Legislature(2007 - 2008)CAPITOL 106

03/01/2007 08:00 AM House STATE AFFAIRS


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08:03:16 AM Start
08:03:45 AM HB109
09:57:11 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 109 DISCLOSURES & ETHICS TELECONFERENCED
Heard & Held
+= HB 3 REQUIREMENTS FOR DRIVER'S LICENSE/I.D. TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 1, 2007                                                                                          
                           8:03 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bob Lynn, Chair                                                                                                  
Representative Bob Roses, Vice Chair                                                                                            
Representative John Coghill                                                                                                     
Representative Kyle Johansen                                                                                                    
Representative Craig Johnson                                                                                                    
Representative Andrea Doll                                                                                                      
Representative Max Gruenberg                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 109                                                                                                              
"An  Act  relating to  the  requirement  for candidates,  groups,                                                               
legislators,  public  officials,  and  other  persons  to  submit                                                               
reports electronically  to the Alaska Public  Offices Commission;                                                               
relating  to disclosures  by legislators,  public members  of the                                                               
Select  Committee on  Legislative Ethics,  legislative directors,                                                               
public  officials,  and  certain  candidates  for  public  office                                                               
concerning  services performed  for  compensation and  concerning                                                               
certain  income, gifts,  and other  financial matters;  requiring                                                               
legislators,   public  members   of  the   Select  Committee   on                                                               
Legislative Ethics, legislative  directors, public officials, and                                                               
municipal  officers to  make certain  financial disclosures  when                                                               
they leave  office; relating to insignificant  ownership interest                                                               
in a  business and to  gifts from  lobbyists for purposes  of the                                                               
Alaska  Executive   Branch  Ethics   Act;  relating   to  certain                                                               
restrictions  on  employment  after  leaving  state  service  for                                                               
purposes  of   the  Alaska  Executive  Branch   Ethics  Act;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD AND HELD                                                                                                           
                                                                                                                                
HOUSE BILL NO. 3                                                                                                                
"An  Act relating  to  issuance of  identification  cards and  to                                                               
issuance  of driver's  licenses; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 109                                                                                                                  
SHORT TITLE: DISCLOSURES & ETHICS                                                                                               
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/25/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        

01/25/07 (H) STA, JUD

01/30/07 (H) STA AT 8:00 AM CAPITOL 106

01/30/07 (H) Heard & Held

01/30/07 (H) MINUTE(STA) 02/03/07 (H) STA AT 10:00 AM SPEAKER'S CHAMBER 02/13/07 (H) STA AT 8:00 AM CAPITOL 106 02/13/07 (H) <Postponed Pending Subcommittee Report> 02/15/07 (H) STA AT 8:00 AM CAPITOL 106 02/15/07 (H) <Postponed Pending Subcommittee Report> 02/20/07 (H) STA AT 8:00 AM CAPITOL 106 02/20/07 (H) <Postponed Pending Subcommittee Report> 02/22/07 (H) STA AT 8:00 AM CAPITOL 106 02/22/07 (H) Heard & Held 02/22/07 (H) MINUTE(STA) 02/27/07 (H) STA AT 8:00 AM CAPITOL 106 02/27/07 (H) Heard & Held 02/27/07 (H) MINUTE(STA) 03/01/07 (H) STA AT 8:00 AM CAPITOL 106 WITNESS REGISTER DAVID JONES, Senior Assistant Attorney General Opinions, Appeals, & Ethics Civil Division (Anchorage) Department of Law Anchorage, Alaska POSITION STATEMENT: Answered questions during the hearing on HB 109. BROOKE MILES, Executive Director Alaska Public Offices Commission (APOC) Anchorage, Alaska POSITION STATEMENT: Responded to questions during the hearing on HB 109. TOM WRIGHT, Staff to the House Majority Office Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Answered questions during the discussion of Amendment 14 to HB 109. JOYCE ANDERSON, Administrator Select Committee on Legislative Ethics Legislative Agency & Offices Anchorage, Alaska POSITION STATEMENT: Provided clarification and information during the discussion of amendments to HB 109. REPRESENTATIVE PAUL SEATON Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Offered information related to blind trusts during the hearing on HB 109. ACTION NARRATIVE CHAIR BOB LYNN called the House State Affairs Standing Committee meeting to order at 8:03:16 AM. Representatives Roses, Coghill, Johansen, Doll, and Lynn were present at the call to order. Representatives Johnson and Gruenberg arrived as the meeting was in progress. HB 109-DISCLOSURES & ETHICS 8:03:45 AM CHAIR LYNN announced that the only order of business was HOUSE BILL NO. 109, "An Act relating to the requirement for candidates, groups, legislators, public officials, and other persons to submit reports electronically to the Alaska Public Offices Commission; relating to disclosures by legislators, public members of the Select Committee on Legislative Ethics, legislative directors, public officials, and certain candidates for public office concerning services performed for compensation and concerning certain income, gifts, and other financial matters; requiring legislators, public members of the Select Committee on Legislative Ethics, legislative directors, public officials, and municipal officers to make certain financial disclosures when they leave office; relating to insignificant ownership interest in a business and to gifts from lobbyists for purposes of the Alaska Executive Branch Ethics Act; relating to certain restrictions on employment after leaving state service for purposes of the Alaska Executive Branch Ethics Act; and providing for an effective date." [Before the committee was CSHB 109, Version GH1059\K, Wayne, 2/21/07, as work draft.] 