Legislature(2015 - 2016)BELTZ 105 (TSBldg)

02/25/2016 01:30 PM LABOR & COMMERCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as
Download Video part 1. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 127 INSURER'S USE OF CREDIT HISTORY/SCORES TELECONFERENCED
Heard & Held
*+ SB 149 AIDEA:DIVIDEND TO STATE;INCOME;VALUATION TELECONFERENCED
Heard & Held
*+ SB 152 MONEY SERVICES BUSINESS: REQS; LICENSING; TELECONFERENCED
<Bill Hearing Canceled>
*+ SB 118 DNR LAND DISPOSAL SURVEYS; PEER REVIEW TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled: TELECONFERENCED
-- Public Testimony --
+= SB 72 DESIGNATED CAREGIVERS FOR PATIENTS TELECONFERENCED
Moved CSSB 72(L&C) Out of Committee
+= SB 141 E-CIGS: SALE TO AND POSSESSION BY MINOR TELECONFERENCED
Moved CSSB 141(L&C) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 25, 2016                                                                                        
                           1:31 p.m.                                                                                            
                                                                                                                                
                                                                                                                              
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Cathy Giessel, Vice Chair                                                                                               
Senator Kevin Meyer                                                                                                             
Senator Gary Stevens                                                                                                            
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Johnny Ellis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 72                                                                                                              
"An  Act relating  to  caregivers  of  patients after  release  or                                                              
departure from a hospital; and providing for an effective date."                                                                
                                                                                                                                
     - MOVED CSSB 72(L&C) OUT OF COMMITTEE                                                                                      
                                                                                                                                
SENATE BILL NO. 141                                                                                                             
"An Act  relating to possession  of an electronic  smoking device,                                                              
e-liquid  or  e-liquid  product,  vapor  product,  or  alternative                                                              
tobacco  product  by   a  minor  and  to  selling   or  giving  an                                                              
electronic  smoking device,  e-liquid or  e-liquid product,  vapor                                                              
product, or alternative tobacco product to a minor."                                                                            
                                                                                                                                
     - MOVED CSSB 141(L&C) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 127                                                                                                             
"An Act  relating to actions by  insurers based on  credit history                                                              
or   insurance  score;   and  providing   for   an  exception   to                                                              
consideration  by  an  insurer  of  credit  history  or  insurance                                                              
score."                                                                                                                         
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 149                                                                                                             
"An  Act relating  to  the dividends  from  the Alaska  Industrial                                                              
Development  and  Export Authority;  relating  to  the meaning  of                                                              
'mark-to-market   fair   value,'   'net   income,'   'project   or                                                              
development,' and  'unrestricted net  income' for purposes  of the                                                              
Alaska   Industrial   Development   and  Export   Authority;   and                                                              
providing for an effective date."                                                                                               
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
SENATE BILL NO. 152                                                                                                             
"An  Act  relating  to a  money  services  business;  relating  to                                                              
transmitting  value  that  substitutes   for  money;  relating  to                                                              
licensing  requirements and  registration  through the  Nationwide                                                              
Multistate  Licensing  System  and Registry;  relating  to  surety                                                              
bonding requirements;  authorizing  certain licensees  to contract                                                              
to use subdelegates  for reloading funds onto  stored-value cards;                                                              
relating  to   record  retention,   reporting  requirements,   and                                                              
enforcement  provisions;  relating   to  exemptions;  relating  to                                                              
money  services  Internet  activities;   relating  to  definitions                                                              
regarding   the   transmitting    value,   currency,   and   money                                                              
transmission business  activities; and providing for  an effective                                                              
date."                                                                                                                          
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
SENATE BILL NO. 118                                                                                                             
"An  Act relating  to  surveys required  to  be  submitted to  the                                                              
Department of  Natural Resources; relating  to peer review  by the                                                              
State Board  of Registration for  Architects, Engineers,  and Land                                                              
Surveyors  of required  surveys  submitted  to the  Department  of                                                              
Natural Resources; and providing for an effective date."                                                                        
                                                                                                                                
     - BILL HEARING CANCELED                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB  72                                                                                                                  
SHORT TITLE: DESIGNATED CAREGIVERS FOR PATIENTS                                                                                 
SPONSOR(s): SENATOR(s) GIESSEL                                                                                                  
                                                                                                                                
03/11/15       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/11/15       (S)       HSS, L&C                                                                                               
04/10/15       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
04/10/15       (S)       Heard & Held                                                                                           
04/10/15       (S)       MINUTE(HSS)                                                                                            
02/01/16       (S)       HSS AT 1:30 PM BUTROVICH 205                                                                           
02/01/16       (S)       Moved  CSSB 72(HSS) Out of Committee                                                                   
02/01/16       (S)       MINUTE(HSS)                                                                                            
02/03/16       (S)       HSS RPT CS  2DP 2NR  NEW TITLE                                                                         
02/03/16       (S)       DP: GIESSEL, STOLTZE                                                                                   
02/03/16       (S)       NR: STEDMAN, ELLIS                                                                                     
02/23/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/23/16       (S)       Heard & Held                                                                                           
02/23/16       (S)       MINUTE(L&C)                                                                                            
02/25/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 141                                                                                                                  
SHORT TITLE: E-CIGS: SALE TO AND POSSESSION BY MINOR                                                                            
SPONSOR(s): SENATOR(s) STEVENS                                                                                                  
                                                                                                                                
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (S)       L&C, JUD                                                                                               
02/04/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/04/16       (S)       Heard & Held                                                                                           
02/04/16       (S)       MINUTE(L&C)                                                                                            
02/18/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
02/18/16       (S)       Heard & Held                                                                                           
02/18/16       (S)       MINUTE(L&C)                                                                                            
02/25/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 127                                                                                                                  
SHORT TITLE: INSURER'S USE OF CREDIT HISTORY/SCORES                                                                             
SPONSOR(s): SENATOR(s) HUGGINS                                                                                                  
                                                                                                                                
01/19/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/19/16       (S)       STA, L&C                                                                                               
02/11/16       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/11/16       (S)       Heard & Held                                                                                           
02/11/16       (S)       MINUTE(STA)                                                                                            
02/16/16       (S)       STA AT 9:00 AM BUTROVICH 205                                                                           
02/16/16       (S)       Moved  SB 127 Out of Committee                                                                         
02/16/16       (S)       MINUTE(STA)                                                                                            
02/17/16       (S)       STA RPT 4DP 1AM                                                                                        
02/17/16       (S)       DP: STOLTZE, COGHILL, HUGGINS, MCGUIRE                                                                 
02/17/16       (S)       AM: WIELECHOWSKI                                                                                       
02/25/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: SB 149                                                                                                                  
SHORT TITLE: AIDEA:DIVIDEND TO STATE;INCOME;VALUATION                                                                           
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/21/16       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/21/16       (S)       L&C, FIN                                                                                               
02/25/16       (S)       L&C AT 1:30 PM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JANE CONWAY, Staff                                                                                                              
Senator Cathy Giessel                                                                                                           
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided an explanation of changes for SB                                                                
72.                                                                                                                             
                                                                                                                                
