Legislature(1995 - 1996)

03/16/1995 01:05 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                         March 16, 1995                                        
                           1:05 p.m.                                           
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Ivan, Co-Chair                                                 
 Representative Alan Austerman, Co-Chair                                       
 Representative Kim Elton                                                      
 Representative Al Vezey                                                       
 Representative Pete Kott                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Jerry Mackie                                                   
 Representative Irene Nicholia                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 * HB 223:   "An Act relating to joint insurance arrangements; and             
             providing for an effective date."                                 
                                                                               
             HEARD AND HELD                                                    
                                                                               
   HB 192    "An Act relating to housing programs of the Alaska                
             Housing Finance Corporation, the corporation's                    
             supplemental housing development grants to regional               
             housing authorities, and to housing programs of                   
             regional housing authorities, and permitting regional             
             housing authorities to make, originate, and service               
             loans for the purchase and development of residential             
             housing."                                                         
                                                                               
             PASSED OUT OF COMMITTEE                                           
                                                                               
   HB 185:   "An Act relating to an exemption from municipal                   
             property taxes for certain primary residences; and                
             providing for an effective date."                                 
                                                                               
             HEARD AND HELD                                                    
                                                                               
   HB 154:   "An Act requiring the Department of Law to provide                
             guidelines regarding unconstitutional state and                   
             municipal takings of private real property; relating to           
             the taxation of private real property taken                       
             unconstitutionally by state or municipal action;                  
             establishing a time limit for bringing an action for an           
             unconstitutional state or municipal taking of private             
             real property; and providing for an effective date."              
                                                                               
             BILL POSTPONED                                                    
 (* First public hearing)                                                      
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 TOM WRIGHT, Legislative Assistant                                             
 to Representative Ivan                                                        
 State Capitol Building, Room 503                                              
 Juneau, AK 99801                                                              
 Telephone: (907) 465-4942                                                     
 POSITION STATEMENT:  Introduced HB 223 and HB 185                             
                                                                               
 DAN KOCH, Chief of Market Surveillance                                        
 Division of Insurance                                                         
 Department of Commerce and Economic Development                               
 P.O. Box 110805                                                               
 Juneau, AK 99801                                                              
 Telephone: (907) 465-2577                                                     
 POSITION STATEMENT:  Testified against HB 223                                 
                                                                               
 STEVE WELLS, Director of Risk Management                                      
 Alaska Municipal League                                                       
 626 F St., Ste. 100                                                           
 Anchorage, AK 99501                                                           
 Telephone: (907) 258-2625                                                     
 POSITION STATEMENT:  Testified in support of HB 223                           
                                                                               
 REPRESENTATIVE RICHARD FOSTER                                                 
 Alaska State Legislature                                                      
 State Capitol Building, Room 410                                              
 Juneau, AK 99801                                                              
 Telephone: (907) 465-3789                                                     
 POSITION STATEMENT:  Introduced HB 192                                        
                                                                               
 ELIZABETH DRONKERT, Legislative Assistant                                     
 Representative Richard Foster                                                 
 State Capitol Building, Room 410                                              
 Juneau, AK 99801                                                              
 Telephone: (907) 465-3789                                                     
 POSITION STATEMENT:  Answered questions regarding HB 192                      
                                                                               
 LES CAMBELL, Budget Specialist                                                
 Alaska Housing Finance Corporation                                            
 520 East 34th Avenue                                                          
 Anchorage, AK 99503-4199                                                      
 Telephone: (907) 561-1900                                                     
 POSITION STATEMENT:  Testified in support of HB 192                           
                                                                               
 DAN FAUSKE, Chief Executive Officer                                           
 Alaska Housing Finance Corporation                                            
 520 East 34th Avenue                                                          
 Anchorage, AK 99503-4199                                                      
 Telephone: (907) 561-1900                                                     
 POSITION STATEMENT:  Testified in support of HB 192                           
                                                                               
 JUDY DESPAIN                                                                  
 Alaska Housing Finance Corporation                                            
 P.O. Box 101020                                                               
 Anchorage, AK 99510                                                           
 Telephone: (907) 561-1900                                                     
 POSITION STATEMENT:  Testified in support of HB 192                           
                                                                               
 JACQUELINE JOHNSON                                                            
 Association of Alaska's Housing Authorities                                   
 Box 32237                                                                     
 Juneau, AK 99803                                                              
 Telephone: (907) 780-6868                                                     
 POSITION STATEMENT:  Testified in support of HB 192                           
                                                                               
 BRUCE KOVARIK, Executive Director                                             
 Bering Straits Regional Housing Authority                                     
 P.O. Box 995                                                                  
 Nome, AK 99762                                                                
 Telephone:  (907) 443-5256                                                    
 POSITION STATEMENT:  Testified in support of HB 192                           
                                                                               
 KEVIN RITCHIE, Executive Director                                             
 Alaska Municipal League                                                       
 217 2nd St., Ste. 200                                                         
 Juneau, AK 99801                                                              
 Telephone: (907) 586-1325                                                     
 POSITION STATEMENT:  Answered questions regarding HB 185                      
                                                                               
 STEVE VAN SANT, State Assessor                                                
 Department of Community and Regional Affairs                                  
 333 W. 4th Ave., Ste. 319                                                     
 Anchorage, AK 99501                                                           
 Telephone: (907) 269-4500                                                     
 POSITION STATEMENT:  Commented on HB 185                                      
                                                                               
 PAT CARLSON, Assessor                                                         
 Kodiak Island Borough                                                         
 710 Mill Bay Road                                                             
 Kodiak, AK 99615                                                              
 Telephone: (907) 486-9350                                                     
 POSITION STATEMENT:  Testified in support of HB 185                           
                                                                               
 CONNIE SIPE, Director                                                         
 Division of Senior Services                                                   
 Department of Administration                                                  
 3601 C St., Ste. 260                                                          
 Anchorage, AK 99510                                                           
 Telephone:  (907) 563-5654                                                    
 POSITION STATEMENT:  Testified on HB 185                                      
                                                                               
 GENE DAW                                                                      
 American Association of Retired Persons                                       
 Veterans of Foreign Wars                                                      
 Box 32237                                                                     
 Juneau, AK 99802                                                              
 Telephone: (907) 586-3816                                                     
 POSITION STATEMENT:  Testified in support of HB 185                           
                                                                               
