Legislature(1995 - 1996)
03/07/1996 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 532 - COSTS OF ADOPTING REGULATIONS The first order of business to come before the House State Affairs Committee was HB 532. CHAIR JAMES explained HB 532 was sponsored by the House State Affairs Committee. She called it a simple bill so it did not have a sponsor statement. She did not plan to move it out of the committee today. The Administration was concerned about HB 532's direction. She explained there were other House Bills, HB 105 and HB 267 that also addressed the issue of regulations. House Bill 105 established a special group to write regulations, and HB 267 required the legislature to extend regulations every session. In an attempt to address the issue of regulatory reform, she asked the Administration last year for information from the agencies regarding the amount of time and effort spent on writing regulations. The Administration tried to get the information, but it was hard to go back and recreate the time and effort put forth. Therefore, HB 532 required each agency that reviewed proposed regulations and changes of another agency to determine the direct and indirect cost of reviewing and writing the proposed changes incurred. She was interested in the who, the time and the cost of writing regulations for all agencies. She said the Administration was concerned about the fiscal note. She commented she expected a $0 fiscal note. She explained the tracking would be incorporated into the already existing daily activities. The Administration would probably be interested in this information as well, so she was looking for cooperation. The record reflected the arrival of Representative Caren Robinson at 8:08 a.m. Number 0388 REPRESENTATIVE JOE GREEN was concerned about the fiscal notes. He commented he had seen a wide latitude of fiscal notes from the departments, and explained, if a department liked a bill, the fiscal note would be low; if a department did not like a bill, the fiscal note would be high. Therefore, he questioned if the information would be reliable. He suggested a targeted audit approach instead. Number 0450 CHAIR JAMES replied an audit was her initial approach. However, according to the House Legislative Budget and Audit Committee, there was nothing to audit because of the lack of record keeping. House Bill 532 would allow the necessary information to be tracked and kept for future audits. Number 0499 REPRESENTATIVE CAREN ROBINSON called the issue a moving target. She explained a department would expend a lot of time and effort when a regulation was needed producing a "picture in time" result. The results were also directly related to the bills the legislature passed that year. She reiterated HB 532 would provide a picture in time result rather than an overall expended amount of effort. Number 0564 CHAIR JAMES replied a time study took into consideration her concerns. She agreed there probably were times when more regulations were being written, however, considering everything there was a way to determine a composite amount of time and effort being spent on regulations. She reiterated, time and effort data was needed to evaluate a more efficient process. Number 0657 REPRESENTATIVE ROBINSON asked Chair James what was the goal and purpose of the bill? Number 0662 CHAIR JAMES replied the goal was for true regulation reform in the state of Alaska, which would take approximately four years to accomplish. The bill would set aside one year for the information to be collected. Due to her past experiences and true desires, she believed she could contribute to the solution making process. She asserted the process must be more efficient, cost less, implement statutes better, cause less distress with the public, and provide accountability. Number 0735 REPRESENTATIVE ROBINSON commented that a moratorium was needed on passing bills. It was necessary to look at how legislation was passed, for a true fix. Number 0765 CHAIR JAMES agreed with Representative Robinson. She said a lot of the blame laid in the lap of the legislature because of incomplete pieces of legislation. Therefore, the Administration had to pick- up the pieces causing friction between the public, the Administration and the legislature. It was a two-sided coin, and all had to work together towards the same goal. Number 0845 REPRESENTATIVE GREEN wondered if guidelines would be issued to help the departments determine a direct and indirect cost. He said it was vague as written and might produce unreliable data. Number 0852 CHAIR JAMES replied the Office of Management and Budget (OMB) would be the leader of this project. She was interested in an overall view of the ratio of time and cost related to regulation writing. The public wanted a reduction in the cost of government operations, but they did not want to cut the education budget, for example. The public wanted to cut the cost of government and this was a way to accomplish that goal. Furthermore, the cost of government started with the legislature. She reiterated she agreed with Representative Robinson that the legislature needed to look at how legislation was passed and to include more accountability. Moreover, a government crash was eminent, if it was not handled better. Number 0998 REPRESENTATIVE GREEN said benefits and overhead were part of the direct cost involved, and as long as OMB established guidelines he was more comfortable with the tracking process. He stated the direct cost was a sizeable amount. Number 1015 CHAIR JAMES agreed with Representative Green that the direct cost was a sizeable amount. She explained it touched every employee in some way. CHAIR JAMES called on the first witness in Juneau, Jack Kreinheder, Office of Management and Budget. Number 1030 JACK KREINHEDER, Senior Policy Analyst, Office of the Director, Office of Management and Budget, Office of the Governor, said the overview of Chair James addressed some of the concerns of the Administration. He said the Administration was happy to work with the committee members and the Chair to accomplish the intent of the bill. The Administration, however, was concerned about the fiscal notes. The departments indicated they could absorb this as part of the cost of doing business. The Administration was concerned, however, about the resources necessary to track the data. The Governor had asked the departments to review their regulations and delete any that were out dated or needed to be revised. This would take time because legislation passed last year that required regulations were still being written. He further said even though the efforts could be absorb, it was not insignificant because of the cumulative efforts over time for each department. He cited the report at the end of the year would take time. The Administration agreed the information would be interesting, but believed those resources would be better devoted to working on the regulations directly. He further addressed Representative Green's concern regarding the direct