8:04:08 AM CHAIR LYNN, after ascertaining that there was no one to testify, closed public testimony. 8:04:52 AM CHAIR LYNN said the committee would begin by addressing Amendment 12, which read as follows [original punctuation provided]: Page 17, line 21: Delete "$5,000" Insert "$1,000" Page 17, line 31: Delete "if the income was earned by the hour," Page 18, line 10: Delete "$5,000" Insert "$1,000" Page 18, line 17: Delete "$5,000" Insert "$1,000" Page 18, line 20: Delete "$5,000" Insert "$1,000" Page 18, line 24: Delete "$5,000" Insert "$1,000" Page 18, line 27: Delete "$5,000" Insert "$1,000" 8:05:08 AM DAVID JONES, Senior Assistant Attorney General, Opinions, Appeals, & Ethics, Civil Division (Anchorage), Department of Law, reviewed the action the committee had taken during its prior hearing of HB 109. He said both Amendments 12 and 13 are designed to increase the level of disclosure required of public officials and, in the case of Amendment 13, legislators, legislative directors, and the public members of the Select Committee on Legislative Ethics. Amendment 12, he related, would require public officials to disclose more information about their sources of outside income in two ways: One, it would reduce the reporting threshold from $5,000 to $1,000; and two, it would require public officials to report the number of hours worked for that outside income, regardless of whether they're working on an hourly basis, or "some other basis." The public officials affected by Amendment 13, he said, would include high-level executive branch officials, judicial officers, and certain municipal officers, among others. MR. JONES continued: We believe that $1,000 is the appropriate threshold for a couple reasons: One, $1,000 to most folks is a lot of money. Try convincing someone to give up his or her permanent fund dividend if you have any doubt about that. The other reason is that in August [2006], by initiative, the Alaska public reduced to $1,000 the reporting threshold for legislators. Now, if what we want is consistency, then we ought to have a $1,000 reporting threshold for the public officials, ... the executive branch, and judicial branch, also. MR. JONES said it is important that all hours worked are reported, not just those hours in which someone is working on an hourly basis. He explained: If, for example, I'm required to report, and I earn, under a flat fee contract, $50,000, but only perform one hour of work to get that $50,000, the public's going to want to know that. They're going to wonder where my loyalties lie if I'm getting $50,000 for only one hour's work. And for that reason we believe that the number of hours worked is an important fact to include in the reports required of the public officials. MR. JONES urged the committee to adopt Amendment 12. 8:09:13 AM REPRESENTATIVE COGHILL directed attention to the portion of the bill that Amendment 12 would affect, on page 18 [of Version K]. He said he understands the requirement of [paragraph (2)], relating to holding interest in stocks, but he opined that the change to $1,000 in [paragraph (4)], which is in regard to trusts and fiduciary relations, would be low. Regarding loans or loan guarantees mentioned in [paragraph (5)], he surmised that "that's probably a credit line that you're going to have to report at the end of the year." He indicated that a person may run over the $1,000 amount frequently. He revealed that he uses his credit line quite a bit and he wonders, "Is that a big deal; is that an ethical problem?" Chair Coghill said that in the quest for transparency, it may be possible to get "down to the ... nit-picky part." 8:13:34 AM REPRESENTATIVE ROSES said he is not sure this is "the issue." He explained that currently the disclosure form "asks us to report this information regardless of the dollar amount," but exempts credit cards. REPRESENTATIVE COGHILL clarified that the credit line to which he had referred does not pertain to a credit card. He offered an example wherein he may borrow $1,000 from his son to buy a water softener, paying his son back in a month. He questioned the necessity of disclosing such an amount. He said, "We're talking about the whole range of movement of money in your life." 8:15:40 AM MR. JONES, to Representative Coghill, said: You asked whether, if at any time during the year, the loan amount exceeded $1,000, it would need to be reported. For this provision - applying to public officials - it would. It says in [paragraph (5)] that anything over $5,000 under the existing language would need to be reported if it exceeded $5,000 at any time during the preceding calendar year. So, it would cover the bubble at some time during the year; it's not just what's owed at the end of the year. And in terms of whether this is necessary to require this level of detail, I say, "Let's bore the public; let's show them that all of this stuff is routine - that there's nothing to worry about." That's the whole goal of transparency, to show folks that there is no reason to question the actions that their public officials are taking. Because they're just like us; they're engaged in the same sorts of transactions that we are day to day. And when they borrow money here and pay it back later ..., they're just operating the same way we do. And there's no reason to question that they have these undisclosed transactions or relationships that the public should worry about. 8:17:13 AM REPRESENTATIVE GRUENBERG stated that he supports the language in "the bill as presented." He indicated that [paragraph (4) on page 18] would require parents who deposit their child's permanent fund dividend into an account [related to the Uniform Transfer for Minors Act (UTMA)] to report that "for two years." With respect to the value of stock on page 18, line 10, he said, "That will require people to study the stock values in the paper for every day just to see if it went, at one time, over $1,000. That's a very small amount. If it's $5,000 at least it's a substantial interest and there's really an interest in the public in knowing that. REPRESENTATIVE GRUENBERG reminded everyone that "this is not in the legislature," but rather would affect the executive branch. He said the initiative [passed in the fall of 2006] did not deal with the executive branch, and he remarked that if the drafters of the initiative had wanted to include the executive branch, they would have done so. He directed attention to page 17, line 31, which specifies work paid by the hour. He said many people are not paid by the hour, but are paid by the result, and it would be misleading to the public. 