TIM LAMKIN, Staff                                                                                                               
Senator Gary Stevens                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided a sectional analysis for the                                                                    
committee substitute for SB 141.                                                                                                
                                                                                                                                
SENATOR CHARLIE HUGGINS                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Sponsor of SB 127.                                                                                       
                                                                                                                                
LAUREN RASMUSSEN, Staff                                                                                                         
Senator Charlie Huggins                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided an overview of SB 127 on behalf                                                                
of the sponsor.                                                                                                                 
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community and Economic Development                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions related to SB 127.                                                                    
                                                                                                                                
KRISTIE BABCOCK, Agent                                                                                                          
State Farm Insurance                                                                                                            
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
GARY STRANNIGAN                                                                                                                 
Safeco and Liberty Mutual Insurance                                                                                             
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
MARK CHOATE, representing himself                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on SB 127.                                                                                     
                                                                                                                                
DANIEL LYNCH, representing himself                                                                                              
Kenai, Alaska                                                                                                                   
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
TIM MAUDSLEY, President                                                                                                         
Alaska USA Insurance Brokers                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
ARMAND FELICIANO                                                                                                                
Property Casualty Insurers Association of America                                                                               
California                                                                                                                      
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
CINDA SMITH                                                                                                                     
Geico Insurance Company                                                                                                         
Maryland                                                                                                                        
POSITION STATEMENT:  Stated support for SB 127.                                                                               
                                                                                                                                
JEFFERY KINSEY                                                                                                                  
State Farm Insurance                                                                                                            
Bloomington, Illinois                                                                                                           
POSITION STATEMENT:  Testified in support of SB 127.                                                                          
                                                                                                                                
GENE THERRIAULT, Policy Director                                                                                                
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Introduced SB 149.                                                                                       
                                                                                                                                
MICHAEL LAMB, Chief Financial Officer                                                                                           
Alaska Industrial Development and Export Authority (AIDEA)                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Delivered a PowerPoint relating to SB 149.                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:31:58 PM                                                                                                                  
CHAIR MIA COSTELLO  called the Senate Labor and  Commerce Standing                                                            
Committee meeting  to order  at 1:31 p.m.  Present at the  call to                                                              
order  were   Senators  Giessel,  Stevens,  and   Chair  Costello.                                                              
Senator Meyer arrived during the introductory remarks.                                                                          
                                                                                                                                
           SB  72-DESIGNATED CAREGIVERS FOR PATIENTS                                                                        
                                                                                                                                
1:32:32 PM                                                                                                                    
CHAIR COSTELLO  announced the  consideration of  SB 72.  She noted                                                              
that  public testimony  was closed  on  2/23/16, and  asked for  a                                                              
motion to adopt the work draft committee substitute (CS).                                                                       
                                                                                                                                
1:32:53 PM                                                                                                                    
SENATOR  GIESSEL moved  to  adopt the  work  draft CS  for SB  72,                                                              
labeled 29-LS0047\L, as the working document.                                                                                   
                                                                                                                                
1:33:07 PM                                                                                                                    
CHAIR COSTELLO objected for an explanation.                                                                                     
                                                                                                                                
1:33:24 PM                                                                                                                    
JANE  CONWAY, Staff,  Senator Cathy  Giessel,  said these  changes                                                              
were  made   working  in  conjunction   with  the   Alaska  Nurses                                                              
Association  and  the  Alaska  State  Hospital  and  Nursing  Home                                                              
Association  (ASHNHA).  She  read   from  the  following  prepared                                                              
explanations of changes: [Original punctuation provided.]                                                                       
                                                                                                                                
     1. Deletes the word "lay" in these places:                                                                                 
          Page 1, line 8, 11, 14                                                                                              
          Page 2, line 1, 3, 7, 18                                                                                            
                                                                                                                                
     Explanation: Eliminates  use of term "lay  caregiver" as                                                                   
     a   defined  term   (which  we've   deleting  from   the                                                                   
     definitions)  and uses  the  term we're  using which  is                                                                   
     "designated caregiver."                                                                                                    
                                                                                                                                
     2. On page 1, line 9:                                                                                                    
          Delete "in the patient's home"                                                                                      
          Insert "in a private residence"                                                                                     
                                                                                                                                
     Explanation: Patients  may not always  receive aftercare                                                                   
     in their  home, but  perhaps in  a sibling's or  child's                                                                   
     home.                                                                                                                      
                                                                                                                                
     3. On page 2, lines 8-9:                                                                                                 
          After "patient", delete ".",                                                                                        
          insert "," and the  following new language:                                                                         
          "including professional  follow-up as specified                                                                     
          in the discharge plan."                                                                                             
                                                                                                                                
     Explanation:   The  purpose  of   the  addition   is  to                                                                   
     explicitly  acknowledge  that often  follow  up will  be                                                                   
     required  by the patient's  primary  care provider or  a                                                                   
     specialized care provider.                                                                                                 
                                                                                                                                
     4. Page 2, line 29 deletes "an instruction contractor"                                                                   
          and adds                                                                                                              
          " a person who contracts with the hospital to provide                                                               
          instruction to a designated caregiver"                                                                              
                                                                                                                                
     5.  Page 3,  line  7  deletes "individual"  and  inserts                                                                 
          "patient"                                                                                                         
                                                                                                                                
     6. On  page 3, line 16  deletes the word "lay"  and adds                                                                 
       "in a private residence" after the word "patient"                                                                    
                                                                                                                                
     Explanation: This clarifies that the caregiving will                                                                       
     not be occurring in a healthcare facility.                                                                                 
                                                                                                                              
     7. Page  3, line 22-24  Adds the definition  of "private                                                                 
          residence":                                                                                                         
                                                                                                                              
     "private  residence does  not  include a  rehabilitative                                                               
     facility,  a  hospital,  a  nursing  home,  an  assisted                                                               
     living  facility,  a  group  home  or  another  licensed                                                               
     health care facility."                                                                                                 
                                                                                                                                
     8. On page 3, lines 20-21 of version F                                                                                   
          Delete the definition of "lay caregiver"                                                                            
                                                                                                                                
     Explanation:  Keeping   this  in  as  a   definition  is                                                                   
     confusing and  redundant with definition  of "designated                                                                   
     lay  caregiver" in this  same section.  There's no  need                                                                   
     to define the term.                                                                                                        
                                                                                                                                
1:37:32 PM                                                                                                                    
SENATOR  STEVENS  asked  if  the bill  defines  the  training  the                                                              
hospital will provide to caregivers.                                                                                            
                                                                                                                                
MS. CONWAY replied  there was a specific list  initially, but this                                                              
version directs hospitals  to write their own policies  using best                                                              
practice  methods. This  gives hospitals  more  latitude to  write                                                              
their  policies  and  provide  training  that is  pertinent  to  a                                                              
patient's particular needs.                                                                                                     
                                                                                                                                
SENATOR STEVENS  said he'd like more specific  direction regarding                                                              
what the hospital is being asked to do.                                                                                         
                                                                                                                                
SENATOR  GIESSEL  said  the  Centers  for  Medicaid  and  Medicare                                                              
Services   already  have   checklists  that   hospitals  use   for                                                              
discharge planning  so the very specific list in  the initial bill                                                              
raised   concern.  Most   hospitals   already  provide   discharge                                                              
training and  this bill is intended  to ensure that  all hospitals                                                              
do that.                                                                                                                        
                                                                                                                                