 JOHN HOPE                                                                     
 Alaska Native Brotherhood                                                     
 Box 20311                                                                     
 Juneau, AK 99802                                                              
 Telephone: (907) 789-0971                                                     
 POSITION STATEMENT:  Testified against HB 185                                 
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 223                                                               
 SHORT TITLE: JOINT INSURANCE ARRANGEMENTS                                     
 SPONSOR(S): REPRESENTATIVE(S) IVAN                                            
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 03/03/95       564    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/03/95       564    (H)   CRA AND LABOR & COMMERCE                          
 03/16/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
                                                                              
 BILL:  HB 192                                                                
 SHORT TITLE: AHFC HOUSING LOANS                                               
 SPONSOR(S): REPRESENTATIVE(S) FOSTER,Ivan                                     
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/22/95       448    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/22/95       448    (H)   COMMUNITY & REGIONAL AFFAIRS, FINANCE             
 02/27/95       511    (H)   COSPONSOR(S): IVAN                                
 03/07/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
 03/07/95              (H)   MINUTE(CRA)                                       
 03/16/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
                                                                              
 BILL:  HB 185                                                                
 SHORT TITLE: MUNICIPAL PROPERTY TAX EXEMPTIONS                                
 SPONSOR(S): REPRESENTATIVE(S) IVAN                                            
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/20/95       418    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/20/95       418    (H)   COMMUNITY & REGIONAL AFFAIRS, FINANCE             
 03/09/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
 03/09/95              (H)   MINUTE(CRA)                                       
 03/16/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
                                                                               
 BILL:  HB 154                                                               
 SHORT TITLE: REGULATORY TAKING OF PRIVATE PROPERTY                            
 SPONSOR(S): REPRESENTATIVE(S) KOHRING,Rokeberg                                
                                                                               
 JRN-DATE     JRN-PG               ACTION                                      
 02/03/95       237    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/03/95       237    (H)   CRA, JUD, FIN                                     
 02/16/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
 02/16/95              (H)   MINUTE(CRA)                                       
 02/21/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
 02/21/95              (H)   MINUTE(CRA)                                       
 03/01/95       550    (H)   COSPONSOR(S): ROKEBERG                            
 03/09/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
 03/09/95              (H)   MINUTE(CRA)                                       
 03/16/95              (H)   CRA AT 01:00 PM CAPITOL 124                       
                                                                               
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 95-7, SIDE A                                                             
 Number 000                                                                    
                                                                               
 CO-CHAIR IVAN called the House Community and Regional Affairs                 
 Committee to order at 1:05 p.m.  Members present at the call to               
 order were Representatives Alan Austerman, Pete Kott and Kim Elton.           
 Absent were Representatives Jerry Mackie, Irene Nicholia and Al               
 Vezey.  Co-Chair Ivan went over the meeting agenda, HB 223, HB 192            
 and HB 185.  He said testifiers would be on teleconference from               
 Anchorage, Fairbanks, Kodiak, Mat-Su, Nome, Sitka and Soldotna.               
                                                                               
 HCRA - 03/16/95                                                               
 HB 223 - JOINT INSURANCE ARRANGEMENTS                                       
                                                                               
 Co-Chair Ivan invited his staff aide, Tom Wright to introduce HB
 223.                                                                          
                                                                               
 Number 034                                                                    
                                                                               
 TOM WRIGHT, Legislative Assistant to Representative Ivan, read the            
 sponsor statement for HB 223.  He said the bill was a response to             
 needs of quasi-governmental entities such as Native tribal                    
 councils, port authorities and others who either can't obtain                 
 insurance or find the cost of insurance prohibitively expensive.              
 HB 223 gives these entities an option to obtain affordable                    
 liability coverage they currently don't have under current                    
 statutes.  The current joint insurance statute limits participation           
 to municipalities and their public corporations, school districts             
 and Rural Education Attendance Areas (REAA).  This bill expands the           
 scope of poolings so that pools, either those in existence or                 
 additional pools, can serve the unmet needs of tribal councils and            
 other quasi-governmental entities.  Those that would be eligible              
 for coverage must perform at least two of the general municipal               
 powers described in Alaska Statute 29.35.101.                                 
                                                                               
 Number 062                                                                    
                                                                               
 CO-CHAIR IVAN welcomed any questions from committee members.                  
                                                                               
 Number 065                                                                    
                                                                               
 REPRESENTATIVE PETE KOTT asked if Mr. Wright could list some                  
 examples of the duties the entities would have to perform.                    
                                                                               
 Number 074                                                                    
                                                                               
 MR. WRIGHT stated some of the requirements are to establish                   
 prescribed salaries for an elected or appointed municipal official            
 or employee, to combine two or more appointive or administrative              
 offices, to sue and be sued, to regulate the operational use of a             
 municipal right of way facility or service.  He said there were 14            
 different powers that were in statute regarding this.                         
                                                                               
 Number 086                                                                    
                                                                               
 REPRESENTATIVE KOTT stated he wanted to ensure those that would be            
 eligible could perform at least two of those functions.                       
                                                                               
 Number 091                                                                    
                                                                               
 CO-CHAIR IVAN again welcomed comments from the committee.  He                 
 invited Mr. Dan Koch from the Division of Insurance to testify.               
                                                                               