8:20:39 AM REPRESENTATIVE COGHILL recollected that "this is referenced by our Title 24 reporting." He noted that the language on page 17, line 19, read, "or candidate under this chapter". He said, "It seems that our Title 24 referenced that as well, so, I'm just looking for clarification on that." 8:21:32 AM REPRESENTATIVE DOLL asked: "Do I understand this correctly that if I went and got a loan to buy a car ... for my son, ... I would have to disclose that I got a loan to buy a car?" [In response to several members nodding their head in the affirmative], she said, "That does seem to be a little inordinate surveillance on this kind of thing." 8:22:04 AM REPRESENTATIVE ROSES noted that following "by the hour", on page 17, line 31, is "the approximate number of hours worked". He stated that he thinks "what we're looking for" is addressed by the previous remark made by Mr. Jones that the public does not want to see someone get paid $50,000 for only one hour of work. He directed attention to [subparagraph (F)] on page 18, beginning on line 2, which sets up an exception for those who are required to keep their work confidential, such as doctors and lawyers. He said although he understands the reasoning, he questions creating a special class of citizenry "within our own ranks." He emphasized that he wants [the public] to understand the dilemma: Nobody wants to leave a loophole and the possibility for corruption, but closing that loophole may result in either exclusive groups of people within the body or the exclusion of people from the body. 8:26:33 AM REPRESENTATIVE COGHILL reminded everyone that the issue here is in regard to the executive branch. He reiterated his question regarding the ethical nature of reporting or not reporting amounts under $1,000, as well as his statement that the $5,000 limit seems more reasonable. He stated, "I need to be convinced that my capacity to report cleanly is going to be ... clear, and I'm just not convinced of that right now." 8:29:10 AM REPRESENTATIVE DOLL moved to adopt Amendment 12 [text provided previously]. REPRESENTATIVE JOHNSON objected. 8:29:46 AM MR. JONES stated that he agrees that reducing the reporting threshold to $1,000 would increase the burden of reporting for public officials, as well as increase the risk of inadvertent failure to report. He said he thinks the circumstances of [failing to report] will determine how the public views the particular incident. He added, "But ... we have no control over the headlines." 8:30:46 AM REPRESENTATIVE ROSES stated, "You're not allowed to give the people their own perception; you plant the perception." He said, "I agree, if everybody were rational, reasonable, and logical, we wouldn't need any of these, we could have had one line, and it would have said, 'Be ethical.' But unfortunately not everybody fits into that category, so we have to go through 23 pages of detailed explanation." He said he appreciates Mr. Jones' sentiment, but he indicated that unfortunately it is not based in reality. [REPRESENTATIVE DOLL maintained her objection.] A roll call vote was taken. Representative Lynn voted in favor of Amendment 12. Representatives Johnson, Gruenberg, Doll, Roses, Coghill, and Johansen voted against it. Therefore, Amendment 12 failed by a vote of 1-6. 8:32:50 AM REPRESENTATIVE COGHILL moved to adopt Amendment 13, which read as follows [original punctuation provided]: Page 16, following line 8: Insert a new bill section to read: "* Sec. 22. AS 24.60.200 is amended to read: Sec. 24.60.200. Financial disclosure by legislators, public members of the committee, and legislative directors. A legislator, a public member of the committee, and a legislative director shall file a disclosure statement, under oath and on penalty of perjury, with the Alaska Public Offices Commission giving the following information about the income received by the discloser, the discloser's spouse or domestic partner, the discloser's dependent children, and the discloser's nondependent children who are living with the discloser: (1) the information that a public official is required to report under AS 39.50.030, other than information about gifts; (2) as to income in excess of $1,000 received as compensation for personal services, the name and address of the source of the income, the amount of the income, the number of hours of services performed to earn that income, and a statement describing in detail the nature of the services performed; [IF THE SOURCE OF INCOME IS KNOWN OR REASONABLY SHOULD BE KNOWN TO HAVE A SUBSTANTIAL INTEREST IN LEGISLATIVE, ADMINISTRATIVE, OR POLITICAL ACTION AND THE RECIPIENT OF THE INCOME IS A LEGISLATOR OR A LEGISLATIVE DIRECTOR, THE AMOUNT OF INCOME RECEIVED FROM THE SOURCE SHALL BE DISCLOSED;] (3) as to each loan or loan guarantee over $1,000 from a source with a substantial interest in legislative, administrative, or political action, the name and address of the person making the loan or guarantee, the amount of the loan, the terms and conditions under which the loan or guarantee was given, the amount outstanding at the time of filing, and whether or not a written loan agreement exists." Renumber the following bill sections accordingly. 8:33:06 AM REPRESENTATIVE ROSES objected for discussion purposes. He noted that Amendment 13 also address AS 39.50.030. 8:33:49 AM MR. JONES clarified that the reference in Amendment 13 to AS 39.50.030 pertains to current law. He said the new language would require additional details in the disclosures currently required from legislators, public members of the Select Committee on Legislative Ethics, and legislative directors. He read the bold, underlined new language [shown in the previously provided text of Amendment 13]. He said the $1,000 threshold that exists "under this provision" exists because of an initiative adopted in August 2006, thus, the legislature is not in a position to deal with that. The effect of Amendment 13, he said, would merely be to acquire additional details about the income that is earned for outside services. 8:35:43 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 1 to Amendment 13, which read as follows [original punctuation provided]: Page 1, line 16 through page 2, line 9. Delete all material and insert information from page 17, line 21 through page 19, line 9 of the Draft Version "K" of CSHB 190 and $1,000 in each place where $5,000 appears. REPRESENTATIVE ROSES objected. REPRESENTATIVE GRUENBERG spoke to Amendment 1 to Amendment 13. He said the amount must be $1,000, because that's what the initiative demands. He said, "It makes it so that the language exactly tracks the language we have just been debating in Amendment 12." 8:37:32 AM REPRESENTATIVE ROSES said [Amendment 13] "already has $1,000 everywhere you want to replace $5,000." REPRESENTATIVE GRUENBERG explained that instead of referencing two different standards, Amendment 1 to Amendment 13 would use the language from AS 39.50.030, with the exception of the amount of money, which has to be $1,000 in order not to violate the initiative. REPRESENTATIVE ROSES responded, "I guess I'm confused; I thought we just voted on not changing that to $1,000" [in Amendment 12]. REPRESENTATIVE GRUENBERG clarified that [Amendment 12] dealt with Title 39 - the executive branch. The initiative passed last fall, he said, requires the reporting of $1,000 of legislators and legislative candidates. 