Legislature(2011 - 2012)BUTROVICH 205

03/01/2011 09:00 AM Senate STATE AFFAIRS


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 93 SPECIALTY LICENSE PLATES: TELECONFERENCED
Moved SB 93 Out of Committee
Delegating Authority to DMV
+= SB 2 LICENSE PLATES: NATIONAL RIFLE ASSN. TELECONFERENCED
Moved CSSB 2(STA) Out of Committee
+= SB 16 SPECIAL REQUEST LICENSE PLATES: TELECONFERENCED
Moved CSSB 16(STA) Out of Committee
Choose Life and Pro-Family, Pro-Choice
*+ SB 36 OPT-OUT CHARITABLE GIVING PROGRAM TELECONFERENCED
Heard & Held
*+ SCR 1 LUPUS AWARENESS MONTH TELECONFERENCED
Heard & Held
Bills Previously Heard/Scheduled
            SB  36-OPT-OUT CHARITABLE GIVING PROGRAM                                                                        
                                                                                                                              
9:24:07 AM                                                                                                                    
CHAIR WIELECHOWSKI announced the next  order of business would be                                                               
SB 36.                                                                                                                          
                                                                                                                                
GRIER HOPKINS,  staff to  Senator Joe Thomas,  sponsor of  SB 36,                                                               
said this  bill was brought  to their attention by  Golden Valley                                                               
Electric Association  (GVEA). Opt-out charitable  giving programs                                                               
have  been around  for  many  years, and  more  than 250  utility                                                               
cooperatives  across  the  U.S. have  adopted  similar  programs.                                                               
These allow individuals  to contribute small amounts  that add up                                                               
quickly and  help build a stronger  community. Opt-out charitable                                                               
giving programs must  be approved by co-op  members. This program                                                               
rounds up  a monthly bill to  the nearest dollar, so  the maximum                                                               
amount withheld per month would  be anywhere between .01 cent and                                                               
.99 cents.  These small amounts  add up quickly, and  the average                                                               
payment for  a GVEA member  would be approximately six  dollars a                                                               
year. Collected  funds are  dispersed to  qualified organizations                                                               
and individuals  within the service  district. Each  co-op crafts                                                               
its own by-laws  on this. Most distribute the funds  to the board                                                               
of  a separately  created 501(c)(3)  organization that  they have                                                               
established.   Among  the   more  than   250  cooperatives   with                                                               
charitable  giving programs,  most  have  adopted opt-out  rather                                                               
than  opt-in  programs. These  programs  have  90 percent  member                                                               
participation. Members  may choose to  opt out of the  program at                                                               
any time. Donations may be refunded  up to a full three years. SB
36 will remove  any possible conflict with  AS 45.45.930, dealing                                                               
with opt-out marketing plans.  Opt-out charitable giving programs                                                               
in Alaska  would require membership  approval; disclosure  of the                                                               
amount added would  be identified on the  member's bill; extended                                                               
refunds, if requested, could stretch  back as far as three years.                                                               
Donations are  tax deductible and  must benefit the  service area                                                               
of the cooperative.                                                                                                             
                                                                                                                                
9:28:05 AM                                                                                                                    
BRIAN  NEWTON, CEO,  Golden Valley  Electric Association  (GVEA),                                                               
Fairbanks, testified in  support of SB 36. He  said their members                                                               
have already  approved initiating the program.  GVEA became aware                                                               
of  a  possible conflict  with  AS  45.45.930,  so this  bill  is                                                               
intended to remove any possible  conflict. GVEA is proud of being                                                               
able to give back to  the community. Collecting small amounts and                                                               
then returning  them to the community  is a way of  giving to the                                                               
community. GVEA will rotate the money as quickly as possible.                                                                   
                                                                                                                                
9:30:37 AM                                                                                                                    
CHAIR WIELECHOWSKI asked how GVEA  decides what charities to give                                                               
to.                                                                                                                             
                                                                                                                                
