (APOC), reviewed that APOC administers and enforces the disclosure sections of the Legislative Ethics Law. Regarding, "as to income in excess of $5,000 received as compensation for personal services", she said the language does apply to "employment as well as to self-employment." She stated her greatest concern regarding the proposed requirement of describing in detail the nature of services performed is that it is very broad. She said without a bright line showing "where we must request this additional information," APOC could be vulnerable to accusations of favoritism. She offered an example. 8:17:34 AM MS. MILES also expressed concerned with the language on [page 2, beginning on line 5], which read: "and the approximate number or hours that have been or will be spent performing the services". She continued: The words "or will be" are superfluous. This requirement specifically states that each filing - for example the filing that each of you made on March 15 - represents your financial activities for the former calendar year. In other words, on March 15, you file a ... 2006 legislative financial disclosure, and it encapsulates your financial picture for calendar year 2005. Thus, you're not required to be prospective with the disclosure. 8:18:59 AM CHAIR SEATON, after ascertaining that there was no one else to testify, closed public testimony. 8:19:11 AM REPRESENTATIVE GARDNER offered her understanding that under current law, legislators are required to report the nature of the services performed. She asked if it meets current law when people write down contract or consulting work. 8:19:50 AM MS. MILES answered that those who have disclosed, for example, that they were a consultant have met the requirements of current law. 8:20:04 AM REPRESENTATIVE GARDNER asked Ms. Miles if she could suggest the bright line she is looking for that would require legislators to give more information about what kind of consulting work they do. 8:20:16 AM MS. MILES responded that there may be a direct way to ask consultants, business managers, management services, and analysts, for example, for more detailed information without having to ask, for example, for more specific information from lawyers and fishermen. She said she does not currently have a suggestion for how to do that, but she expressed her willingness to work with legislative staff on the issue. 8:21:29 AM CHAIR SEATON stated that he thinks the existing language of the proposed bill is more encompassing than the committee would like to adopt, but he said he understands the issue at hand. 8:22:03 AM REPRESENTATIVE GARDNER reemphasized that she welcomes suggestions. Regarding "will be spent performing the services", she said she thinks there are contracts and agreements for which the contractor is paid up front for work to be performed over a period of time, thus she said it seems reasonable to require the legislator involved to specify that the contract covers "X" number of hours. 8:23:44 AM MS. MILES, in response to a question from Chair Seaton, said she thinks it would be okay for an individual to report a payment that was received in calendar year 2005, for services that, after January 1, 2006, were not completed; however, it would not be "within the purview of this chapter" to include "an agreement to do something in the next calendar year for payment that will be received in the next calendar year." 8:24:16 AM CHAIR SEATON said he thinks the first example is "what the language is trying to get at." He opined, "I think it's important that the uncompleted work estimate be there as well, so that we don't give the public the misimpression of a payment received in one calendar year." He asked Ms. Miles to work with the sponsor on the language. 8:24:58 AM CHAIR SEATON moved to adopt Amendment 1, which read as follows [original punctuation provided]: Page 2, line 4, following "services,": Insert "and, as to a dividend received from a limited liability corporation, as compensation for personal services," 8:25:32 AM REPRESENTATIVE GRUENBERG objected for discussion purposes. 8:25:42 AM CHAIR SEATON explained that limited liability corporations (LLCs) are businesses - often conducted as partnerships - that report income as dividends. He said: And, of course, ... dividends and interest over $5,000 has to be reported, although the amounts of dividend or interest over $5,000 from a source are not ... reported. But amounts over $5,000 from business that you do [are] reported as the actual amount. And so, this just clears up a little glitch in the system that could get a legislator in trouble, because you have a form that says you received this as a dividend, and yet later it could be said, "Well, you were actually doing this as a partner in a business." And therefore, it could draw an ethical question. Whereas, if we clean it up here, it eliminates the problem of ethical questions, because everybody's fully aware of what a dividend from an LLC would -- how it would have to be reported. 8:26:56 AM REPRESENTATIVE GARDNER questioned the need for the word "personal" in Amendment 1. 8:27:14 AM CHAIR SEATON responded that he checked with Legislative Legal and Research Services and was told that "to be within the title of the bill, this was the way to write it." Notwithstanding that, he indicated his willingness for other suggestions. 8:27:44 AM REPRESENTATIVE GRUENBERG suggested that if Representative Gardner wants to delete the word "personal", she could do so, and then an amendment could be made to the title of the bill. 8:27:49 AM REPRESENTATIVE GARDNER moved Amendment 1 to Amendment 1, to delete "personal" from Amendment 1, and also to delete "personal" from the title of the bill on page 1, line 2. 8:28:17 AM CHAIR SEATON objected to Amendment 1 to Amendment 1. He noted that Section 2 addresses personal services. He asked, "So, if we remove the 'personal services' there, are we expanding Section 2 beyond ... the intent of ... Section 2?" 8:29:09 AM REPRESENTATIVE GRUENBERG suggested making the amendment conceptual and allowing the drafter to decide what to do. 8:29:27 AM REPRESENTATIVE GARDNER asked Ms. Miles if there is a compelling reason to keep the term, "personal services", as opposed to "business services" or any other kind of service. 8:29:36 AM MS. MILES stated her understanding that the term "personal services" has always been used to mean self-employment. She said she is not certain if dropping the word "personal" would expand the meaning, or not. 8:30:08 AM CHAIR SEATON asked Ms. Miles if, perhaps, "personal services" refers to self-employed work, whereas "services" might include all employees. 8:30:31 AM MS. MILES replied: This is the section where regular employees also report. So, "personal services" are for people who are regularly employed when they're not serving in the legislature, as well. "Services", I think, could be broader than that, but certainly would not include services for which no payment was received or payment [was] $5,000, or less. But it just seems that "services" perhaps could be broader than that. I'd need to ... talk it over with [the] Department of Law, who advises us. 8:31:15 AM CHAIR SEATON said he would like to withdraw Amendment 1 to Amendment 1, then withdraw Amendment 1, and hold the bill for the sponsor to work on the language before the committee hears the bill again. REPRESENTATIVE GRUENBERG said he has in mind a technical amendment for Amendment 1. 8:32:07 AM REPRESENTATIVE GARDNER withdrew her motion to adopt Amendment 1 to Amendment 1. 8:32:26 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 2 to Amendment 1, as follows: Between "and" and "as" Insert "," Between "corporation" and "as" Insert "," 8:33:00 AM CHAIR SEATON asked if there was any objection to [Amendment 2 to Amendment 1]. There being none, it was so ordered. 8:33:35 AM CHAIR SEATON withdrew [Amendment 1, as amended]. 8:34:06 AM CHAIR SEATON noted that at the next hearing of the bill he would reopen public testimony to accommodate someone he had missed who had wanted to testify. [HB 461 was heard and held.]
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