8:38:56 AM MR. JONES said there is already a provision in statute that addresses gifts separately, and that is [AS] 24.60.080. He suggested there may be "duplication problems" in incorporating the language in Title 39. 8:39:39 AM REPRESENTATIVE GRUENBERG stated that it was not his intention to do anything to change that little provision in Title 34. 8:40:20 AM BROOKE MILES, Executive Director, Alaska Public Offices Commission, APOC, said, "When I saw this amendment, this looked to reverse what you just voted on." She reviewed as follows: Current law does require the $1,000 reporting threshold for sources of income and indebtedness on legislators. Current law has a $5,000 reporting threshold on the same information for public officials. Public officials report any gifts more than $250 to the Alaska Public Offices Commission, as well as to their designated ethics supervisors. Gifts under the legislative financial disclosures go to your Select Committee on Legislative Ethics, which ... [the reason for] the language at line 16 and 17, [as numbered] on Amendment 13, "other than information about gifts". I believe that process has worked really well for everyone. MS. MILES offered a brief history, noting that when citizens first enacted the financial disclosure law, the limit set was $100. CHAIR LYNN asked if Amendment 1 to Amendment 13 is needed. 8:42:34 AM MR. JONES responded as follows: I believe the intent of the amendment is to make the two sections parallel, so that what's good for public officials is good for legislators. ... The difficulty is that those two systems have developed in different directions. ... Ms. Miles and I have given the example of the gift (indisc. -- coughing). And so, a simple solution to make them parallel isn't simple; it's difficult to reach that. And so, we have to look at the nuances of the differences between the two systems .... CHAIR LYNN asked, "Does this go to the heart of what we're trying to do in HB 109?" MR. JONES answered yes, but he said the difficulty is in the details. 8:43:34 AM REPRESENTATIVE ROSES indicated that Amendment 1 to Amendment 13 would result in "everything" being "under Section 39.50, not under 24." He indicated that Amendment 12 dealt with the same sections. He explained: So, if you wanted to refer this back to reducing $5,000 to where $1,000 is, to comply with the initiative, you have to go back to Title 24. ... This specifically says change the items on these pages. They're all in Title 39 and that's what we just voted on, on [Amendment] 12. 8:44:27 AM REPRESENTATIVE GRUENBERG withdrew Amendment 1 to Amendment 13. He said he wants it drafted correctly. 8:45:49 AM REPRESENTATIVE JOHANSEN noted that the minutes from the Alaska Constitutional Convention, case law, and various opinions of attorney generals reinforce the legislature's power to make changes to initiatives. 8:47:43 AM REPRESENTATIVE GRUENBERG moved Amendment 2 to Amendment 13, as follows: On page 1, line 20 [as numbered on Amendment 13]: Before "the number of hours of services performed to earn that income" Insert "if the income was earned by the hour" 8:48:42 AM REPRESENTATIVE COGHILL objected. 8:49:17 AM REPRESENTATIVE GRUENBERG, in response to a question from Representative Coghill, confirmed that the intent of Amendment 2 to Amendment 13 is to "exactly conform to what we've just done in Title 39." In response to a follow-up question from Representative Coghill, regarding why the amendment is not redundant, he explained that Amendment 2 to Amendment 13 makes it clear that the same standard will apply in Title 24. 8:50:12 AM REPRESENTATIVE COGHILL asked for an opinion from Mr. Jones. 8:50:24 AM MR. JONES stated: Our concern about limiting reporting of hours to those cases in which the person is being paid on an hourly basis is the $50,000 contract that I mentioned earlier: I get $50,000 on a flat-fee basis; I'm not being paid by the hour; I only do an hour's worth of work. I think the public will care to know that. REPRESENTATIVE COGHILL concurred. 8:51:14 AM REPRESENTATIVE GRUENBERG said many members of the legislature do not work by the hour and it would be misleading to disclose the number of hours worked, because to do so would not reflect the value of the services or the skill required. He concluded, "We've already been down this road 15 minutes ago for the executive branch; it doesn't make any sense to me to not adopt the same policy in both branches." 8:51:54 AM A roll call vote was taken. Representatives Gruenberg and Doll voted in favor of Amendment 2 to Amendment 13. Representatives Roses, Coghill, Johansen, Johnson, and Lynn voted against it. Therefore, Amendment 2 to Amendment 13 failed by a vote of 2-5. 8:52:56 AM REPRESENTATIVE JOHNSON asked if the disclosure would be the same for everyone, including those who have to keep their business confidential. 8:53:13 AM MR. JONES related that there are two means for exclusions. Under AS 24.60.230, a legislator who believes that the constitution or laws provide for privacy can apply to the court for an exception. An easier method yet, he said, exists under APOC's current regulation, whereby someone who believes that reporting [a disclosure] would violate, for example, an attorney/client privilege or doctor/client privilege, may apply for exception to the regulation and can be granted an exception. MS. MILES confirmed that's correct. 8:54:03 AM REPRESENTATIVE ROSES asked for confirmation that that exception does not exclude those people from having to disclose, but would make possible an exemption on reporting all the details, such as the name of the client or patient. MS. MILES responded that's correct. REPRESENTATIVE COGHILL asked if there has been any "contest on what is or what is not reasonably substantial interest in legislative, administrative affairs." 8:55:34 AM MS. MILES responded as follows: This has been a difficult area for the commission to administer, being that it's subjective. So, the filer herself, or himself, is making the determination whether or not to include the additional information, based on whether ... there's some regulatory guidelines if they have more than $5,000-worth of contracts with the state, if they're a lobbyist, if [they have] otherwise a close economic association. But it is subjective upon the filer to determine when their source of income has a substantial interest in state, administrative, legislative, or political action. And, in the view of the commission, [there are] ... entities in Alaska ... that don't have a substantial interest in legislative, administrative, or political action. REPRESENTATIVE COGHILL said the initiative uses the phrase, "if the income is known or reasonably should be known to have a substantial interest in legislative, administrative, or political action." He said, "Once again, we're changing the initiative. Though we're not dealing with a hot button number issue, we're certainly changing the language of what the expectation of the public was." He said for the sake of consistency, the language [in brackets in Amendment 13] needs to be included. 