1:40:01 PM                                                                                                                    
CHAIR  COSTELLO removed  her objection  and version  L was  before                                                              
the  committee.  Finding no  further  questions,  she solicited  a                                                              
motion.                                                                                                                         
                                                                                                                                
1:40:12 PM                                                                                                                    
SENATOR GIESSEL  moved to  report the  CS for  SB 72, labeled  29-                                                              
LS0047\L,  from  committee  with  individual  recommendations  and                                                              
attached fiscal note(s).                                                                                                        
                                                                                                                                
1:40:25 PM                                                                                                                    
CHAIR COSTELLO announced  that without objection,  CSSB 72(L&C) is                                                              
reported from the Senate Labor and Commerce Standing Committee.                                                                 
                                                                                                                                
1:40:28 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
         SB 141-E-CIGS: SALE TO AND POSSESSION BY MINOR                                                                     
                                                                                                                                
1:41:42 PM                                                                                                                    
CHAIR   COSTELLO  reconvened   the  meeting   and  announced   the                                                              
consideration  of SB  141.  She noted  that  public testimony  was                                                              
closed  on 2/18/16,  and  asked for  a motion  to  adopt the  work                                                              
draft committee substitute (CS).                                                                                                
                                                                                                                                
1:42:07 PM                                                                                                                    
SENATOR  GIESSEL moved  to adopt  the work  draft CS  for SB  141,                                                              
labeled 29-LS1258\P, as the working document.                                                                                   
                                                                                                                                
CHAIR COSTELLO objected for discussion purposes.                                                                                
                                                                                                                                
1:42:38 PM                                                                                                                    
TIM   LAMKIN,   Staff,   Senator  Gary   Stevens,   Alaska   State                                                              
Legislature, sponsor  of SB 141, reminded the  committee that this                                                              
bill is about protecting Alaska's youth and it treats e-                                                                        
cigarettes and all  their components the same as  tobacco. Similar                                                              
to tobacco,  vendors would be required  to get a  business license                                                              
endorsement to sell  electronic smoking products of  any kind. The                                                              
requirements   relating   to  vending   machines,   signage,   and                                                              
penalties for  violating the  statutes also would  be the  same as                                                              
for  tobacco. The  definition for  electronic  smoking product  is                                                              
consolidated to keep any loophole from being exploited regarding                                                                
what these products really are.                                                                                                 
                                                                                                                                
He displayed a short video to illustrate the possible dangers of                                                                
these products.                                                                                                                 
                                                                                                                                
MR. LAMKIN provided the following sectional analysis for version                                                                
P:                                                                                                                              
                                                                                                                                
     Section  1:     AS  11.76.105(a) Adds  to  existing  law                                                                 
     that,  as   with  prohibiting  minors   from  possessing                                                                   
     cigarettes  or tobacco, to  also prohibit possession  of                                                                   
     electronic cigarettes and any component thereof.                                                                           
                                                                                                                                
     Section  2:    AS  11.76.107(a)  Adds  to  existing  law                                                                 
     that,   as  with  tobacco   product  vending   machines,                                                                   
     vending  machines  dispensing  electronic  cigarette  or                                                                   
     nicotine products must also be supervised.                                                                                 
                                                                                                                                
     Section 3: AS  11.76.109(a) Adds to existing  law that a                                                                 
     minor  may not sell  tobacco or  nicotine products,  nor                                                                   
     sell  electronic cigarettes,  or  any related  component                                                                   
     thereof.                                                                                                                   
                                                                                                                                
     Section 4:    AS 11.76.109(b) Provides an  exception for                                                                 
     persons  to  sell  or  give  E-cigarettes  to  a  minor,                                                                   
     provided  the  minor  is using  an  e-cigarette  for  an                                                                   
     approved  medical purpose,  such  as smoking  cessation,                                                                   
     and is provided by a parent or prescribed by a doctor.                                                                     
                                                                                                                                
     Section  5:    AS  11.76.109(f) adds  a  new  subsection                                                                 
     that   is  consistent   with   existing  law   regarding                                                                   
     placement   of  vending   machines  dispensing   tobacco                                                                   
     products;  that the  same  requirements  are applied  to                                                                   
     vending  machines  dispensing  E-cigarette  or  nicotine                                                                   
     products.                                                                                                                  
                                                                                                                                
     Section  6: AS  11.81.900(b)  Makes new  definition  for                                                                 
     "electronic smoking product," summarized as follows:                                                                       
     (67)  a   device  designed  to  aerosolize   and  inhale                                                                   
     nicotine,   a  synthetic   of  nicotine,   or  other   a                                                                   
     potentially  hazardous  substance   that  "may  have  an                                                                   
     adverse effect" on the person inhaling it.                                                                                 
                                                                                                                                
     Section 7:  AS 43.50.105(b)  is amended for  conformity,                                                                 
     changing  "tobacco"  endorsement to  "business  license"                                                                   
     endorsement,  for purposes of  shipping or transport  of                                                                   
     cigarettes.   It  also  sets   up  conformity   for  the                                                                   
     following  Section   8  of  the  bill,  relating   to  a                                                                   
     required  business license  endorsement  for selling  E-                                                                   
     cigarette or nicotine products.                                                                                            
                                                                                                                                
     Section  8:     AS  43.70.075(a)  amends   existing  law                                                                 
     requiring  a  special business  license  endorsement  in                                                                   
     order to  lawfully sell  tobacco products, by  including                                                                   
     the  same licensing  requirements  for lawfully  selling                                                                   
     E-cigarette or nicotine products.                                                                                          
                                                                                                                                
     Section   9:  AS   43.70.075(d)   amends  existing   law                                                                 
     relating  to selling  tobacco to minors,  by adding  the                                                                   
     same  penalty  provisions,  including  graduated  fines,                                                                   
     for  selling   E-cigarette   or  nicotine  products   to                                                                   
     minors.                                                                                                                    
                                                                                                                                
     Section   10:  AS  43.70.075(f)   amends  existing   law                                                                 
     requiring  signage  when selling  tobacco  products,  to                                                                   
     also   require  signage  for   selling  E-cigarette   or                                                                   
     nicotine products.  The signage  must read "The  sale of                                                                   
     electronic  smoking  products   or  products  containing                                                                   
     nicotine  to a  person under  the  age of  19 without  a                                                                   
     prescription is illegal."                                                                                                  
                                                                                                                                
     Section 11:  AS 43.70.07(i) amends existing  enforcement                                                                 
     provisions  that, as  with tobacco  sales, to allow  the                                                                   
     State to  seize a vendors' business  license endorsement                                                                   
     and  E-cigarette or  nicotine products  in the event  of                                                                   
     such products being sold to minors.                                                                                        
                                                                                                                                
     Section 12:  AS 43.70.075(l)  is amended for  conformity                                                                 
     that,  as with  tobacco  sales,  to allow  one  business                                                                   
     license  endorsement  to  serve  as  an  umbrella  if  a                                                                   
     vendor  has  multiple  locations  they  are  selling  E-                                                                   
     cigarette or  nicotine products,  and to shut  down only                                                                   
     the  offending vending  machine  or  outlet location  in                                                                   
     the event of a violation.                                                                                                  
                                                                                                                                