MR. NEWTON  said the board  of directors of their  501(c)(3) will                                                               
review the applications. They will  look at the need and purpose.                                                               
The  board has  specifically prohibited  religious campaigns  and                                                               
political donations.  So the board  will choose who  receives the                                                               
funds, based upon criteria they have established.                                                                               
                                                                                                                                
SENATOR GIESSEL asked if GVEA had already started the program.                                                                  
                                                                                                                                
MR.  NEWTON responded  that  GVEA has  started  the program,  and                                                               
legal counsel  advises they are  not prohibited from  doing this.                                                               
SB 36 is a  clean-up bill to make sure there  is no conflict with                                                               
existing statutes.                                                                                                              
                                                                                                                                
9:32:35 AM                                                                                                                    
ED  SNIFFEN,  Assistant  Attorney  General,  Consumer  Protection                                                               
Unit, Civil Division, Department of  Law, Anchorage, said that AS                                                               
45.45.930  creates  a  potential  conflict with  the  program  as                                                               
outlined.  There  is some  question  about  whether this  program                                                               
would be prohibited  under current statute. This  bill would make                                                               
a  specific   exemption  from  AS  45.45.930   for  electric  and                                                               
telephone cooperatives.  This bill  provides good  protection for                                                               
consumers.                                                                                                                      
                                                                                                                                
9:33:33 AM                                                                                                                    
SENATOR PASKVAN joined the meeting.                                                                                             
                                                                                                                                
9:34:55 AM                                                                                                                    
SENATOR  GIESSEL  asked  about  information  in  the  committees'                                                               
packets referring  to an amendment  discussing the  definition of                                                               
charitable purpose.                                                                                                             
                                                                                                                                
MR.  SNIFFEN  said in  HB  114,  the  companion bill,  there  was                                                               
discussion  in  the  House  Labor   &  Commerce  Committee  about                                                               
restricting the  ability of cooperatives to  provide donations to                                                               
religious organizations.  After doing  research on how  to define                                                               
charitable purpose, the committee came up with an amendment.                                                                    
                                                                                                                                
9:36:47 AM                                                                                                                    
MR.  SNIFFEN noted  that  language in  statutes  and cases  helps                                                               
define "charitable  purpose." Alaska Statutes  require charitable                                                               
solicitors  to register  and operate  within certain  guidelines.                                                               
Combining  these  resources led  to  a  definition of  charitable                                                               
purpose. GVEA  is a model  program, but the bill  doesn't require                                                               
other electric associations to do  the same thing. The definition                                                               
of charitable donations in the original bill is too broad.                                                                      
                                                                                                                                
SENATOR GIESSEL  asked how the amendment  narrowed the definition                                                               
of charitable donations.                                                                                                        
                                                                                                                                
MR. SNIFFEN  said the definition  was dealing with  language that                                                               
does not  exist in the  bill, and would  not apply to  this bill.                                                               
The proposed  amendment to  the companion bill  did not  use that                                                               
language, but  rather mirrored existing language  which says that                                                               
they can make  donations for the public  welfare, charitable, and                                                               
educational  purposes.  They  have  narrowed  the  definition  to                                                               
charitable purposes  only. Entities  other than 501(c)  (3)s also                                                               
do charitable work.                                                                                                             
                                                                                                                                
SENATOR GIESSEL  asked about the constitutional  equal protection                                                               
issue.  She  mentioned the  Salvation  Army  and Brother  Francis                                                               
Shelter, and  asked if organizations  like these are  included or                                                               
excluded.                                                                                                                       
                                                                                                                                
MR. SNIFFEN  said they would  be included under  this definition.                                                               
Religious based  organizations can  do charitable work.  If there                                                               
is not  a religious  purpose, to  promote a  particular religion,                                                               
then they are eligible to receive donations.                                                                                    
                                                                                                                                
9:42:18 AM                                                                                                                    
CHAIR  WIELECHOWSKI   suggested  the  bill   sponsor's  suggested                                                               
amendment could be included in a CS for the next meeting.                                                                       
                                                                                                                                