and indirect cost. He agreed that OMB would oversee the effort. He said an amendment would not be necessary to clarify that because the bill left it up to the Administration. In conclusion, he said, OMB would probably define the terms for the consistent gathering of the information. Number 1315 CHAIR JAMES explained there would not be a fiscal impact for the record keeping required, but there would be a fiscal impact to prepare the report at the end of the year. She stated plenty of time was given in the bill to prepare a report - June 30, 1997 to December 1, 1997. It was not mandated, but she expected a norm would be established by the Administration. She reiterated it was an overall picture involved for analysis. She said the agencies and Mr. Kreinheder had been very cooperative, but there was no parallel thinking yet. Both sides needed to give a little. Number 1426 REPRESENTATIVE GREEN lauded the efforts put forth. A handle on the cost of regulations was needed. However, based on personal experience, record keeping was not always reliable. He was concerned about the value of the data. It was time consuming to track data accurately. He asked if the state had ever done this before, and wondered if Mr. Kreinheder believed the data would be reliable? Number 1501 MR. KREINHEDER replied according to the Department of Environmental Conservation (DEC) the effort could be accommodated easily within its existing operations. Permit costs were paid by the permitees so the departments already tracked that information using a project accounting system. He shared the concern of Representative Green regarding the value of the data. He wondered if the cost of the regulation projects in FY 97 were worth the time expended. Number 1567 REPRESENTATIVE GREEN wondered if there was a way, short of a computer program, so that at the end of the day the data was recorded. He was concerned about data being forgotten if it was collected weekly, for example. Number 1596 MR. KREINHEDER said the enforcement of the data collection would be left to department managers and supervisors. He agreed, for a time keeping system to work it needed to be tracked on a daily basis, otherwise it was only rough estimates. Number 1618 REPRESENTATIVE GREEN asked Mr. Kreinheder if he had any suggestions for a method to track the information. He agreed the information was needed, but he did not know how to get it. Number 1634 MR. KREINHEDER replied the survey approach used by the Legislative Audit Division was reasonable. Number 1690 REPRESENTATIVE BRIAN PORTER wondered if DEC's permitting process would be necessary to track according to HB 532. Number 1712 MR. KREINHEDER replied, "no." He said he used DEC as an example because it had a system in place already. Number 1726 REPRESENTATIVE ROBINSON again wondered what the information would reveal and how it would be used. She agreed it would be good information to know, but she did not understand how it would help the legislature change its way of business. Number 1756 CHAIR JAMES responded the question of how the information would be used had yet to be determined. She explained the basic information collected would be the starting point to analyze the current system. Number 1826 REPRESENTATIVE ROBINSON wondered if a piece of legislation was necessary. She suggested choosing a few pieces of legislation and backtracking the time and effort required to implement the regulations. She said it would be faster and it made more sense. Number 1863 CHAIR JAMES replied backtracking would not yield accurate data. She was distressed because the information was not being tracked now. In the private sector cost accounting was standard procedure. The government never considered evaluating the cost involved because time keeping was not recorded. Furthermore, the lack of data affected the continued passage of HB 105 in the system because she could not determine how many people would be necessary to establish a regulatory writing group. Number 2020 REPRESENTATIVE ROBINSON reiterated it was still a moving target because certain divisions within departments would be working on regulations based on legislation at that given time. Number 2055 CHAIR JAMES replied for every program it was a moving target. Therefore, a preestablished tracking system was needed. She understood the concerns of Representative Robinson, and reiterated a cost analysis was the beginning of making any changes. Number 2112 MR. KREINHEDER asked the Chair what level of detail she envisioned from the departments? A grand total? A breakdown by specific regulatory project? Number 2138 CHAIR JAMES replied she expected the hours by specific regulation or statute. She also expected the cost incurred relative to time. Everything would be relative to time, she explained. Number 2193 REPRESENTATIVE PORTER wondered if asking for subjective information was reasonable as well. He cited explaining a statute that caused the biggest problem while trying to develop a regulation as an example. The record reflected the arrival of Representative Scott Ogan at 8:45 a.m. Number 2225 CHAIR JAMES replied it would be in the best interest of the Administration to include as much narration as possible to help reform the system. She did not want to mandate that in the bill, however. Number 2253 MR. KREINHEDER responded it did not need to be specified in the bill. He said there had been some discussion about whether a bill was necessary or a request from the committee would suffice, and that in his personal opinion, a bill would be more effective. Number 2288 CHAIR JAMES thanked Mr. Kreinheder for his time. She reiterated she did not plan to move the bill out of the committee today. She explained she was willing to include a fiscal note to address the tallying of information at the end of the period, however. CHAIR JAMES called on the first witness via teleconference in Fairbanks, Scott Calder. Number 2315 SCOTT CALDER said the goal of the 19th Alaska State Legislature should be to help all Alaskans witness the closure of vast fissures between the needs of Alaskans and the activities of the government. He said there was an ongoing and contemporaneous public process to allow action from the people. The goal should be to restructure the government to act at the people's request. He said HB 532 seemed wasteful on one hand, but it was important the agencies face the true cost and impact of their regulations. CHAIR JAMES called on the next witness in Juneau, Pam La Bolle. Number 2393 PAM LA BOLLE, President, Alaska State Chamber of Commerce, said the Chamber supported HB 532. She explained regulatory reform was the Chamber's second priority, and the information HB 532 would provide was something that the Chamber had been trying to acquire. She explained the business community was not addressing this issue to the dismay of the Chamber. A handle on the resources applied was necessary in both the private and public sectors. Furthermore, the information would help in the analysis of several areas.