8:58:01 AM REPRESENTATIVE ROSES opined that the voters didn't understand the ramifications of the initiative, but instead were reacting emotionally to the dollars involved and the input of journalists. He said, "If the intent is to conform, we have to go to that extreme detail. ... I don't see where we have a choice. I don't like it, and I don't think it's reasonable, but I would agree with you that we don't have a choice." 8:58:46 AM REPRESENTATIVE COGHILL moved to adopt Amendment 3 to Amendment 13, to reinsert the language that Amendment 13 proposes to delete, beginning on page 1, line 21, through page 2, line 3, [as numbered on Amendment 13], which read as follows: [IF THE SOURCE OF INCOME IS KNOWN OR REASONABLY SHOULD BE KNOWN TO HAVE A SUBSTANTIAL INTEREST IN LEGISLATIVE, ADMINISTRATIVE, OR POLITICAL ACTION AND THE RECIPIENT OF THE INCOME IS A LEGISLATOR OR A LEGISLATIVE DIRECTOR, THE AMOUNT OF INCOME RECEIVED FROM THE SOURCE SHALL BE DISCLOSED;] There being no objection, Amendment 3 to Amendment 13 was adopted. 8:59:27 AM REPRESENTATIVE GRUENBERG stated concern that confusion will result from not considering certain other amendments as alternatives simultaneously. He requested that the committee consider Amendment 15 "in the nature of potential amendments to [Amendment] 13 or alternatives suggested." 9:00:41 AM REPRESENTATIVE COGHILL, in response to Chair Lynn, suggested sticking with Amendment 13 before moving on. He announced that he would be voting against both Amendments 13 and 15, because he indicated that those amendments would make "a greater standard" than what the initiative provides. Representative Coghill revised his original statement, saying that he could be convinced to vote for Amendment 13, to "put it in the bill and then talk about it later." CHAIR LYNN said that would also be his wish. 9:02:08 AM REPRESENTATIVE ROSES removed his objection to Amendment 13. There being no further objection, Amendment 13 was adopted. 9:02:30 AM REPRESENTATIVE GRUENBERG moved to adopt Amendment 15, labeled 25-GH1059\K.20, Cook/Wayne, 2/21/07, which read as follows: Page 1, line 4, following "government;": Insert "relating to disclosure 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;" Page 16, following line 8: Insert a new bill section to read: "* Sec. 22. AS 24.60.200 is amended to read: Sec. 24.60.200. Financial disclosure by legislators, public members of the committee, and legislative directors. A legislator, a public member of the committee, and a legislative director shall file a disclosure statement, under oath and on penalty of perjury, with the Alaska Public Offices Commission giving the following information about the income received by the discloser, the discloser's spouse or domestic partner, the discloser's dependent children, and the discloser's nondependent children who are living with the discloser: (1) the information that a public official is required to report under AS 39.50.030, other than information about gifts; (2) as to income in excess of $1,000 received as compensation for personal services, and as to a dividend received from a limited liability company as compensation for personal services, the name and address of the source of the income, and a statement describing (A) the nature of the services performed, with sufficient description to make clear to a person of ordinary understanding the specific services performed, unless those services require the issuance of a state or federal professional license; for purposes of this subparagraph, "professional license" means a license required for a profession regulated by the federal government or by a state; (B) the approximate total number of hours that have been spent or will be spent performing the services; and (C) the amount of income received from the source, if the [; IF THE SOURCE OF INCOME IS KNOWN OR REASONABLY SHOULD BE KNOWN TO HAVE A SUBSTANTIAL INTEREST IN LEGISLATIVE, ADMINISTRATIVE, OR POLITICAL ACTION AND THE] recipient of the income is a legislator or legislative director [, THE AMOUNT OF INCOME RECEIVED FROM THE SOURCE SHALL BE DISCLOSED]; (3) as to each loan or loan guarantee over $1,000 from a source with a substantial interest in legislative, administrative, or political action, the name and address of the person making the loan or guarantee, the amount of the loan, the terms and conditions under which the loan or guarantee was given, the amount outstanding at the time of filing, and whether or not a written loan agreement exists." Renumber the following bill sections accordingly. Page 22, line 9: Delete "sec. 29" Insert "sec. 30" Page 22, line 10: Delete "sec. 29" Insert "sec. 30" Page 22, line 11: Delete "sec. 30" Insert "sec. 31" Page 22, line 14: Delete "sec. 30" Insert "sec. 31" Page 22, line 15: Delete "sec. 31" Insert "sec. 32" Page 22, line 18: Delete "sec. 31" Insert "sec. 32" Page 22, line 19: Delete "22, and 26" Insert "23, and 27" Page 22, line 20: Delete "sec. 33" Insert "sec. 34" REPRESENTATIVE ROSES objected for discussion purposes. 9:03:10 AM REPRESENTATIVE COGHILL objected to Amendment 15, because he said it would add a significant amount of language, while addressing issues dealt with in Amendment 13, such as what specific service was performed, the total number of hours worked, and the amount of income received. REPRESENTATIVE GRUENBERG expressed interest in dividing the question, which would separate the portion [of Amendment 15] found on [page 1], lines 18-21, [as numbered on the amendment], from the rest of the amendment. MR. JONES suggested that "a better way of addressing the same issue" would be to change the definition of "source of income" in [AS] 39.50.200. He said that would allow a limited liability company to be included among the list of entities that are identified in that definition of source of income. REPRESENTATIVE GRUENBERG said he agrees that what Mr. Jones is expressing needs to be done in Title 39, but he thinks that something also needs to be done in Title 24. MR. JONES responded: It all depends on where we end up. If, because this provision refers to Title 39, and that stays the same, then I believe that the source of income reporting requirement under Title 39 would apply, and so, therefore, the definitions that apply under Title 39 would also be applicable. MS. MILES confirmed that is so. 9:06:31 AM REPRESENTATIVE GRUENBERG said that may be true from the point of view of an attorney and APOC; however, he said, "This is going to be viewed by a whole raft of relatively unsophisticated people who are running for the legislature, and those of us in the legislature may not be a lot more sophisticated." He said he wants the language to be crystal clear. 9:07:05 AM REPRESENTATIVE COGHILL said if he wants to find out what "income" is, he looks at definitions, not in statute. He stated, "I would suggest that we take their suggestion and put it in the definitions." REPRESENTATIVE GRUENBERG responded, "If you put it in a definition, it's got to be in Title 24, because very few people are going to look at the reference to Title 39, and then look in the definition in Title 39. That's asking more than most people will do." He said the average person looks directly to the statute, and he reemphasized his desire for clarity. 