MR. HOPKINS  explained the purpose  of the amendment. This  is an                                                               
amendment that Mr. Sniffen wrote  to limit or more closely define                                                               
charitable  purposes.  The  intent  is  to  assure  there  is  no                                                               
pecuniary  profit, but  it  does not  exclude  specific types  of                                                               
organizations or donations.  This could also be  addressed in the                                                               
by-laws of the utility co-op.                                                                                                   
                                                                                                                                
SENATOR PASKVAN asked about refunds going back three years.                                                                     
                                                                                                                                
9:45:25 AM                                                                                                                    
MR. HOPKINS said it was to  give members the benefit of the doubt                                                               
in case they did not read their bill.                                                                                           
                                                                                                                                
SENATOR PASKVAN asked  if there was discussion  about that length                                                               
of time.                                                                                                                        
                                                                                                                                
MR. HOPKINS said GVEA took the recommendation from its members.                                                                 
                                                                                                                                
MR. NEWTON said  that the board of GVEA was  emphatic about the 3                                                               
years, because people vote with  their dollars. GVEA will publish                                                               
the list of  organizations donated to, and consumers  get a three                                                               
year look at  how money is given to the  community. If they don't                                                               
like the board's choices, they can request a refund.                                                                            
                                                                                                                                
SENATOR MEYER  noted that opt-out  programs on credit  card bills                                                               
required 60 days  written notice for opting out. He  stated he is                                                               
not concerned  with this program,  but he is concerned  about the                                                               
length of three years, and asked  where GVEA would get the refund                                                               
money.                                                                                                                          
                                                                                                                                
9:48:22 AM                                                                                                                    
CHAIR WIELECHOWSKI noted the committee  is setting policy for the                                                               
whole state. Other organizations might be affected.                                                                             
                                                                                                                                
MR. NEWTON said  the committee could change the  refund length to                                                               
one or  two years. He  stated the fund  would have to  maintain a                                                               
reserve  for  possible  refunds.  Other states  have  not  had  a                                                               
problem with  this. If the  committee wants to shorten  the time,                                                               
that would be fine.                                                                                                             
                                                                                                                                
SENATOR MEYER  said if  there is an  adequate reserve  then three                                                               
years is probably  okay. He does support the bill.  In general he                                                               
favors opt in vs. opt out, but  this program seems okay. He had a                                                               
bad  experience  with  a  credit  card  company  and  an  opt-out                                                               
program, but is not concerned with this bill.                                                                                   
                                                                                                                                
CHAIR WIELECHOWSKI asked if Mr.  Sniffen could address opt in vs.                                                               
opt out programs.                                                                                                               
                                                                                                                                
MR.  SNIFFEN  said  generally  the   DOL  doesn't  like  opt  out                                                               
programs. But  for this particular  program the statute  has good                                                               
features to  help protect  consumers. The  cooperative membership                                                               
has to  vote on the program.  The three year refund  is a feature                                                               
that DOL likes,  and would encourage keeping in the  bill. If the                                                               
program  is run  correctly they  will  have a  reserve. DOL  also                                                               
likes  the mandatory  disclosures  on monthly  utility bills.  He                                                               
stated  SB  36 contains  many  protections  to resolve  potential                                                               
problems,  it does  benefit the  community, and  he supports  the                                                               
bill.                                                                                                                           
                                                                                                                                
MR. NEWTON stated  that GVEA would support an amendment  or CS as                                                               
proposed, with the changes proposed in the House version.                                                                       
                                                                                                                                
9:54:13 AM                                                                                                                    
CHAIR  WIELECHOWSKI  closed  public testimony  and  announced  he                                                               
would hold SB 36 in committee.                                                                                                  

Document Name Date/Time Subjects
SB 36 - Sectional Analysis.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - GVEA Goodcents Website.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - GVEA Explanation.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - Utility Support Letters.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - Bill Version M.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - Sponsor Statement.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SB 36 - Utility Membership.pdf SSTA 3/1/2011 9:00:00 AM
SB 36
SCR 1 Committee Substitute.pdf SSTA 3/1/2011 9:00:00 AM
SCR 1
SCR 1 Legislative Counsel.pdf SSTA 3/1/2011 9:00:00 AM
SCR 1