     Sections 13  through Sections 18: AS  43.70.075(m), (r),                                                                 
     (t),  (v),  (w),  and (x)  are  amended  for  conformity                                                                   
     that,  as with tobacco  sales, to  allow an  evidentiary                                                                   
     and   administrative   hearing,  appeal   process,   and                                                                   
     penalties   in  the   event  of   violations  of   these                                                                   
     statutes,   involving  the   sale   of  E-cigarette   or                                                                   
     nicotine products to minors.                                                                                               
                                                                                                                                
     Section 19:  AS 43.70.075(y)  is added for  consistency,                                                                 
     linking   the   definitions   of   "electronic   smoking                                                                   
     products,"   and  distinguishing   between   traditional                                                                   
     cigarette (tobacco)  products and other  modern nicotine                                                                   
     alternatives.                                                                                                              
                                                                                                                                
     Section 20:  AS 43.70.105(b)  is amended for  conformity                                                                 
     that, as with  tobacco products, a vendor  must have the                                                                   
     appropriate  business license  endorsement  in order  to                                                                   
     lawfully sell E-cigarette or nicotine products.                                                                            
                                                                                                                                
     Section  21:  AS 44.29.092  is  amended  for  conformity                                                                 
     that,  as with  tobacco sales,  providing  the Dept.  of                                                                   
     Health  and  Social  Services  the  authority  to  issue                                                                   
     citations  for  violating  state  law  regarding  minors                                                                   
     buying,  selling or possessing  E-cigarette or  nicotine                                                                   
     products.                                                                                                                  
                                                                                                                                
     Section  22: Is  the applicability  and effective  date,                                                                 
     applying   to   offenses  committed   only   after   the                                                                   
     effective  date of  the  bill, which  would  be 90  days                                                                   
     after the bill is enacted.                                                                                                 
                                                                                                                                
CHAIR COSTELLO noted the individuals available to answer                                                                        
questions.                                                                                                                      
                                                                                                                                
1:53:29 PM                                                                                                                    
CHAIR COSTELLO removed her objection and version P was before                                                                   
the committee.                                                                                                                  
                                                                                                                                
1:53:37 PM                                                                                                                    
SENATOR GIESSEL moved to report the CS for SB 141, labeled 29-                                                                  
LS1258\P, from committee with individual recommendations and                                                                    
attached fiscal note(s).                                                                                                        
                                                                                                                                
1:53:52 PM                                                                                                                    
CHAIR COSTELLO announced that without objection, CSSB 141(L&C)                                                                  
is reported from the Senate Labor and Commerce Standing                                                                         
Committee.                                                                                                                      
                                                                                                                                
1:53:55 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
         SB 127-INSURER'S USE OF CREDIT HISTORY/SCORES                                                                      
                                                                                                                                
1:55:25 PM                                                                                                                    
CHAIR   COSTELLO  reconvened   the  meeting   and  announced   the                                                              
consideration of SB 127. She noted this is the first hearing.                                                                   
                                                                                                                                
1:56:00 PM                                                                                                                    
SENATOR CHARLIE  HUGGINS, Alaska  State Legislature sponsor  of SB                                                              
127, said  the bill relates to  renewing insurance for  an auto or                                                              
home mortgage.  He explained  that Alaska is  the only  state that                                                              
allows  credit  scoring to  be  used  when the  initial  insurance                                                              
policy  is written,  but  not upon  renewal.  SB  127 very  simply                                                              
allows  credit  scoring to  be  used  on  renewal, which  is  more                                                              
convenient for the policyholder.                                                                                                
                                                                                                                                
1:57:50 PM                                                                                                                    
LAUREN  RASMUSSEN, Staff,  Senator  Charlie  Huggins, provided  an                                                              
overview  of SB  127 on  behalf of  the sponsor,  speaking to  the                                                              
following sponsor statement.                                                                                                    
                                                                                                                                
     When  Alaskans apply  for personal  auto and  homeowners                                                                   
     insurance,   there  are  several   variables  of   which                                                                   
     companies  take  into  consideration   to  assess  risk.                                                                   
     Factors  such  as  motor vehicle  record,  good  student                                                                   
     discount,  marital status, age,  and credit history  are                                                                   
     allowable by  statue; however, when an  Alaskan consumer                                                                   
     considers renewing  a policy with the same  company, the                                                                   
     business  is not allowed  to use  credit history.  Under                                                                   
     current   law,   insurers    must   strip   out   credit                                                                   
     information  after two  years  and may  only include  it                                                                   
     with request from the policy holder.                                                                                       
                                                                                                                                
     By not  being able  to include  credit when it  benefits                                                                   
     consumers,  increases  in  renewal rates  can  often  be                                                                   
     significant, causing  unnecessary market  disruption and                                                                   
     consumer  complaints.  This occurrence  leads  consumers                                                                   
     to seek  new insurance  companies which  means they  may                                                                   
     not  secure the  benefits of  being  a long-term  policy                                                                   
     holder.  Senate  Bill  127  would  allow  for  insurance                                                                   
     companies  to  include credit  history  at the  time  of                                                                   
     policy renewal.                                                                                                            
                                                                                                                                
     The  passage  of  Senate Bill  127  would  also  require                                                                   
     insurers to  make exceptions  to a consumer's  rate when                                                                   
     the  consumer's   credit  is  unfavorably   impacted  by                                                                   
     extraordinary  life circumstances.  This applies  to the                                                                   
     time  of   policy  inception  and  policy   renewal.  An                                                                   
     extraordinary  life circumstance  clause is a  safeguard                                                                   
     for   consumers.   Unforeseen    circumstances   include                                                                   
     incidents such as death of an immediate family member,                                                                     
      military deployment, suffering a catastrophic event,                                                                      
     and divorce.                                                                                                               
                                                                                                                                
2:01:13 PM                                                                                                                    
LORI WING-HEIER,  Director, Division  of Insurance,  Department of                                                              
Commerce, Community  and Economic Development  (DCCED), Anchorage,                                                              
Alaska, described  credit scoring as  an emotional topic  and said                                                              
this   bill  is   written  to   be   neutral  and   that  is   the                                                              
administration's position on it.                                                                                                
                                                                                                                                
She confirmed that  Alaska is the only state that  removes the use                                                              
of credit  scoring to  effect a discount  or lower insurance  rate                                                              
upon renewal. A  policyholder can, however, receive  a discount by                                                              
applying  for  one  through  their   insurance  agent  or  company                                                              
representative.  Because some people  may suffer  from the  use of                                                              
credit  scoring, the  bill is  written  so that  it cannot  impact                                                              
someone who  might have a  lesser credit  score than as  if credit                                                              
scoring were not  used at all. She noted that  provision was added                                                              
when the bill was redrafted last year.                                                                                          
                                                                                                                                