9:08:40 AM REPRESENTATIVE JOHNSON remarked that he thinks the average person is going to call APOC rather than look in statute. REPRESENTATIVE ROSES concurred with Representative Johnson. CHAIR LYNN said he has, upon occasion, called APOC for advice, rather than look in statute. 9:09:32 AM CHAIR LYNN told Representative Gruenberg that he would prefer not to divide the question at this point. REPRESENTATIVE GRUENBERG made mention of the [new language added in Amendment 15] at the bottom of the first page [through the top of the second page of the amendment]. He said he doesn't want someone who is filing a disclosure to just put down "consulting services," for example. He emphasized that he wants more specificity. 9:11:25 AM REPRESENTATIVE ROSES directed attention to language on page 2, beginning on line 1, [as numbered on Amendment 15], which read, "unless those services require the issuance of a state or federal professional license". He said that would make an exclusion for an entire list of professionals, including: doctors, lawyers, surveyors, dentists, and pilots. He said that creates a special class of citizenry. 9:12:35 AM REPRESENTATIVE DOLL said she interprets the language to mean that people who have licenses don't have to describe the specific services they perform, because people understand, according to the license, what those professionals do. REPRESENTATIVE COGHILL clarified: In the amendment that we passed previously, we asked that they describe the work product in detail and the hours performed for it. What we're attempting here is to describe what that detail might look like. ... I think that what we want to do is have everybody tell us in detail what they did to get those services. REPRESENTATIVE COGHILL restated his objection to Amendment 15. 9:14:40 AM REPRESENTATIVES ROSES and COGHILL maintained their objections. 9:14:55 AM REPRESENTATIVE GRUENBERG withdrew Amendment 15. 9:15:24 AM REPRESENTATIVE DOLL moved to adopt Amendment 14, labeled 25- GH1059\K.17, Cook/Wayne, 2/21/07, which read as follows: Page 1, line 4, following "government;": Insert "restricting representation of others by legislators and legislative employees;" Page 11, lines 9 - 17: Delete all material and insert: "Sec. 24.60.100. Representation. A legislator or legislative employee may not represent [WHO REPRESENTS] another person for compensation before a municipal, legislative, or executive branch [AN] agency, board, [OR] commission, or other entity [OF THE STATE SHALL DISCLOSE THE NAME OF THE PERSON REPRESENTED, THE SUBJECT MATTER OF THE REPRESENTATION, AND THE BODY BEFORE WHICH THE REPRESENTATION IS TO TAKE PLACE TO THE COMMITTEE. THE DISCLOSURE SHALL BE MADE BY THE DEADLINES SET OUT IN AS 24.60.105. THE COMMITTEE SHALL MAINTAIN A PUBLIC RECORD OF A DISCLOSURE UNDER THIS SECTION AND FORWARD THE DISCLOSURE TO THE RESPECTIVE HOUSE FOR INCLUSION IN THE JOURNAL. A LEGISLATOR OR LEGISLATIVE EMPLOYEE MAY NOT REPRESENT ANOTHER PERSON FOR COMPENSATION BEFORE AN AGENCY, COMMITTEE, OR OTHER ENTITY OF THE LEGISLATIVE BRANCH]." Page 12, line 2: Delete "matter, interest, or representation" Insert "matter or interest [OR REPRESENTATION]" Page 12, lines 14 - 15: Delete all material. Insert "AS 24.60.070 [; (5) REPRESENTATION OF A CLIENT UNDER AS 24.60.100]." REPRESENTATIVE COGHILL objected for discussion purposes. REPRESENTATIVE GRUENBERG spoke to the amendment as follows: ... It doesn't draw the distinction between people representing them before the agency in a quasi- legislative capacity or in a quasi-judicial capacity. REPRESENTATIVE GRUENBERG offered examples. He concluded, "It's much broader than the current situation, which just really requires disclosure." 9:17:50 AM REPRESENTATIVE COGHILL removed his objection, stating that [Amendment 14] is "one of the brighter line issues." 9:18:05 AM REPRESENTATIVE GRUENBERG objected to Amendment 14. He explained through the following example: If I have a family law [practice], for example, I can't take a case before the child support enforcement division in dealing with child support - something like that. And it has nothing at all to do with the legislative position. 9:18:55 AM REPRESENTATIVE COGHILL asked, "Is it true that we would keep a lawyer from going before ... an administrative law judge ...? If that's the case, maybe we do have a problem here." 9:19:12 AM TOM WRIGHT, Staff to the House Majority Office, Alaska State Legislature, surmised that Representative John Harris, who brought Amendment 14 to the committee originally, intended that the amendment clarify that a legislator cannot represent any client for compensation before any state or municipal entity, without exception. 9:20:32 AM REPRESENTATIVE COGHILL opined that one of the duties of a legislator is to be a good ombudsman to his/her constituents. He offered an example whereby a legislator and his/her staff spend a lot of time helping a constituent. In that situation, he said, the staff would be getting compensated for the work, but that compensation would come from the legislature. 9:21:10 AM MR. WRIGHT answered that's correct. He said, "We do not want to, in any way, ... prevent a legislator or legislative employee from doing their constituent work, and that's why we have the 'by compensation' in there." 9:21:47 AM MR. WRIGHT, in response to a question from Representative Gruenberg, said according to the director of Legislative Legal and Research Services, there is no definition of "other entity"; however, he explained that the term is used to express something other than a municipal, legislative, executive branch agency, board, or commission. 9:22:11 AM REPRESENTATIVE COGHILL suggested that perhaps the language proposed to be deleted begins too soon and the phrase should be "other entity of the state". REPRESENTATIVE GRUENBERG asked if Amendment 14 would prevent a legislator who is an attorney from representing a person who has had his/her animal confiscated by animal control. 9:22:48 AM MR. WRIGHT replied that he has no idea. REPRESENTATIVE GRUENBERG suggested that [animal control] would qualify as a municipal agency, and he stated that he does not see any relationship between it and the legislature. MR. WRIGHT indicated that the language in Amendment 14 is straightforward. He said there is nothing to prohibit a legislator who is also a lawyer from going to court. 9:23:41 AM REPRESENTATIVE COGHILL moved Amendment 1 to Amendment 14, to delete "or other entity" on page 1, line 10, [as numbered on the amendment]. REPRESENTATIVE ROSES objected. He said he has no problem including "or other entity", as long as those words are followed by "of the state". 9:24:27 AM MR. WRIGHT said, "I have no objection to that." 9:24:33 AM REPRESENTATIVE COGHILL said that had been his original thought; however, he pointed out that within that sentence is the word "municipal". He said it may complicate decisions related to municipalities if the language says, "or other entity of the state". 9:25:16 AM REPRESENTATIVE JOHNSON suggested adding "or political subdivision" so that the language would be all-inclusive. 