 Number 097                                                                    
                                                                               
 DAN KOCH, Chief of Market Surveillance, Division of Insurance,                
 Department of Commerce and Economic Development, said the bill                
 before the committee was one the division did not favor.  In 1986,            
 AS 21.76 was formed to allow municipalities, REAAs and school                 
 districts to form joint insurance arrangements (JIA).  Up until               
 that point, the division had argued the insurance code had within             
 it, the ability to permit entities to group together to form a                
 mutual insurance company or a reciprocal insurance exchange.  The             
 latter is probably the appropriate vehicle for most entities that             
 would like to do the kinds of things spoken to in this bill.  The             
 reason why the division shifted position when the municipalities              
 wanted to form a JIA, was because of the statute that is referred             
 to in the bill, AS 29.35.101, which listed the general powers of a            
 municipality.  In those 14 items, there are 2 the division thought            
 were particularly pertinent and removed some of the concerns the              
 division had as to solvency issues.  The first of those was item 6            
 which levies a tax or special assessment and imposes a lien for its           
 enforcement.  They have a tax base that takes the place of the                
 capitalization and surplus requirements you would normally want to            
 see for the formation of any sharing of liabilities.  The second              
 was to enforce an ordinance and prescribe a penalty for violation             
 of an ordinance so they had some policing authority as well.  The             
 JIA indicated they didn't want to be considered an insurance entity           
 even though that particular chapter had been placed within the                
 insurance code.  At that time, there was careful drafting to ensure           
 anything the JIA did was not subject to any oversight or regulation           
 by the division.  The division's concern was if additional entities           
 without a tax base were permitted to form JIAs, there was nothing             
 to say they would join the same arrangement already existing for              
 municipalities.  There would be concern about the solvency of those           
 entities and their ability to meet any obligations they may have.             
 In effect, they are acting as an insurer and they are sharing each            
 other's liabilities.  This is the division's biggest concern.                 
 This, coupled with the fact the division believes the existing                
 statutes already make a provision for forming something that will             
 do what an entity wants, was the division's biggest concern.                  
                                                                               
 Number 172                                                                    
                                                                               
 CO-CHAIR IVAN welcomed comments and questions from committee                  
 members.                                                                      
                                                                               
 Number 175                                                                    
                                                                               
 REPRESENTATIVE KOTT asked if there was a potential recommendation             
 or change that would bring the Division of Insurance in on this.              
                                                                               
 Number 183                                                                    
                                                                               
 MR. KOCH replied the division contended the statute in the                    
 insurance code which deals with reciprocal exchanges is their best            
 vehicle.  That has reduced capital on surplus requirements so they            
 wouldn't have to come up with the same kind of money you would                
 normally have with a stock insurer, for example, or a mutual                  
 insurer.  The owners of a reciprocal exchange are the members of a            
 reciprocal exchange.  There are reduced costs for operating a                 
 reciprocal exchange that don't exist with insurance companies                 
 because they don't have the same kind of management you would have            
 with a stock company.  Typically, the management of their insurance           
 arrangement is done through an attorney and that person conducts              
 operations for them, usually under some form of contract.  There              
 are currently two such organizations existing in the state and both           
 have been fairly successful.  One is the Alaska Timber Insurance              
 Exchange which was initially formed by the Alaska Loggers                     
 Association.  This has operated smoothly for at least 15 years.               
 They are able to offer rates to their members less than the going             
 market rate for other insurers.  The other organization is the                
 Alaska Rural Electrification Co-op Association (ARECA).  They                 
 insure around 15-16 power plants around the state that are members            
 of that particular exchange.  They have been operating successfully           
 for the last ten years.  The division is pleased with the operation           
 of both of those exchanges.  The division also amended the section            
 of law this reciprocal exchange appears to allow other cooperative            
 kinds of ventures at reduced levels of capital and surplus.  One              
 doesn't have to have large numbers of participants to do it.  One             
 of the ingredients one would typically find in these arrangements             
 is they have insurance and there is a very careful review of what             
 they are capable of bearing.  If there is no oversight on one of              
 these things, the division is very much concerned that people will            
 view it as insurance and not have the financial capability of                 
 withstanding a large loss.  Another concern the division has is               
 nonprofit corporations, who often enter into contracts with the               
 state, would present this as being their insurance coverage.  If              
 that vehicle were not sufficiently capitalized, one may find that             
 on audit, it won't hold up to the scrutiny of what the Feds think             
 ought to be an insurer and could lose any of those grants or kinds            
 of funds.  Mr. Koch believed it placed some things into real                  
 question.  The division would prefer to see something that has                
 financial oversight.  The division has examination teams and are in           
 often enough to ensure the entities are able to meet their                    
 obligations.  Mr. Koch said insurance is an agreement on paper to             
 pay some money at some future point given certain contingencies.              
 If that entity isn't sufficiently well healed to meet those kinds             
 of obligations, it has a problem.  He wanted to know who this would           
 fall back to.  If the state effectively creates this mechanism and            
 says `Do it,' who do they look to if the arrangement fails?  Other            
 insurers have guarantee funds to back them to make sure if one does           
 go down, one has some mechanism to support it.  The JIA doesn't               
 have this and relies on the participants.  This doesn't mean this             
 arrangement can't purchase insurance or excess insurance, but the             
 division is concerned with the solvency and structure of one of               
 those arrangements.                                                           
                                                                               
 Number 288                                                                    
                                                                               
 CO-CHAIR IVAN recognized the attendance of Representative Al Vezey.           
                                                                               
 Number 292                                                                    
                                                                               
 CO-CHAIR ALAN AUSTERMAN asked if the division was concerned about             
 entities other than a municipality entering an arrangement without            
 being secure or solvent.                                                      
                                                                               
 Number 300                                                                    
                                                                               
 MR. KOCH said a municipality was more secure in the sense if the              
 entity had a demand on cash they had a tax base to fall back on.              
 This was the division's view when this issue was originally thought           
 up.  The argument presented at that time was if there was a                   
 deficiency, either in the insurance mechanism they had for                    
 themselves or in the sharing of liabilities, there was always a tax           
 base to go back to.                                                           
                                                                               
 Number 313                                                                    
                                                                               
 CO-CHAIR IVAN asked if there had been requests by local                       
 municipalities in Alaska and/or tribal governments for the                    
 division's assistance or direction on how to address their                    
 insurance needs.                                                              
                                                                               
 Number 320                                                                    
                                                                               
 MR. KOCH replied the division occasionally received questions, but            
 not typically from municipalities or Native corporations.  The                
 division has had questions arise from nonprofit corporations and              
 the common complaint is it costs too much.  The legislature made              
 some revisions to the tort system to provide some level of immunity           
 for the officers of nonprofit corporations so they are not as                 
 exposed as they used to be.  To some degree it alleviates the                 
 problem, being it is almost inherent in a nonprofit corporation,              
 they are not going to be sufficiently well-healed to meet the kinds           
 of liabilities they may be exposed to in doing what they do.  The             
 division tries to tell them ways to go about buying insurance and             
 will provide what help they can.  The division can generally find             
 a broker where they might be able to find the kinds of coverage               
 they want.  The cost of that coverage is a problem as the cost of             
 that insurance has to cover the losses that arise out of it.                  
                                                                               