MS.  WING-HEIER reported  that  the division  receives  complaints                                                              
from  consumers  whose  renewed   homeowner  or  auto  policy  had                                                              
increased as  much as 70  percent. Their option  is to find  a new                                                              
agent  or broker.  The consumer  got into  this situation  because                                                              
they either  didn't understand  that for  renewals credit  scoring                                                              
is  not automatically  allowed  in  the underwriting  practice  or                                                              
they  didn't agree  with  the use  of  credit  scoring and  didn't                                                              
complete the form.                                                                                                              
                                                                                                                                
She clarified  that  credit scoring  is not based  on income,  but                                                              
how  the  consumer uses  credit  and  how  timely they  pay  their                                                              
bills.  She said  there  is a  statistical  correlation between  a                                                              
credit  score and  the  number of  claims a  person  is likely  to                                                              
have, and that provides an underwriting guideline.                                                                              
                                                                                                                                
SENATOR GIESSEL asked  if a consumer could pay  the higher premium                                                              
one year  and sign  the form to  use credit  scoring for  the next                                                              
renewal.                                                                                                                        
                                                                                                                                
MS.  WING-HEIER said  the consumer  would probably  be better  off                                                              
looking for a new  insurance company to get started  back on using                                                              
a credit score in their portfolio.                                                                                              
                                                                                                                                
2:06:01 PM                                                                                                                    
CHAIR COSTELLO opened public testimony.                                                                                         
                                                                                                                                
2:06:10 PM                                                                                                                    
KRISTIE BABCOCK,  State Farm  Agent, Kenai,  Alaska, testified  in                                                              
support of  SB 127. She  described the  impact of the  current law                                                              
on her  customers and why  SB 127 offers  a solution.  Current law                                                              
allows  the  agent  to  use  certain   credit  components  in  the                                                              
original  rate,  but after  two  years those  characteristics  are                                                              
stripped  out.  The  result  is  a  significant  increase  in  the                                                              
premium  unless  the  agent  is able  to  get  the  policyholder's                                                              
written permission  to use their  credit. If the  customer doesn't                                                              
sign  the  form in  time  for  the annual  renewal,  existing  law                                                              
prohibits  the  use of  credit  for  subsequent renewals  on  that                                                              
policy. She shared  the experiences of several  customers that are                                                              
all paying more than they should.                                                                                               
                                                                                                                                
SB 127 will alleviate  the dramatic swing in  rates; eliminate the                                                              
frustration  and cumbersome  process  of getting  a manual  waiver                                                              
signed  at  each  renewal;  and   allow  consumers  to  shop  with                                                              
confidence,  knowing  that  there   is  stability  in  the  rating                                                              
factors.                                                                                                                        
                                                                                                                                
2:11:40 PM                                                                                                                    
SENATOR  STEVENS asked  how someone  is affected  if their  credit                                                              
rate fluctuates.                                                                                                                
                                                                                                                                
MS. BABCOCK  explained that  the policy will  be written  based on                                                              
the consumer's  credit at the time.  If their credit  has improved                                                              
when  the  policy  is  due  for renewal  they  may  see  a  better                                                              
premium.  If their  credit doesn't  improve or  worsens, they  may                                                              
want to do more shopping.                                                                                                       
                                                                                                                                
2:12:52 PM                                                                                                                    
GARY STRANNIGAN,  Safeco and  Liberty Mutual Insurance,  testified                                                              
in support  of SB  127. He shared  Safeco's experience  conforming                                                              
to  the current  statute.  He related  that  the  cost to  program                                                              
software to  comply with  the current  statute was $1.25  million.                                                              
That becomes a  barrier to entry in the broader  marketplace given                                                              
the size of the market.                                                                                                         
                                                                                                                                
2:14:32 PM                                                                                                                    
MARK CHOATE,  representing himself,  Juneau, Alaska,  testified on                                                              
SB  127. He  questioned  why credit  scoring  should  be used  for                                                              
something  that is  mandatory. He  further  questioned why,  after                                                              
two  years of  proven  use, the  policyholder's  credit score  has                                                              
anything to  do with the risk  the insurance company is  taking in                                                              
terms of their driving or maintaining their home.                                                                               
                                                                                                                                
He  claimed that  the  insurance companies  are  creating a  false                                                              
paradigm to  create the  situation. They  factor in credit  scores                                                              
on buying  the policies and  then pull  that out of  the algorithm                                                              
for  renewal, but  they don't  consider anything  else. What  they                                                              
should do is reweight other factors, he said.                                                                                   
                                                                                                                                
He  suggested  the  Division  of  Insurance  should  look  at  the                                                              
algorithm  because there's  no reason  that two  years of  driving                                                              
history shouldn't be the basis for calculating the premium.                                                                     
                                                                                                                                
2:18:24 PM                                                                                                                    
DANIEL LYNCH,  representing himself,  Kenai, Alaska,  testified in                                                              
support  of SB  127.  He is  completely  opposed  to using  credit                                                              
scores to  determine insurance  rates at any  time. He  shared his                                                              
personal story  of having no credit  score. Through choice  he has                                                              
had no credit  cards or loans for  40 years. He maintains  his old                                                              
vehicle  and is  a good driver,  yet his  auto rates  go up  every                                                              
renewal.  He  urged  the  committee  to go  old  school  and  base                                                              
insurance rates  on driving history,  vehicle value,  and distance                                                              
driven, not a credit rating.                                                                                                    
                                                                                                                                
2:21:25 PM                                                                                                                    
TIM   MAUDSLEY,   President,   Alaska   USA   Insurance   Brokers,                                                              
Anchorage, Alaska,  testified in  support of  SB 127. He  said the                                                              
change embodied in  SB 127 will provide consumers  with a fair and                                                              
accurate rate  on insurance renewals  and eliminate  the confusion                                                              
due to  policy cancellations and  the burden of  changing carriers                                                              
to  maintain insurance  and rate  discounts. He  opined that  this                                                              
legislation  will   likely  open  the  door  for   more  insurance                                                              
carriers  to  come  to  Alaska.  This  means  lower  premiums  for                                                              
consumers.                                                                                                                      
                                                                                                                                
2:23:20 PM                                                                                                                    
ARMAND  FELICIANO,  Property  Casualty   Insurers  Association  of                                                              
America,  California,  testified   in  support  of  SB  127.  This                                                              
legislation will  allow consumers to  receive the full  benefit of                                                              
credit  scoring.  He suggested  the  committee  look at  what  has                                                              
happened  in Arkansas since  it started  allowing credit  scoring.                                                              
Over  40  percent  of  policyholders   have  seen  their  premiums                                                              
decrease.  The  number  of  policyholders  that  have  seen  their                                                              
premiums  increase has  held steady  at about  14 percent.  A good                                                              
number of policyholders have been unaffected since 2011.                                                                        
                                                                                                                                
2:24:54 PM                                                                                                                    
CINDA  SMITH,  Geico,  Maryland,  echoed  previous  testimony  and                                                              
stated support for SB 127.                                                                                                      
                                                                                                                                
