Legislature(1995 - 1996)
03/07/1996 02:05 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 216 OMNIBUS STATE FEES & COST ASSESSMENTS
NANCY SLAGLE, Director of the Division of Budget Review, reported
SB 216 reflects a recommendation made by the Long Range Financial
Planning (LRFP) Commission to generate revenue by increasing user
fees. The LRFP projected the increase in fees would generate
approximately $3 million for FY 97. The Governor's goal was to
generate $8 million to close the fiscal gap. Some of the user fee
increases, which did not require statutory revision, are included
in the Governor's budget submission, however SB 216 contains those
fees that do require statutory revision. She offered to provide
committee members with a spread sheet that identifies the agencies
involved and dollar amounts. She gave the following sectional
analysis of the bill.
Section 1 relates to the Real Estate Surety Fund in the Department
of Commerce and Economic Development. It allows the Department to
charge for hearing costs associated with real estate surety cases.
The estimated revenue is $3,000.
Section 2 deals with the Postsecondary Education Commission.
SENATOR KELLY asked if that was dealt with in a bill that passed
previously. MS. SLAGLE did not believe so, and explained the
change would allow the Commission to establish fees for
applications to operate or for agents' permits related to the
operation of postsecondary institutions. The estimated revenue is
$62,500.
SENATOR KELLY presumed that section is liable to be incorporated
into Senator Green's bill.
Section 3 would allow the Human Rights Commission to charge fees
for education and training services and materials, and information
provided to the public, specifically in the area of training for
the prevention of discrimination and sexual harassment and
disability issues.
Section 4 provides fees to cover costs for self-insured companies
to pay for workers' compensation claims processed in the Department
of Labor.
SENATOR KELLY asked for more information. PAUL GRASSE, Director of
the Division of Workers' Compensation, explained the state does not
process claims per se, for workers' compensation, except for its
own, but keeps a database of all workers' compensation cases,
administers the program, and provides resolution for disputes.
Additionally it administers the second injury fund and the self
insurance program.
SENATOR KELLY questioned how the Division calculated four percent
as an equitable figure, and whether the amount is four percent of
gross salary. MR. GRASSE answered it is 4 percent of all workers'
compensation costs. The amount closely approximates the premium
tax that is charged to employers who buy workers' compensation
policies. If a company is not large enough to be able to pay
claims itself, it is required to purchase workers' compensation and
an insurance policy. There is a premium tax assessed to that at
2.7 percent. The 4 percent is based on just the workers
compensation costs paid; medical costs, time-loss benefits;
permanent partial impairment, etc.
SENATOR KELLY asked what that total would be for Carr-Gottstein's.
MR. GRASSE replied the amount changes annually.
SENATOR KELLY questioned the figure of $671,000. MR. GRASSE
answered that figure is based on the 1994 cost, and is 4 percent of
what self insured companies paid.
SENATOR KELLY asked if Mr. Grasse's position is that the 4 percent
replaces the premium tax that all non-self insured's pay. MR.
GRASSE stated that amount is actually a little less than the
premium tax.
SENATOR KELLY inquired how that could be so if it is based on 4
percent rather than 2.7 percent. MR. GRASSE explained the premium
covers the entire cost of the policy plus the insurance company's
profit which is a larger sum than that which it paid out on claims.
Number 572
SENATOR TORGERSON asked if municipalities would be covered by this
section. MR. GRASSE noted they would, if self-insured. SENATOR
TORGERSON asked for the breakdown between private and public
corporations and whether the increase in revenue will cover program
operating costs. MR. GRASSE referred to a breakdown he provided to
committee members.
SENATOR KELLY referred to the University of Alaska, listed in the
breakdown. It is a self insured workers' compensation carrier who
paid out $955,000 in costs. He asked if the 4 percent would be
based on those payments. MR. GRASSE agreed, and noted the amount
would be $38,217.
SENATOR KELLY asked whether the University of Alaska would deposit
the money in the general fund. MR. GRASSE explained the money
would come to his division, and then be deposited into the state
treasury.
SENATOR KELLY asked if the division does $671,000 worth of work for
the 28 self insured entities. MR. GRASSE replied affirmatively and
added the system is very efficient. He reminded members that
workers compensation is a form of tort reform and keeps cases out
of the courts, is based on a no-fault philosophy, is predictable,
and benefits both employees and employers. He added self-insured
entities save money because they do not have to buy an insurance
policy.
SENATOR KELLY asked if anyone else was concerned that this policy
transfers pots of money, and will entail more paperwork. SENATOR
TORGERSON agreed.