 Number 345                                                                    
                                                                               
 REPRESENTATIVE AL VEZEY asked where the risk is.  This isn't                  
 referring to pooling together to buy insurance.                               
                                                                               
 Number 348                                                                    
                                                                               
 MR. KOCH replied this was pooling together to cover each other's              
 liabilities and the entity could either do this through purchase of           
 insurance or by insuring themselves.                                          
                                                                               
 Number 351                                                                    
                                                                               
 REPRESENTATIVE VEZEY said if they insure themselves, then they have           
 to meet the requirements of a self-insured entity.                            
                                                                               
 Number 353                                                                    
                                                                               
 MR. KOCH stated that under this arrangement they don't.  The JIA              
 doesn't have to meet the standards of self-insurance requirements.            
 The way this statute is structured, the entity is considered to be            
 the insurer, but isn't one in fact.  If what the groups are trying            
 to do is combine as a purchasing power, there are ways to do this             
 under existing statute.  One of the most common ways is if an                 
 entity has an association, they can purchase as a group.  If the              
 entity has an association that has a safety plan, they have another           
 purpose other than insurance, they then can under existing statute            
 buy insurance as a group.  They have to find a buyer, but they can            
 do it.  The division's problem with this proposal is it lets the              
 entity be their own insurer.  The JIA is not just a purchasing unit           
 but shares each other's liabilities as well.  This is a big                   
 difference.                                                                   
                                                                               
 Number 375                                                                    
                                                                               
 REPRESENTATIVE VEZEY asked about a section of statute he didn't               
 have in front of him.                                                         
                                                                               
 Number 377                                                                    
                                                                               
 MR. KOCH listed the statute called AS 21.36.190 pertaining to                 
 fictitious groups.  There are provisions within this statute that             
 describe the conditions under which an entity could purchase as a             
 group.  If this isn't clear enough, it's a good point of attack to            
 revise so one could have the purchasing group.   There was also a             
 federal law, the Product Liability Act, that set up risk retention            
 and risk purchasing groups.  Already existing under federal law is            
 the ability for nonprofit corporations to gather as a purchasing              
 group and buy insurance as a mechanism but not to insure.                     
                                                                               
 Number 390                                                                    
                                                                               
 REPRESENTATIVE VEZEY said he didn't understand we had statutes                
 allowing municipalities and certain public corporations to self-              
 insure without meeting insurance requirements.  He thought the                
 government would get into a big lawsuit with this.                            
                                                                               
 Number 393                                                                    
                                                                               
 MR. KOCH said this was what the JIA did and while they were not               
 required to do it that way, they were enabled to do it this way by            
 statute.                                                                      
                                                                               
 Number 396                                                                    
                                                                               
 REPRESENTATIVE VEZEY asked why the city of Fairbanks got in a big             
 dispute with the Department of Labor over not being adequately                
 insured under their self-insurance program.                                   
                                                                               
 Number 399                                                                    
                                                                               
 MR. KOCH replied he could only assume they weren't part of the JIA            
 and they were depending upon their own resources for their self-              
 insurance application.  When a self-insurance application is made             
 to the Department of Labor (DOL), the DOL looks at the resources of           
 that self-insured to see if the entity would meet its obligations.            
 The DOL wants to see enough cash flow and support for the shock               
 loss through excess coverage or insurance to satisfy the entity so            
 they are able to meet their obligations in the future.                        
                                                                               
 Number 413                                                                    
                                                                               
 CO-CHAIR IVAN stated he would appreciate knowing the division's               
 position prior to the hearing.  He referred to Mr. Koch's                     
 statements on these municipalities that have a tax base to fall on.           
 He said that he understood the existing REAAs did not have a tax              
 base to fall on in rural Alaska.  He couldn't see how these                   
 nonprofit organizations incorporated under the state or Native                
 associations couldn't participate.  Insurance fears of the unknown            
 have always been a hinderance to development and activities that              
 could have potential.  Some of these organized municipalities try             
 to provide these basic services to citizens in that community and             
 in the area.  The committee's interest through this legislation is            
 to give them that opportunity to further expand some of the                   
 services they could provide.                                                  
                                                                               
 Number 440                                                                    
                                                                               
 MR. KOCH said his purpose in saying what has been said so far is              
 not to oppose that notion.  He said the REAAs are viewed as reliant           
 on the tax base of the state itself.  Municipalities obviously have           
 their own.  The division did see a distinction, but if what the               
 legislature is intending to do is allow a greater voice in purchase           
 in terms of pooling the entity's resources to buy insurance, it is            
 a very easy thing to accomplish and there is an existing audit that           
 would do this.  The division's concern is by placing it in this               
 particular statute, this mechanism not only allows the purchase of            
 the arrangement, it allows an insuring arrangement by those same              
 entities.  In effect, with this language, a group of nonprofits               
 could come together and say they were going to insure each other              
 and not go out and buy anything but just insure each other.  The              
 argument currently is they don't have the resources to buy it so              
 how are they going to be able to meet the obligations if a suit               
 comes along.  They won't take down just the one, but would take               
 down all the participants, too.  As far as the purchase mechanism,            
 there is a federal statute that helps and if need be, further                 
 revision to 21.36.190.  The division could help draft some language           
 that would meet needs in that area.  The purpose of the division is           
 not to oppose what is described as the intent of encouraging people           
 to better their lives.                                                        
                                                                               
 Number 471                                                                    
                                                                               
 REPRESENTATIVE KIM ELTON asked what happened to the exposure of               
 those people already participating in the Alaska Municipal League,            
 Joint Insurance Association (AML/JIA).  It seemed their exposure              
 increased with the additions made in this legislation.                        
                                                                               
 Number 478                                                                    
                                                                               
 MR. KOCH responded if these entities were joined into the same                
 pooling arrangement, they would have their exposures added to                 
 whatever else the municipalities were in.  This statute says any              
 one of these groups could form a JIA.  The JIA isn't a single                 
 mechanism of which only one currently exists, but the statute                 
 language didn't require just one.  The JIA would have to react to             
 how they would feel about having other entities join their                    
 arrangement.                                                                  
                                                                               