2:25:44 PM                                                                                                                    
JEFFERY  KINSEY,  State  Farm  Insurance,  Bloomington,  Illinois,                                                              
testified in  support of SB 127.  He said State Farm insures  1 in                                                              
4  autos  in  Alaska  and  1  in 3  homes.  He  leads  a  team  of                                                              
predictive  modelers  that  develop insurance  risk  scores  using                                                              
credit-related  information.  Their  analysis  and  other  studies                                                              
show that certain  credit-related variables are  highly predictive                                                              
of  future  insurance  losses.  Using  this  information  benefits                                                              
consumers but  neither adds  to nor  reduces an insurer's  profit.                                                              
Because it  is such  a proven effective  tool, credit  information                                                              
is allowed in 47 states including Alaska.                                                                                       
                                                                                                                                
He   clarified  that   the  credit   information  that   insurance                                                              
companies  use  is not  a  FICO  score.  Those were  developed  to                                                              
estimate  a person's  ability  to repay  debt.  An insurance  risk                                                              
score uses  credit related  variables that have  been shown  to be                                                              
predictive of future  insurance losses. He further  clarified that                                                              
current Alaska  law requires all  insurance companies  to consider                                                              
the absence of credit history as rate neutral.                                                                                  
                                                                                                                                
MR. KINSEY  said many  low-income policyholders  benefit  from the                                                              
use  of  credit-related   information  initially,   but  based  on                                                              
current  Alaska law  they are  not  allowed to  continue to  enjoy                                                              
those benefits  after two years  with a company.  Approximately 60                                                              
percent of State  Farm personal auto and homeowners  policyholders                                                              
entering  their  third  year  of coverage  would  receive  a  rate                                                              
increase if their credit information is stripped out at renewal.                                                                
                                                                                                                                
State Farm  supports SB 127  because it  will lead to  a healthier                                                              
insurance market  and increase the affordability  of insurance for                                                              
Alaskans, he said.                                                                                                              
                                                                                                                                
2:29:12 PM                                                                                                                    
CHAIR COSTELLO asked if he heard Mr. Lynch's testimony.                                                                         
                                                                                                                                
MR. KINSEY said yes.                                                                                                            
                                                                                                                                
CHAIR COSTELLO asked  if current law allows the  absence of credit                                                              
history to be considered rate neutral.                                                                                          
                                                                                                                                
MR. KINSEY  said that's  correct; existing  law requires  insurers                                                              
to treat the lack of credit history as rate neutral.                                                                            
                                                                                                                                
CHAIR COSTELLO asked  for clarification that a  person's credit is                                                              
considered when  the initial policy  is written, but  upon renewal                                                              
it's absent from the analysis.                                                                                                  
                                                                                                                                
MR.   KINSEY  confirmed   that  without   the  waiver,   insurance                                                              
companies  are required  to strip  out any  credit variables  that                                                              
were used  as new business. He  recalled that requirement  was the                                                              
result of a court case.                                                                                                         
                                                                                                                                
SENATOR  STEVENS  asked for  help  understanding  risk and  credit                                                              
score in the context of insurance.                                                                                              
                                                                                                                                
MR.  KINSEY explained  that a  credit score  is oftentimes  geared                                                              
toward banking and  whether or not an individual  will repay debt,                                                              
whereas an  insurance risk  score is  geared toward insurance  and                                                              
the likelihood an individual will file a future claim.                                                                          
                                                                                                                                
CHAIR COSTELLO  asked him to  put that into  an email and  send it                                                              
to her office.                                                                                                                  
                                                                                                                                
MR. KINSEY agreed.                                                                                                              
                                                                                                                                
SENATOR STEVENS  asked if  he's saying that  a poor  credit rating                                                              
is predictive of a future insurance claim.                                                                                      
                                                                                                                                
MR.  KINSEY  said the  credit  score  itself isn't  predictive  of                                                              
future losses,  but individual elements  from a credit  report are                                                              
predictive of future losses.                                                                                                    
                                                                                                                                
SENATOR  STEVENS  asked what  elements  are predictive  of  future                                                              
losses.                                                                                                                         
                                                                                                                                
MR.  KINSEY said  they vary  by  company but  generally fall  into                                                              
four broad categories:  performance on credit  obligations, credit                                                              
seeking behavior,  consumer's  use of credit  such as  outstanding                                                              
balance to available credit, and length of the credit history.                                                                  
                                                                                                                                
2:34:47 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:35:22 PM                                                                                                                    
CHAIR COSTELLO  reconvened  the meeting and  asked Ms.  Wing-Heier                                                              
if she had any comment on the testimony today.                                                                                  
                                                                                                                                
MS. WING-HEIER  said the  comments have  all been valid  including                                                              
those from Mr. Lynch.                                                                                                           
                                                                                                                                
SENATOR MEYER  asked if it matters  to the division that  the bill                                                              
has  no  effective  date.  He would  prefer  it  became  effective                                                              
immediately.                                                                                                                    
                                                                                                                                
MS. WING-HEIER said it makes no difference to the division.                                                                     
                                                                                                                                
SENATOR MEYER  asked about  the process  for an insurance  company                                                              
to consider a consumer's extraordinary life circumstances.                                                                      
                                                                                                                                
MS. WING-HEIER said  the onus would be on the  consumer to explain                                                              
to the insurer why their credit score was impacted.                                                                             
                                                                                                                                
2:38:25 PM                                                                                                                    
SENATOR  MEYER  asked if  this  covers  more  than auto  and  home                                                              
insurance policies. He mentioned his wife's lost diamond ring.                                                                  
                                                                                                                                
MS.  WING-HEIER  replied  this  is for  all  personal  lines,  not                                                              
commercial.  It   would  be  auto,  home,  and   could  extend  to                                                              
watercraft,   equipment,   artwork,   the  loss   described,   and                                                              
umbrellas.                                                                                                                      
                                                                                                                                
SENATOR  MEYER  asked  about discrimination.  He  noted  that  his                                                              
insurance increased when his daughter started driving.                                                                          
                                                                                                                                
MS. WING-HEIER said  insurers are not allowed to  discriminate and                                                              
their  research has  found  it has  not been  a  factor in  credit                                                              
scoring.                                                                                                                        
                                                                                                                                
2:40:36 PM                                                                                                                    
CHAIR  COSTELLO  closed  public  testimony  and  held  SB  127  in                                                              
committee.                                                                                                                      
                                                                                                                                
        SB 149-AIDEA: DIVIDEND TO STATE;INCOME;VALUATION                                                                    
                                                                                                                                
2:40:56 PM                                                                                                                    
CHAIR COSTELLO  announced the consideration  of SB 149.  She noted                                                              
that this is the first hearing.                                                                                                 
                                                                                                                                
2:41:32 PM                                                                                                                    
GENE THERRIAULT,  Policy Director,  Alaska Industrial  Development                                                              
and Export Authority (AIDEA), introduced himself.                                                                               
                                                                                                                                
2:41:51 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:42:26 PM                                                                                                                    
CHAIR COSTELLO reconvened the meeting.                                                                                          
                                                                                                                                
MR.  THERRIAULT  directed attention  to  the word  "excluding"  on                                                              
page  2,  lines  3  and  21, of  the  bill  to  help  explain  the                                                              
presentation.  The exclusions  were  added by  the legislature  in                                                              
recognition  that certain things  needed to  be excluded  from the                                                              
determination of  available net income  in order to  calculate the                                                              
dividend  AIDEA pays  the  state. Some  new  accounting rules  are                                                              
becoming  problematic  and AIDEA  would  like the  legislature  to                                                              
consider adding  things to  the exclusion. He  said Mr.  Lamb will                                                              
have examples  of the  new rules,  the impact  they are  having on                                                              
the dividend, and the proposed solution.                                                                                        
                                                                                                                                