9:25:31 AM JOYCE ANDERSON, Administrator, Select Committee on Legislative Ethics, Legislative Agency & Offices, asked for clarification regarding the meaning of "other entity". MR. WRIGHT reiterated that it is a catch-all phrase that could relate, for example, to administrative hearings, child support cases, or hearing officers. 9:26:55 AM REPRESENTATIVE GRUENBERG said a couple years ago the legislature passed the Administrative Law Judge Act, and Article II judges were set up as official judges governed by cannons of ethics. He asked: What conflict of interest is there? Why prohibit people from exercising a very legitimate profession in a very private dispute that may involve [a] dispute getting child support, or somebody's permanent fund [dividend, or] something like that that really doesn't have any possibility of any undue interest? What's the public policy in telling that the law should go this far? 9:28:01 AM MR. WRIGHT responded, "The policy is ... to take away any chance of having a conflict of interest in ... a matter such as this, and to have any undue influence over budgets, legislation, [or] whatever may occur." 9:28:23 AM REPRESENTATIVE COGHILL related an experience as follows: When I was dealing with several issues ... [related to] Child in Need of Aid laws, I was asked to go to a particular hearing, and I could tell just my presence was a chill in the court. And I withdrew, because I could just tell that they thought I was there to ... start tinkering with law based on that individual case. So, just being there was problem, let alone knowing somebody who was going to be making law in that same arena representing for compensation. .. It's an interesting question: Should a guy be forbidden to observe law in action? Probably not. But if it becomes a chill on that particular event, I think you're ... out of bounds. But ... having, then, a sitting legislator or a legislative employee ... who is already getting paid to superintend the law, you should do that as a matter of course, probably. But representing before an administrative law judge has a very intimidating effect, I would think. So, ... I think ... there is an ethical question there. 9:30:24 AM REPRESENTATIVE ROSES removed his objection to Amendment 1 to Amendment 14. CHAIR LYNN objected [to Amendment 1 to Amendment 14]. The committee took an at-ease from 9:31:27 AM to 9:31:45 AM. REPRESENTATIVE GRUENBERG stated that nobody wants to create a conflict of interest. He continued: This amendment - Amendment 14 and the "other entity" issue - deal with an assumption that because you're going before an administrative law judge, or something like that, there's going to be a conflict. I personally think that assumption is no more ... or less likely than people in an entirely private sphere. For example, somebody may go to a realtor who serves in the legislature ... to sell their house or conduct other business because they want to curry favor with that legislator. ... I mean, anybody that does any business or sells something to them [could] sell ... at a lower price or give them a better deal when they purchase to curry favor. And you can't ... prohibit people in the citizen legislature from conducting their own business. We don't live in glass bowls, and with all due respect, we're not under the same standard as judges, who are really very strictly prohibited from doing anything like that because they adjudicate. And it's a slippery slope, and once you prevent people from conducting unrelated things ..., it's not very long before you start looking at the other business dealings any of us have to do in our private affairs. CHAIR LYNN disclosed that he is a licensed real estate broker, but is on referral status. REPRESENTATIVE ROSES, as a point of order, said what the committee just heard was a debate on Amendment 14, but what the committee has before it currently is Amendment 1 to Amendment 14. A roll call vote was taken. Representatives Roses, Coghill, Johansen, Johnson, and Gruenberg voted in favor of Amendment 1 to Amendment 14. Representatives Doll and Lynn voted against it. Therefore, Amendment 1 to Amendment 14 was adopted by a vote of 5-2. 9:35:42 AM REPRESENTATIVE GRUENBERG maintained his objection to Amendment 14 [as amended]. A roll call vote was taken. Representatives Roses, Coghill, Johansen, Johnson, and Lynn voted in favor of Amendment 14, as amended. Representatives Gruenberg and Doll voted against it. Therefore, Amendment 14, as amended, was adopted by a vote of 5- 2. The committee took an at-ease from 9:37:12 AM to 9:37:23 AM. 9:38:17 AM REPRESENTATIVE COGHILL moved to adopt Amendment 17, which read as follows [original punctuation provided]: Page 16, line 9. Insert: (a) A person required to file a disclosure statement under AS 24.60.200 shall file an annual report with the Alaska Public Offices Commission, covering the previous calendar year, containing the disclosures required by AS 25.60.200, on or before March 14 of each year, except that a legislator appointed under AS 15.40.320- 15.40.320, a public member of the committee, and a legislative director must file within 30 days after the person's initial appointment. REPRESENTATIVE GRUENBERG asked if Amendment 17 was an amendment that [the subcommittee] considered and rejected. REPRESENTATIVE COGHILL confirmed it was not. 9:39:07 AM REPRESENTATIVE GRUENBERG objected to Amendment 17 for discussion purposes. 9:39:42 AM MS. ANDERSON said currently statute has no "teeth" regarding financial disclosures filed by legislators, public members of the Select Committee on Legislative Ethics, and legislative directors and a March 15 deadline. She clarified, "So, what this is doing is actually putting in statute what past practice has been with APOC." 9:41:50 AM MS. ANDERSON, in response to a question from Representative Gruenberg, clarified that Amendment 17 addresses those who are new to the legislature. 9:42:10 AM REPRESENTATIVE GRUENBERG removed his objection to Amendment 17. 9:42:21 AM CHAIR LYNN announced that there being no further objection, Amendment 17 was adopted. 9:42:29 AM REPRESENTATIVE ROSES moved to adopt Amendment 18, labeled 25- GH1059\K.19, Cook/Wayne, 2/21/07, which read as follows: Page 1, line 4, following "government;": Insert "relating to disclosures by legislators, public members of the Select Committee on Legislative Ethics, and legislative directors;" Page 16, following line 8: Insert a new bill section to read: "* Sec. 22. AS 24.60.210 is amended to read: Sec. 24.60.210. Deadlines for filing of disclosure statements. (a) A person required to file a disclosure statement under AS 24.60.200 shall file an annual report with the Alaska Public Offices Commission, covering the previous calendar year, containing the disclosures required by AS 24.60.200, on or before March 15 of each year. On or before the 90th day after ending service as a legislator or legislative director, a former legislator or legislative director shall file with the Alaska Public Offices Commission a report containing the disclosures required by AS 24.60.200, covering any period of that service for which the legislator or legislative director has not already filed a report. (b) Notwithstanding (a) of this section, a public member and a public member nominee of the committee shall file an annual report with the Alaska Public Offices Commission, covering the previous calendar year, containing the disclosures required by AS 24.60.200, on or before the second Monday in January of each year. On or before the 90th day after ending service on the committee, a former public member of the committee shall file with the Alaska Public Offices Commission a report containing the disclosures required by AS 24.60.200, covering any period of that service for which the public member has not already filed a report." Renumber the following bill sections accordingly. Page 22, line 9: Delete "sec. 29" Insert "sec. 30" Page 22, line 10: Delete "sec. 29" Insert "sec. 30" Page 22, line 11: Delete "sec. 30" Insert "sec. 31" Page 22, line 14: Delete "sec. 30" Insert "sec. 31" Page 22, line 15: Delete "sec. 31" Insert "sec. 32" Page 22, line 18: Delete "sec. 31" Insert "sec. 32" Page 22, line 19: Delete "22, and 26" Insert "23, and 27" Page 22, line 20: Delete "sec. 33" Insert "sec. 34" REPRESENTATIVE COGHILL objected. 