 Number 491                                                                    
                                                                               
 CO-CHAIR IVAN asked if committee members had any questions.  He               
 invited Steve Wells to testify.                                               
                                                                               
 Number 496                                                                    
                                                                               
 STEVE WELLS, Director of Risk Management, Alaska Municipal League,            
 Joint Insurance Association (AML/JIA), disagreed with the                     
 division's insurance analysis of HB 223.  He stated that about 7              
 percent of cities in the United States self-insure or pool                    
 providing they have chosen this mechanism to cover their various              
 losses.  The intent is to bring in those intertwined in local                 
 governments to join the poolings.  Currently, there are about 400             
 pools nationwide covering a variety of districts and not one                  
 failure in the 20 years of pooling existence.  Insurance companies            
 can't make this statement proving that pooling is quite successful            
 by creating conservative cohesiveness.  He believed having risk               
 retention groups was a good idea.  He said the AML/JIA sees a need            
 for small entities to pool together to provide public services but            
 can't because they are too small.  The AML/JIA is a $16 million               
 operation, with a $1.1 million budget and was canceled this year              
 due to being too small, so small groups are having a difficult time           
 with insurance.  HB 223 brings in small groups allowing them to               
 pool by bringing them into an organization creating stable                    
 coverage.                                                                     
                                                                               
 Number 550                                                                    
                                                                               
 REPRESENTATIVE VEZEY said this bill talks about a current statute             
 providing for JIA in which municipalities self-insure without                 
 meeting the necessary requirements.                                           
                                                                               
 Number 555                                                                    
                                                                               
 MR. WELLS said current legislation allows the small entity to self-           
 insure and pool and help cover the load of one entity's loss.                 
 Pooling takes the place of insurance throughout the nation and not            
 just in Alaska because the program was structured to succeed.                 
                                                                               
 Number 570                                                                    
                                                                               
 REPRESENTATIVE VEZEY stated the statutes for municipalities fall              
 under this category aren't the same for any other entity wishing to           
 self-insure.  The entity would be required to show assets to cover            
 their insurance exposure, but the Division of Insurance states that           
 municipalities are allowed to use their tax base as an asset.  He             
 wondered if municipalities were given a special standard lesser               
 than a poor profit corporation wishing to self-insure.                        
                                                                               
 Number 578                                                                    
                                                                               
 MR. WELLS asked if Representative Vezey questioned the operation of           
 a pooling arrangement.                                                        
                                                                               
 Number 579                                                                    
                                                                               
 REPRESENTATIVE VEZEY said there was a variety of arrangements under           
 the statutes, pooling, assuming risks and other options.                      
                                                                               
 Number 582                                                                    
                                                                               
 MR. WELLS said requirements for pooling was an annual audit and               
 proof that the program was funded appropriately.  These                       
 requirements are built into the current statute, but bylaws and               
 cohesive units are necessary to have a pooling.                               
                                                                               
 Number 585                                                                    
                                                                               
 REPRESENTATIVE VEZEY stated the operative word was funding.  The              
 entity didn't have to fund the program but HB 223 gives the                   
 government entity special consideration due to their standing.                
                                                                               
 Number 588                                                                    
                                                                               
 MR. WELLS said pooling arrangements had to fund the program or it             
 can't exist.  Upon the creation of a pool, actuaries are hired and            
 a rate is stated that will fund the program.  The rate is charged             
 to fund the self-insurance portion and the insurance and                      
 administrative costs.  The pooling arrangement has to be fully                
 funded before it can be started.                                              
                                                                               
 Number 596                                                                    
                                                                               
 CO-CHAIR IVAN asked if the committee had any other questions or               
 comments.  He asked if there were any other witnesses wishing to              
 testify on HB 223.  He asked the desire of the committee concerning           
 HB 223.                                                                       
                                                                               
 Number 606                                                                    
                                                                               
 REPRESENTATIVE ELTON made a motion to move the bill out of                    
 committee with the attached zero fiscal note and individual                   
 recommendations, only because he was on the next committee of                 
 referral.  It would give him the opportunity to follow up with the            
 Division of Insurance to see their intent.  He was willing to                 
 concede to the wishes of the bill sponsor.                                    
                                                                               
 Number 612                                                                    
                                                                               
 CO-CHAIR IVAN asked the Division of Insurance to work with the                
 AML/JIA agency to make an opportunity to further discuss HB 223.              
 He said he would hold the bill until further discussions could be             
 held.                                                                         
                                                                               
 Number 619                                                                    
                                                                               
 REPRESENTATIVE KOTT stated he was going to object to the motion               
 posed by Representative Elton.  He said he thought he understood              
 the intent of the committee, but after the testimony given by Mr.             
 Wells, he believed there was confusion between the parties.                   
                                                                               
 Number 628                                                                    
                                                                               
 CO-CHAIR IVAN said he would hold the bill to allow for more                   
 opportunity for coordination between all agencies.                            
                                                                               
 Number 629                                                                    
                                                                               
 REPRESENTATIVE VEZEY stated there was a movement across the nation            
 for public entities to turn their operations over to certain                  
 segments of their systems to for-profit corporations for                      
 management, including schools districts, sanitation, etc.  He's               
 heard of cities that have turned their entire management over to              
 for-profit corporations.  He suggested instead of considering                 
 nonprofit corporations the bill just refer to other persons,                  
 following the statute definition of persons.                                  
                                                                               
 Number 641                                                                    
                                                                               
 CO-CHAIR IVAN again stated the bill would be held over for further            
 consideration.  He invited any last minute comments before                    
 proceeding to the next item on the agenda, HB 192.                            
                                                                               
 HCRA - 03/16/95                                                               
 HB 192 - AHFC HOUSING LOANS                                                  
                                                                               
 CO-CHAIR IVAN asked for a motion to adopt the proposed committee             
 substitute for HB 192.                                                        
                                                                               
 Number 656                                                                    
                                                                               
 REPRESENTATIVE KOTT made the motion to adopt the committee                    
 substitute.                                                                   
                                                                               
 CO-CHAIR IVAN heard no objections and it was so ordered.  He                  
 invited Representative Foster to introduce HB 192.                            
                                                                               