SENATOR KELLY stated one position the committee might take is to
review outfits that self insure and do not pay a premium tax, but
to extend that to the University of Alaska is different. SENATOR
TORGERSON commented the seven municipalities, University, and
school districts will contribute $200,000.
MR. GRASSE clarified that the amount of paperwork would not
increase because self insurers already have to provide the required
information.
MS. SLAGLE continued with the sectional analysis.
Section 5 increases business license fees in the Department of
Commerce and Economic Development. The increase would be from $25
per year to $75 every two years and would generate an additional
$841,300 to the unrestricted general fund.
SENATOR KELLY asked about the Buy Alaska program. SHERMAN ERNOUF,
committee staff, answered Buy Alaska approached the committee and
wanted to direct an increase in business license fees. SENATOR
KELLY clarified they wanted a surcharge on business licenses of $3
to be appropriated to the Buy Alaska program.
CATHERINE REARDON, Director of the Division of Occupational
Licensing in the Department of Commerce, commented the business
license fee has not increased since Statehood. For efficiency
purposes, business licenses are sold for a two-year time period,
and cost $50. There will be no administrative costs associated
with this increase, as the same number of checks will be processed.
SENATOR KELLY asked if this section will take effect in January,
1997. MS. REARDON replied that is correct, and although she would
prefer the increase begin at the start of the fiscal year, business
licenses expire December 31.
SENATOR TORGERSON asked if the Department could save on
administrative costs by going to a four year license. MS. REARDON
stated it would, but new business owners might not want to pay for
four years, and other businesses might not plan to operate for that
long.
MS. SLAGLE continued with the sectional analysis. Section 6 allows
the Division of Governmental Coordination to charge fees for
federal consistency determinations.
SENATOR KELLY asked what the Division of Governmental Coordination
does. MS. SLAGLE explained it is a division within the Office of
Management and Budget that deals with the Coastal Zone Management
Program and other consistency review areas.
DIANE MAYER, Director of the Division of Governmental Coordination,
stated the Division administers the state's coastal management
program, oversees the state's involvement in the implementation of
ANILCA, and coordinates state agency reviews of environmental
impact statements put out by federal agencies. Its main function
is to act as a coordinator between the state's resource agencies
when development projects are proposed that require action or
review by more than one state resource agency. This allows for a
unified state position on development projects, and provides for
the development of permit stipulations that allow for a consistent
project across the board. Section 6 does not mandate that fees be
charged, but gives the division the authority to write regulations
to accept fees for services rendered. The intent is not to charge
for one-time services, but for ongoing projects.
SENATOR KELLY asked if the new fees would be in addition to what
developers are already required to pay. MS. MAYER responded
Section 6 would enable the division to write regulations, and the
industry is better off with more up-front involvement in project
design to comply with permit regulations, rather than after the
fact review. This would allow the division to work with the
industry to accept fees to get people scheduled early on in the
larger projects, and to get agency personnel involved in
preliminary designs and environmental impact statements to
streamline the process. If an industry was interested in getting
those services, the division would have the ability to enter an
agreement to direct staff time to that project.
SENATOR KELLY asked if they would be buying their way to the front
of the line. MS. MAYER stated it would enable the division to give
priority treatment, but more so to provide the type of services
that would help the project evolve in an efficient way. It would
save industry the cost of having to redesign to fit permit
requirements.
SENATOR TORGERSON questioned whether the division charges any fees
now. MS. MAYER said the division is unable to accept money for
anything. She added that Section 6 would also allow the division
to charge for copies.
SENATOR TORGERSON asked what the $32,000 figure is based on. MS.
MAYER responded the division has discussed this concept with
industry people. It takes into account a time period to work with
industry to draft regulations, and then in the next couple of years
one or two applicants might be willing to try it.
MS. SLAGLE explained Section 7 broadens the ability of the
Department of Military and Veteran Affairs to charge fees for
providing training. Currently, it is only able to charge for
training in relation to emergency situations dealing with hazardous
substances. Section 7 would allow the Department to charge for all
types of training for emergency responses.
SENATOR KELLY asked who the Department currently charges. MS.
SLAGLE responded local governments, and maybe some private
companies. SENATOR KELLY questioned whether those costs are
already being paid for out of the spill fund. MS. SLAGLE noted
that training is specific to oil spills. Other emergency response
training covers earthquakes, floods and a wide variety of disasters
the department may be involved in.