He said  the PowerPoint would  cover the dividend:  history (which                                                              
he   just  summarized),   goal,   statutory   language,  and   two                                                              
accounting problems they are working to solve.                                                                                  
                                                                                                                                
He displayed  a chart showing the  AIDEA dividends that  have been                                                              
paid  starting  in  FY1997  since AIDEA  was  capitalized  with  a                                                              
little more than  $300 million. Since then, AIDEA  has repaid just                                                              
under $380  million. The bill is  intended to bring a  little more                                                              
predictability  to that  income  stream going  forward. He  turned                                                              
the discussion over to Mr. Lamb.                                                                                                
                                                                                                                                
2:46:33 PM                                                                                                                    
MICHAEL   LAMB,  Chief   Financial   Officer,  Alaska   Industrial                                                              
Development  and  Export  Authority (AIDEA),  explained  that  the                                                              
state  receives an  annual dividend  based  on AIDEA's  operations                                                              
and  SB  149   seeks  to  make  that  dividend   more  stable  and                                                              
predictable.  This has become  an issue  because accounting  rules                                                              
have changed since  the statute was written. This  matters because                                                              
the  dividend  is based  on  the  statutorily defined  net  income                                                              
which  is based  on  the financial  audit.  As  the audit  numbers                                                              
change,  the statutory  net income  number  changes which  changes                                                              
the dividend.                                                                                                                   
                                                                                                                                
Three types of  transactions affect the financial  statements that                                                              
affect  the  dividend.  The  first type  are  entries  from  "real                                                              
transactions" that  occurred. Examples  are booking what  was paid                                                              
for an  asset, revenue  that is generated,  payroll that  is paid,                                                              
taxes paid,  and what  cash was  received and  why. There  isn't a                                                              
problem with this type of transactions.                                                                                         
                                                                                                                                
The second  type of transactions  are entries from  "estimates and                                                              
allocations." Examples  are booking depreciation  and amortization                                                              
expenses which recognizes  and records that an asset  used up some                                                              
of  its estimated  useful  life  over  the period  of  operations.                                                              
There isn't a problem with this type of transactions.                                                                           
                                                                                                                                
The  third type  of transactions  are entries  from "market  value                                                              
adjustments." These  are entries related to transactions  that did                                                              
not happen, but  the statute requires them to be  recorded for the                                                              
audit as though  they did occur. [The statute  requires compliance                                                              
with  GASB  (Generally  Accepted   Auditing  Standards)  and  GAAP                                                              
(Generally  Accepted  Auditing  Principles).]  He  clarified  that                                                              
market value  adjustments have a purpose  for an audit  or to read                                                              
a financial  statement, but it's  a policy decision as  to whether                                                              
they  should be  used to  compute  the dividend  or excluded  like                                                              
other things.                                                                                                                   
                                                                                                                                
2:50:34 PM                                                                                                                    
MR. LAMB  summarized the pertinent  language in the  existing Sec.                                                              
44.88.088 relating to the payment of the dividend:                                                                              
                                                                                                                                
     The  authority shall  adopt a  policy for  payment of  a                                                                   
     dividend  to the state  each year.  The amount of  which                                                                   
     may  not  be less  than  25  percent  nor more  than  50                                                                   
     percent  of the  net income  for the  base fiscal  year.                                                                   
     The  meaning  of  "net  income" is  the  change  in  net                                                                   
     position, or  the equivalent term under GAAP  as set out                                                                   
     in  the audited  financial statements  of the  authority                                                                   
     for   the   base   fiscal    year,   excluding   amounts                                                                   
     attributable  to  intergovernmental  transfers,  capital                                                                   
     contributions,   grants,   or   impairment   losses   on                                                                   
     development projects financed under AS 44.88.172.                                                                          
                                                                                                                                
2:50:42 PM                                                                                                                    
CHAIR  COSTELLO  asked  why  "market   value  adjustment"  doesn't                                                              
appear in the bill.                                                                                                             
                                                                                                                                
MR. LAMB replied it's part of the proposed new language.                                                                        
                                                                                                                                
He  displayed   a  chart  to   illustrate  how  the   dividend  is                                                              
calculated. It is  based on the statutorily defined  "net income,"                                                              
which comes from  the audited financial statements  that the board                                                              
approves.  Those board-approved  audited  statements must  include                                                              
applicable "market  value" and/or "write-down/loss"  entries. GAAP                                                              
requires  those entries and  that all  applicable GASB  statements                                                              
are implemented.                                                                                                                
                                                                                                                                
SB  149 would  modify  the existing  excluded  language such  that                                                              
"net  income"  would  not include  any  market  value  adjustments                                                              
and/or state or  federal write-down activity when  calculating the                                                              
dividend.                                                                                                                       
                                                                                                                                
2:53:01 PM                                                                                                                    
CHAIR COSTELLO  asked how  the dividend  would have been  affected                                                              
if this change had been in statute in previous years.                                                                           
                                                                                                                                
MR. LAMB said he would point that out later in the presentation.                                                                
                                                                                                                                
MR. THERRIAULT  clarified that AIDEA  will continue to  follow all                                                              
GAAP  and GASB  rules  to  get the  audited  financial  statement.                                                              
AIEDA  is  asking  the  legislature   to  back  out  market  value                                                              
adjustments only for the purpose of calculating the dividend.                                                                   
                                                                                                                                
MR.  LAMB  added   that  the  question  is  whether   or  not  the                                                              
components  that now  make up the  audit are  appropriate  for the                                                              
calculation of the dividend.                                                                                                    
                                                                                                                                
2:54:37 PM                                                                                                                    
MR.  LAMB restated  the  problems that  arises  when market  value                                                              
adjustments are  factored into  calculating the dividend.  Entries                                                              
that did  not happen are  booked as though  they did.  This causes                                                              
AIDEA's net  income to  swing, which also  causes the  dividend to                                                              
the  state to  swing.  When the  swings are  material  it makes  a                                                              
material difference  in the size  of the dividend. It's  a problem                                                              
for AIDEA when  it has to pay  a dividend based on cash  it hasn't                                                              
actually earned,  and a problem  for the  state when AIDEA  pays a                                                              
dividend based on unrealized losses, not the cash it earned.                                                                    
                                                                                                                                
He  drew an  analogy  to an  individual taxpayer  who  has to  use                                                              
market value adjustments  in their tax return.  The individual had                                                              
W-2  earnings  of  $100,000,  interest   and  dividend  income  of                                                              
$7,500, and a  permanent fund dividend of $1,500  for total income                                                              
of $109,000. If  the taxpayer's income calculation  had to include                                                              
hypothetical  unrealized  GASB 31,  68, 72,  and  75 market  value                                                              
adjustments,  the  total income  would  be $169,000.  That  figure                                                              
presumes the  taxpayer sold  the assets when  in fact he  did not.                                                              
He  noted  that while  the  analogy  shows  more income  than  was                                                              
actually earned, it could just as easily go the other direction.                                                                
                                                                                                                                