 Number 658                                                                    
                                                                               
 REPRESENTATIVE RICHARD FOSTER expressed his appreciation at the               
 willingness of the committee to hear his bill.  He honored the                
 presence of all the veterans in the audience.  He stated HB 192               
 didn't change the Alaska Housing Finance Corporation's (AHFC) role            
 of retaining control of final approval of loans, but allows                   
 regional housing authorities the power to make, originate and                 
 service loans within their jurisdiction, making home mortgages                
 available for rural Alaskans.  HB 192 also changes the percentage             
 of matching amounts from 20 to 30 percent, and the amount of monies           
 available in the bush hasn't been enough to leverage the balance of           
 the federal monies.  In the current fiscal year, AHFC has                     
 contributed $8 million corporate funds to 11 regional housing                 
 authorities to leverage $48.8 million in HUD funds resulting in the           
 building of 259 homes in 19 villages.  He stated his staff aide,              
 Elizabeth Dronkert, would also be available to help answer                    
 questions.                                                                    
                                                                               
 Number 690                                                                    
                                                                               
 CO-CHAIR IVAN asked if committee members had any questions.                   
                                                                               
 Number 692                                                                    
                                                                               
 REPRESENTATIVE FOSTER stated that an identical bill passed through            
 the House, 38-1 last year, but HB 192 was in better form.                     
                                                                               
 Number 696                                                                    
                                                                               
 REPRESENTATIVE KOTT asked about Representative Foster's reference             
 to last year's `identical' bill.                                              
                                                                               
 Number 698                                                                    
                                                                               
 CO-CHAIR IVAN stated programs like AHFC are taken advantage of in             
 more urban areas.  Rural Alaskans find costs too high to                      
 participate in, but Co-Chair Ivan has received comments from rural            
 citizens interested in expanding this program and HB 192 encourages           
 more rural participation.  This bill provides the economy an                  
 improvement of lifestyle in the rural areas for well-meaning                  
 families pursuing housing from this program.                                  
                                                                               
 Number 710                                                                    
                                                                               
 REPRESENTATIVE KOTT asked if there was anyone signed up to testify            
 who could answer questions pertinent to HB 192.                               
                                                                               
 TAPE 95-7, SIDE B                                                             
 Number 002                                                                    
                                                                               
 ELIZABETH DRONKERT, Legislative Aide to Representative Foster,                
 stated  Mr. Don Fauske, the new Chief Executive Officer, Alaska               
 Housing Finance Corporation, was available to help answer any                 
 questions.                                                                    
                                                                               
 Number 006                                                                    
                                                                               
 CO-CHAIR IVAN invited Don Fauske to testify, but Les Cambell spoke            
 on his behalf as Mr. Fauske wasn't currently present.                         
                                                                               
 Number 024                                                                    
                                                                               
 LES CAMBELL, Budget Specialist, Alaska Housing Finance Corporation            
 (AHFC), supported, on behalf of AHFC, HB 192.  The AHFC believed it           
 would be beneficial for the state of Alaska if passed.                        
                                                                               
 Number 039                                                                    
                                                                               
 CO-CHAIR IVAN asked for questions from committee members.                     
                                                                               
 Number 045                                                                    
                                                                               
 REPRESENTATIVE KOTT asked about the provision in Section 3 which              
 increased the percentage from 20 to 30, the amount dispersed in               
 developing a unit and what effects it would have on the overall               
 program as far as spreading the money evenly around categories                
 within the AHFC.  He also asked if the AHFC had the actual money.             
                                                                               
 Number 061                                                                    
                                                                               
 MR. CAMBELL stated that the AHFC had the corporate receipts to                
 provide funding for the assets added into the capital budget.  The            
 AHFC has currently submitted a request for 30 percent funds as the            
 federal funds are declining and this would leverage more state                
 funds toward the federal funds in order to bring it into the state.           
 He noted Don Foske's presence in the audience.                                
                                                                               
 Number 081                                                                    
                                                                               
 DAN FAUSKE, Chief Executive Officer, Alaska Housing Finance                   
 Corporation, said the fiscal amount was estimated to be around a $5           
 million change by moving from the 20 to the 30 percent contribution           
 level coming from corporate receipts, cash of the corporation from            
 programs managed in the past.  He said there were witnesses on                
 teleconference from Anchorage wishing to testify.  He stated to get           
 into more detail, he would need the information supplied by those             
 hooked onto the teleconference line.  The AHFC did discuss the                
 language in Section 1, subsections 1 and 2, where it has been                 
 changed.  The AHFC was concerned about the original wording of the            
 bill.                                                                         
                                                                               
 Number 091                                                                    
                                                                               
 CO-CHAIR IVAN stated there were several on-line waiting to testify.           
                                                                               
 Number 123                                                                    
                                                                               
 JUDY DESPAIN, Director, Operations, Alaska Housing Finance                    
 Corporation, testified via teleconference that Kay Murphy and Duane           
 White were on-line to help answer any questions.                              
                                                                               
 Number 125                                                                    
                                                                               
 MR. FAUSKE stated the language needed to be changed and came up               
 with an agreement between the AHFC employees and rural housing                
 authorities.  Originally, the bill would have created a situation             
 where loans could be initiated at 1 percent below market rate in              
 all areas and the AHFC wanted to change the wording to state in the           
 rural areas.  This was the AHFC's main concern with HB 192.                   
                                                                               
 Number 142                                                                    
                                                                               
 CO-CHAIR IVAN asked if there were any questions for Mr. Fauske.  He           
 invited Jacqueline Johnson to testify.                                        
                                                                               