9:43:46 AM MR. JONES proffered that although Amendment 18 is a "wonderful idea," its intent is covered by an existing provision of the bill, which makes Amendment 18 unnecessary. He explained that a better, more comprehensive version of the language that the governor originally proposed appears in Section 15, on page 12 of Version K. REPRESENTATIVE COGHILL maintained his objection. REPRESENTATIVE ROSES withdrew his motion to adopt Amendment 18. 9:45:59 AM REPRESENTATIVE DOLL moved to adopt Amendment 19. REPRESENTATIVE COGHILL objected. He offered his understanding that "this is already existing practice." 9:46:48 AM MS. ANDERSON related that the Select Committee on Legislative Ethics issued an advisory opinion on December 9, [2006]. She continued: That was the first time the question had been asked of the Ethics Committee about whether legislators who leave office should be filing either financial disclosures as well as ethics disclosures, and the advisory opinion did look at that issue and felt that the language in the statute did require that information. So, all of the 12 outgoing legislators were notified by letter that they needed to file their financial disclosure, as well as any ethics disclosures. I would agree with Representative Coghill; I don't feel that this particular amendment is necessary. 9:47:34 AM REPRESENTATIVE DOLL withdrew her motion to adopt Amendment 19. 9:48:42 AM REPRESENTATIVE COGHILL said Amendment 20 addresses the question of what is and is not significant in "reporting," and the amendment addresses the issue of blind trusts. He emphasized that it is a significant issue, and he stated that he is merely bringing up discussion of the amendment because at present he does not want to accept the language. He said he would like Mr. Jones to explain "how hard it might be to put a blind trust in the insignificant part of reporting." 9:49:30 AM MR. JONES remarked: Of course, the purpose of a blind trust is to place a legislator['s] or other public official's interest in confidential status, so that the public official or legislator does not know what's in the blind trust, thereby removing the potential conflict of interest or appearance of conflict of interest when the public official or legislator takes official action that may affect the interests that are held in a blind trust. If you don't know that it's going to benefit your interests that are held in a blind trust, then of course your interests couldn't have been the reason that you took that initial action. ... The devil is in the details, in trying to come up with a description of what would be an effect blind trust, without making those restrictions so tight that a blind trust is effectively unavailable to anybody that wants to use one to serve in a public capacity. MR. JONES said he has discussed with members of legislative staff, various versions of new restrictions that would tighten up the requirements for blind trusts under Alaska law. He stated his belief, as indicated by Representative Coghill, that there is still work to be done on the issue. 9:51:19 AM REPRESENTATIVE PAUL SEATON, Alaska State Legislature, said it's a fundamental policy call whether or not to allow blind trusts. He continued: My concern is that the current language that we have in Alaska Statute is: A blind trust that is ... essentially ripe for ethics problems, because it's not tight enough, it doesn't explain things well enough, [and] it does not fulfill the purpose that we want a blind trust to fulfill. If the committee decides that we want to allow a blind trust for those people in the executive branch, a good example would be the commissioner of revenue, who might come into that position having a large 401 K, or those kind[s] of assets, to be able to regulate without trying to -- I mean especially if we go down to $1,000 limit, all of a sudden it would be very difficult for them to have their investment and still function in the government. So, the purpose of the blind trust is, as you've discussed, to allow the person to fulfill the government function without having to have any concern and, in fact, any knowledge of ... what they have in that trust. And so, you have another amendment that we worked on quite a bit, which I think is Amendment 22, that goes into that in detail. What we've done is patterned off the New Jersey statute to bring all those things forward that worked, to make our blind trust statute work for not only the citizens of the state, but also work for the individual, so that when they come in and if they establish a blind trust, then it will be truly blind, and they will be protected because they won't know what's in that blind trust. ... [It] establishes a parameter. So, I think that this amendment isn't the amendment that I've worked on and offered, but the whole idea of the blind trust - whether we want to have that tool available or not - is a discussion this committee has to have. And if we want to have the blind trust, I think that we want to have a very effective blind trust that serves a purpose of the state. 9:53:56 AM CHAIR LYNN asked for committee members' feedback as to whether they would like to address Amendment 20 or 22. 9:54:18 AM REPRESENTATIVE GRUENBERG observed that there appear to be three amendments on the subject. REPRESENTATIVE COGHILL indicated that he had asked for the involvement of the House Judiciary Standing Committee. He commented that if the House State Affairs Standing Committee wants to spend the time discussing the blind trust issue, it will take considerable time. 9:55:19 AM REPRESENTATIVE GRUENBERG recommended that the committee consider [Amendments 20, 21, and 22] side by side at its next hearing of the bill. 9:55:46 AM REPRESENTATIVE COGHILL concurred with the idea of a side-by-side comparison. He said Representative Seaton has brought up some good points to consider. 9:56:26 AM CHAIR LYNN announced that HB 109 [was heard and held]. ADJOURNMENT There being no further business before the committee, the House State Affairs Standing Committee meeting was adjourned at 9:57:11 AM.

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