MR. LAMB  displayed a  chart showing 25  years of AIDEA's  audited                                                              
net income  pre-GASB 31 market  value adjusting entries.  He noted                                                              
that  the year-to-year  changes  are  not  large. The  next  chart                                                              
superimposes  net  income  calculations  after  GASB  31  mark-to-                                                              
market   adjustments  started   in   1997.  Including   unrealized                                                              
revenues  and losses  results  in dramatic  swings  in net  income                                                              
from  year to  year. This  causes the  dividend to  swing just  as                                                              
dramatically.  He pointed to  the number of  times that  AIEDA has                                                              
paid a dividend  based on unrealized income. For  example, in 2010                                                              
the  dividend  was  based  on nearly  $20  million  in  unrealized                                                              
income.  Assuming a  50 percent  dividend, AIDEA  would have  paid                                                              
$10  million  more  in dividends  than  it  actually  earned.  The                                                              
situation reversed  in 2013  when AIDEA paid  a dividend  based on                                                              
about  $20 million  in unrealized  losses. The  cost to the  state                                                              
was $10 million less in the dividend.                                                                                           
                                                                                                                                
3:03:34 PM                                                                                                                    
CHAIR  COSTELLO asked  how  he would  describe  the public  policy                                                              
value of the bill.                                                                                                              
                                                                                                                                
MR. LAMB said tying  the dividend to the cash  that AIDEA actually                                                              
earned  from  its  operations provides  much  more  stability  and                                                              
predictability for both AIDEA and the state.                                                                                    
                                                                                                                                
SENATOR MEYER asked  if it's safe to say that  this change doesn't                                                              
necessarily mean  the state  will get more  of a dividend  or less                                                              
of a dividend.                                                                                                                  
                                                                                                                                
MR. LAMB  said we could  be better off  in some instances  and not                                                              
in others.                                                                                                                      
                                                                                                                                
3:08:44 PM                                                                                                                    
MR. LAMB  said the  bill also  seeks to  fix the  potential  for a                                                              
dividend  penalty.   When  the  value   of  a  project   has  been                                                              
determined  to have  been permanently  reduced,  GAAP requires  an                                                              
adjusting entry to  be booked to reduce and/or remove  some or all                                                              
of the value of  the asset or project from AIDEA's  balance sheet.                                                              
The resulting entry  reduces net income, which  either reduces the                                                              
dividend or  stacks the dividend  AIDEA pays due to  the adjusting                                                              
entry  reducing  value.  The dividend  penalty  for  an  adjusting                                                              
entry  could  be  25  percent  to   50  percent.  He  discussed  a                                                              
hypothetical example.                                                                                                           
                                                                                                                                
If the  state funded a  project with $8.8  million and it  were to                                                              
go away, the $25.3  million in net income that  the dividend would                                                              
have been  based on would  be reduced by  $8.8 million so  the net                                                              
income would be  $16.5 million. The $8.8 million has  no value and                                                              
the  dividend  is  reduced  by 50  percent  or  $4.4  million.  He                                                              
displayed a  visual to  discuss the  same example. AIDEA  believes                                                              
this should be fixed, he said.                                                                                                  
                                                                                                                                
3:14:27 PM                                                                                                                    
He reviewed  the new  statutory language proposed  in SB  149. The                                                              
language  on page 1,  lines 10-11,  would fix  the first  problem,                                                              
and  the language  on  page 2,  lines 5-8,  would  fix the  second                                                              
problem.                                                                                                                        
                                                                                                                                
3:16:06 PM                                                                                                                    
MR.  THERRIAU  summarized  that  the bill  adds  to  the  excluded                                                              
items,  accommodates   the  new  GASB  rules,  and   ensures  that                                                              
projects that  are written off won't  drag the dividend  down. The                                                              
policy  of the  bill is  to add  predictability  to the  dividend.                                                              
Referring  to Senator  Meyer's  question,  he said  these  changes                                                              
will smooth the impact to the dividend.                                                                                         
                                                                                                                                
CHAIR COSTELLO asked what precipitated the bill.                                                                                
                                                                                                                                
MR. LAMB  said part of  it was that  the board wanted  the ability                                                              
to explain why  the dividend had shrunk to the  legislature. Also,                                                              
as  he  became  more  familiar  with  the  statutory  language  he                                                              
realized  it needed  to be  fixed. The  third reason  is that  new                                                              
GASB rules are coming and there is a compounding effect.                                                                        
                                                                                                                                
3:21:33 PM                                                                                                                    
CHAIR COSTELLO held SB 149 in committee.                                                                                        
                                                                                                                                
3:21:57 PM                                                                                                                    
CHAIR COSTELLO  recessed  the Senate Labor  and Commerce  Standing                                                              
Committee.  [The meeting  adjourned  at 6:00  p.m.  when the  next                                                              
scheduled meeting was convened.]                                                                                                

Document Name Date/Time Subjects
SB 127.PDF SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Hearing Request L&C.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Sponsor Statement.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Sectional Analysis.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Credit-Based Insurance Scores Consumer Brochure.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents - NAMIC 1-25-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents - State Farm.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Brenda Pearce 2-4-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Cindi Heal 2-10-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Jeff Case 2-10-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Kay Rodriguez 2-10-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Kelly Snodgrass 2-10-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Email Stan Tebow 2-8-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Fax Tim Maudsley 2-10-16.PDF SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Letter Nancy Boeshart 2-16-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 Supporting Documents- Letter Stacey Matteson 2-11-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 127 - Fiscal Note DCCED.pdf SL&C 2/25/2016 1:30:00 PM
SB 127
SB 149.PDF SL&C 2/25/2016 1:30:00 PM
SB 149
SB 149 Transmittal Letter.pdf SL&C 2/25/2016 1:30:00 PM
SB 149
SB 149 Sectional Analysis.pdf SL&C 2/25/2016 1:30:00 PM
SB 149
SB 149 Hearing Request.pdf SL&C 2/25/2016 1:30:00 PM
SB 149
SB 149 Fiscal Note-DCCED-AIDEA-11-20-16.PDF SL&C 2/25/2016 1:30:00 PM
SB 149
SB 149 02.25.16 Presentation.pdf SL&C 2/25/2016 1:30:00 PM
SB 149
SB 141 - AAAS E-Cigs More Dangerous Than Tobacco.pdf SL&C 2/25/2016 1:30:00 PM
SB 141
Changes from CS SB 72(HSS) to CS vsn L 2-23-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 72
SB 141 - Background Harvard Gazette E-Cigs Flavorings Harmful.pdf SL&C 2/25/2016 1:30:00 PM
SB 141
SB 141 - Version P Bill Summary.pdf SL&C 2/25/2016 1:30:00 PM
SB 141
SB 141 E-Cigs Slideshow.PDF SL&C 2/25/2016 1:30:00 PM
SB 141
SB 141 Version P Sectional.pdf SL&C 2/25/2016 1:30:00 PM
SB 141
SB 141 Version P.pdf SL&C 2/25/2016 1:30:00 PM
SB 141
SB72 Designated Caregiver vsn L 2-22-16.pdf SL&C 2/25/2016 1:30:00 PM
SB 72