 Number 156                                                                    
                                                                               
 JACQUELINE JOHNSON, Executive Director, Tlingit and Haida Regional            
 Authority, supported HB 192.  She explained the necessity of the              
 proposed increase.  The 20 percent was set up a long time ago, but            
 regional housing authorities develop a whole community upon the               
 development of housing.  The flexibility between 20 to 30 percent             
 is necessary to make a project work at a particular site which was            
 unable to be developed before.  She used the example in Craig,                
 where she waited three years to come up with additional funding               
 sources through different entities, during which citizens were                
 without money and the cost of construction rose.  She believed the            
 flexibility would help a rural community meet some of the public              
 responsibilities such as providing safe water and sewer services.             
 She mentioned another portion of the bill which addressed the                 
 ability for housing authorities seller services of the AHFCs loans.           
 Currently, several housing authorities are able to run a rural loan           
 program which used to be under Community and Regional Affairs                 
 before it merged with the AHFC.  Some other regional housing                  
 authorities aren't able to service the rural loan program because             
 the statutes state if there is an AHFC office within that area,               
 loans can't be serviced.  She said that by becoming a seller                  
 servicer for the AHFC loans, it is not in competition with banks              
 because the program markets to a different class of people.  The              
 AHFC markets toward those programs not profitable for a bank and in           
 many cases, the AHFC looks toward the reduction of Housing and                
 Urban Development (HUD) funds and potential lost HUD funds.  She              
 stated the AHFC was looking at other ways to leverage their money             
 to be able to meet their mandate of providing housing to low income           
 people.  She said it wasn't directed toward the Native Alaskan but            
 the AHFC had a public responsibility to the whole region.  To meet            
 this mandate, this program needs the flexibility to use equity                
 funds within the housing authority or use other public or private             
 funds to make loans happen and even be creative with the developing           
 to reduce the cost to smaller groups of people.  She stated                   
 requesting the flexibility was a reason to ensure the rural housing           
 authorities had the ability and right to utilize future programs              
 instigated by the AHFC.                                                       
                                                                               
 Number 229                                                                    
                                                                               
 CO-CHAIR IVAN asked committee members if they had questions or                
 comments.  He invited Bruce Kovarik from Nome to testify.                     
                                                                               
 Number 236                                                                    
                                                                               
 BRUCE KOVARIK, Executive Director, Bering Straits Regional Housing            
 Authority, testified via teleconference from Nome in support of HB
 192.  His housing authority serves 17 communities including Nome.             
 He stated the loan program providing federal funds for new housing            
 is not sufficient to meet the needs for housing in rural Alaska.              
 Alternative means for developing and financing new housing needed             
 to be found with substantial rehabilitation of existing substandard           
 housing.  He listed two provisions of HB 192 to help in this                  
 regard.  First, in terms of participation in the AHFC's loan                  
 programs, several currently available programs are severely under             
 utilized in rural Alaska.  The reason is village economics and the            
 lack of village access to information and basic mechanics of the              
 loan program.  He stated there were moderate income families who              
 could benefit from these programs and achieve their goals of home             
 ownership.  An accessible home loan would require more effort in              
 rural areas than in an urban community.  HB 192 would help                    
 regionalize the loan program and offer familiar faces to families             
 trying to participate in the loan programs.  Second, the expansion            
 of the supplemental housing grant program including all site sewer,           
 water and infrastructure facilities would benefit those in rural              
 communities.  He said that in every program they are promoting, the           
 housing authority was also developing the community.  Mr. Kovarik             
 believed the authorization of offsite sewer/water facilities in the           
 supplemental housing grant program would be helpful, but he would             
 still try to remain active in supporting the needs of the village             
 and village housing.                                                          
                                                                               
 Number 292                                                                    
                                                                               
 CO-CHAIR IVAN asked for questions from the committee.  He asked               
 whether there were others signed up to testify regarding HB 192.              
                                                                               
 Number 303                                                                    
                                                                               
 REPRESENTATIVE KOTT referred to page 3, which called for the AHFC             
 to establish a party system for the allocation of monies in advance           
 to pay the offsite water/sewer facility improvements authorized by            
 the statute.  He asked how the AHFC anticipated prioritizing the              
 projects.  He also mentioned the fiscal note didn't require                   
 additional personnel to be hired to work the projects.                        
                                                                               
 Number 318                                                                    
                                                                               
 MR. FAUSKE called on the staff who worked on this to answer the               
 question.                                                                     
                                                                               
 Number 326                                                                    
                                                                               
 MS. DESPAIN stated she understood it established the prime release            
 system and the job could be done with existing staff.                         
                                                                               
 Number 329                                                                    
                                                                               
 REPRESENTATIVE KOTT asked if Ms. DeSpain could give him a basic               
 idea on how a priority system would be set up for the allocation of           
 grant monies for the purpose of offsite sewer/water facility                  
 improvements.                                                                 
                                                                               
 Number 335                                                                    
                                                                               
 MS. DESPAIN stated the first priority considered would be the funds           
 available.  The allocation would be on a first come, first served             
 basis depending on the accessible funds.                                      
                                                                               
 Number 347                                                                    
                                                                               
 CO-CHAIR IVAN welcomed other questions or comments from the                   
 committee.  He asked the desire of the committee concerning HB 192.           
                                                                               
 Number 350                                                                    
                                                                               
 REPRESENTATIVE KOTT made a motion to pass CSHB 192(CRA) out of                
 committee with individual recommendations.                                    
                                                                               
 Number 354                                                                    
                                                                               
 CO-CHAIR IVAN heard no objections and it was so ordered.                      
                                                                               
 HCRA - 03/16/95                                                               
 HB 185 - MUNICIPAL PROPERTY TAX EXEMPTIONS                                   
                                                                               
 CO-CHAIR IVAN stated his staff aide, Tom Wright would present                
 changes made from the original bill.  He asked the committee to               
 entertain the motion to adopt the committee substitute for                    
 discussion purposes.                                                          
                                                                               
 Number 371                                                                    
                                                                               
 REPRESENTATIVE KOTT made a motion to adopt the committee substitute           
 for HB 185.                                                                   
                                                                               
 Number 372                                                                    
                                                                               
 CO-CHAIR IVAN heard no objection and it was so ordered.  He invited           
 Tom Wright to testify.                                                        
                                                                               