SENATOR KELLY believed that making this change to generate $4000 to
be questionable. MS. SLAGLE answered the Department of Military
and Veterans Affairs estimated that amount based on costs specific
to that training, such as room rentals and transportation.
SENATOR KELLY asked if the money would go directly to the
Department. MS. SLAGLE stated it would.
MS. SLAGLE commented the last section allows the Department of
Environmental Conservation to establish fees by regulation for the
use of pesticides and broadcast chemicals, and for reviewing
subdivision plans for sewage waste disposal and treatment
facilities.
JANICE ADAIR, Department of Environmental Conservation, explained
the authority for pesticide registration would include chemicals or
biological substances used to control pests, such as rodents,
mosquitos, or weeds. Through registration, DEC would be able to
monitor what pesticides are being sold in the state. This would
assist DEC with granting monitoring waivers for public drinking
water systems. So far those waivers have saved the public water
systems, collectively, over $2 million per year. DEC would like to
issue more waivers. DEC would also like to work with OSHA when it
does safety inspections and needs information on a pesticide that
might be used in a workplace. Alaska is the only state that does
not charge a registration fee. In other states this fee pays for
the costs of the pesticide program. The fee would be paid by the
pesticide manufacturer.
SENATOR MILLER noted initially it may be paid by the manufacturer,
but the consumer will pay for it in the end in increased prices.
SENATOR KELLY asked how much will be generated from the pesticide
registration program. MS. ADAIR estimated $100,000 and $220,000
from subdivision review plans.
SENATOR KELLY questioned who currently does subdivision plan
review. MS. ADAIR replied DEC does, but is unable to charge.
SENATOR KELLY asked if review is necessary for projects in boroughs
without planning and zoning powers. MS. ADAIR answered yes, and
believed Anchorage and Valdez are the only two municipalities that
do their own reviews.
SENATOR TORGERSON noted an engineer usually designs the project and
then it is rubber stamped by DEC. Some argue that if an engineer
does the design, state review is unnecessary. He added that any
septic system being installed goes through the same process.
MS. ADAIR advised that DEC has been established as the health
authority for the State of Alaska, except in those areas where the
local government has adopted health powers. The reason for DEC's
review of subdivision plans or a sewage disposal system on the lot
(as opposed to a community system), is to ensure that the system
will work and not contaminate drinking water supplies. She noted
the controversy surrounding this particular program within DEC,
however reported that at one time DEC stopped doing on-lot reviews,
and within the first day, banks stopped granting loans in the Mat-
Su Borough. The Bankers' Association informed DEC it needed a
health authority to assure the system will work, because it does
not want to be stuck with a piece of property with inadequate
sewage treatment or a contaminated drinking water source.
SENATOR KELLY did not feel this section is necessary for DEC to
continue to do reviews. MS. ADAIR agreed, but stated the ability
to charge fees would offset the general funds that go into it.
SENATOR KELLY asked if the developer of the lot would pay for the
plan review. MS. ADAIR answered yes. SENATOR KELLY questioned
whether fees would be charged on individual homesites. MS. ADAIR
explained DEC already has the authority to charge fees for
individual homesite plan review, but not for subdivisions.
SENATOR KELLY asked how that happened. MS. ADAIR believed the
ability of DEC to charge for subdivision plan review was pulled out
of a bill several years ago, but did not remember why.
SENATOR KELLY questioned whether individual homesites can be
considered within a subdivision. MS. ADAIR clarified subdivision
plans are reviewed to determine whether the sewage treatment design
is suited to each lot, considering soil type and lot size. When an
individual lot owner needs a plan review it is because a bank is
requiring the review. The bank wants a health authority to ensure
that the sewer system works.
SENATOR TORGERSON commented DEC does not do the tests, they are
done by an engineer. DEC merely rubber stamps those tests. He
added there are not very many subdivision sewage projects. MS.
ADAIR stated the Hillside area in Anchorage is an excellent example
of a failed subdivision. At the time it was designed, the MOA was
not a health authority, and that project was the impetus to
establish a health authority within the municipality.
SENATOR TORGERSON questioned whether any of the designs approved by
DEC have ever failed. MS. ADAIR stated they have. SENATOR
TORGERSON repeated these types of projects must be engineered by a
licensed professional, by law. MS. ADAIR replied DEC does not
merely rubber stamp designs, it reviews all documentation to
fulfill health authority requirements for lending institutions.
SENATOR KELLY did not believe the subdivision review fee would get
through the legislative process.
SENATOR KELLY adjourned the meeting at 3:22 p.m.
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