 Number 373                                                                    
                                                                               
 TOM WRIGHT, Legislative Aide to Representative Ivan, stated there             
 was a significant amount of requests for recommended changes from             
 the previous hearing on HB 185.  He stated the changes were                   
 incorporated into the new committee substitute and the first                  
 difference was the removal of the findings section as the current             
 committee substitute amended the senior citizens/disabled veteran             
 tax exemption program.  Mr. Wright stated the original bill deleted           
 the program and gave municipalities the option to retain a program            
 such as this.  The committee substitute reinstated the full                   
 exemption of $150 thousand for disabled veterans as it was removed            
 from the original bill, and provided an exemption for the                     
 widow/widower of a disabled veteran qualified for the exemption.              
 HB 185 originally deleted the senior citizen property tax exemption           
 program, but the committee substitute reduces this program from               
 $150 thousand to $75 thousand due to the compromise between the               
 Alaska Municipal League (AML) and the American Association of                 
 Retired Persons (AARP).  Section 1 of the committee substitute                
 exempts the value of property under the senior citizen/ disabled              
 veteran property tax exemption program when making a determination            
 of full value of the taxable real and personal property in each               
 city and borough district which determines the local effort that is           
 contributed toward education.  Mr. Wright said the last section in            
 the committee substitute allowed a municipality to exempt the                 
 assessed value of real property that exceeds the limits of $75                
 thousand for senior and $150 thousand for disabled veterans.  In              
 discussions with Steve Van Sant, the state assessor, Mr. Wright               
 said a recommendation was made, but was not incorporated into the             
 committee substitute.  On page 1, line 14 of the committee                    
 substitute, after AS 29.45.050(i), the wording added "up to $150              
 thousand" would ensure municipalities aren't penalized if they                
 decide to go above the $75 thousand and not be penalized as far as            
 the local contribution for education.  This would keep the current            
 funding mechanism in place.  He mentioned Steve Van Sant and Kevin            
 Ritchie, as well as other testifiers were waiting to comment on HB
 185.                                                                          
                                                                               
 Number 419                                                                    
                                                                               
 CO-CHAIR AUSTERMAN referred to page 1 and the proposed change in              
 wording recommended during a discussion between Steve Van Sant and            
 Mr. Wright.                                                                   
                                                                               
 Number 424                                                                    
                                                                               
 MR. WRIGHT restated the chosen wording suggested by the state                 
 assessor, Steve Van Sant.  He said he didn't have it drafted in               
 amendment form, but he wished to bring it to the committee's                  
 attention.                                                                    
                                                                               
 Number 428                                                                    
                                                                               
 REPRESENTATIVE KOTT asked what the reasoning was behind the change.           
                                                                               
 Number 429                                                                    
                                                                               
 MR. WRIGHT said its intent was to keep the current funding in                 
 place.  Currently, both the disabled veteran and senior citizen               
 property tax exemption is exempted up to $150 thousand.  The                  
 addition of the wording would not change the local contribution               
 effort from municipalities toward education.  This means less state           
 funding should a reduction to $75 thousand be made.                           
                                                                               
 Number 436                                                                    
                                                                               
 REPRESENTATIVE ELTON asked why Mr. Wright was adopting a position             
 requiring an affirmative vote from the municipality voters.  It               
 would take an ordinance, then an affirmative vote from the                    
 municipality to raise the exemption back to $150 thousand.  He                
 questioned why it wasn't done in the reverse in the compromised               
 committee substitute which would take an ordinance, then an                   
 affirmative vote to reduce the exemption.                                     
                                                                               
 Number 447                                                                    
                                                                               
 MR. WRIGHT deferred the question to Kevin Ritchie.                            
                                                                               
 Number 449                                                                    
                                                                               
 CO-CHAIR IVAN invited Kevin Ritchie to testify after asking the               
 committee if they had other questions for Mr. Wright.                         
                                                                               
 Number 453                                                                    
                                                                               
 KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML),             
 emphasized the intent of the original bill which allowed                      
 municipalities a full option on whether to continue the exemption.            
 The committee substitute is a compromise for seniors only, which              
 still retains a mandatory $75 thousand exemption and also provides            
 a process for municipalities to exempt above that amount.  This               
 allowance currently exists in the statutes.  He stated the AML                
 didn't have a preference whether by ordinance or ordinance approved           
 by the municipal voters to increase the exemption over the                    
 mandatory amount.  He said the intent of HB 185 was to shift the              
 issue back to municipalities and allow them to renew their program            
 by removing the current mandatory exemption on the part of the                
 state.                                                                        
                                                                               
 Number 472                                                                    
                                                                               
 REPRESENTATIVE ELTON said one could give the municipality the                 
 option in two ways:  Changing by ordinance and going down or                  
 setting up $75 thousand and allowing it to go up.  He wanted to               
 know the reasoning behind the suggestion.                                     
                                                                               
 Number 479                                                                    
                                                                               
 MR. RITCHIE stated mandatory exemptions start out at zero unless a            
 community states it wants to do something rather than require a               
 municipality vote on an issue.  He said the original bill stated              
 municipalities start from zero and optionally adopt a program.  He            
 emphasized the provisions that AML had placed in the bill ensured             
 municipalities aren't penalized if they wished to create the                  
 exemption.  Optional exemptions still require figuring in the value           
 of exempted property for the purpose of figuring out school                   
 foundation and revenue sharing formulas which could decrease state            
 support to municipalities.                                                    
                                                                               
 Number 493                                                                    
                                                                               
 REPRESENTATIVE ELTON followed up with his concern that it is one              
 thing if the exemption is changed by ordinance, but if the change             
 is required by ordinance and a vote of the people, the AML would be           
 pitting senior citizens against other property tax payers.  He                
 wondered if there would be a problem with removing the language by            
 vote.                                                                         
                                                                               
 Number 503                                                                    
                                                                               
 MR. RITCHIE said probably not.  He said the issue of how law                  
 occurred on a local level was a democratic process with input from            
 everyone during the process.  It was an option that wouldn't                  
 counter the intent of HB 185.  He wasn't aware of the AML position            
 regarding this, but it wasn't necessarily a problem.                          
                                                                               
 Number 514                                                                    
                                                                               
 CO-CHAIR IVAN invited questions and comments from committee                   
 members.  He invited Steve Van Sant to testify.                               
                                                                               
 Number 517                                                                    
                                                                               
 STEVE VAN SANT, State Assessor, Community and Regional Affairs,               
 testified via teleconference from Anchorage, and pointed out the              
 suggested language for page 1, line 14, which would keep the status           
 quo.  Currently, all value of the seniors and disabled veterans up            
 to $150 thousand are excluded from the full value determination.              
 This determination is used for educational funding and revenue                
 sharing.  The language does create an inequity between the seniors            
 and disabled veterans by creating one exemption at $75 thousand and           
 the other at $150 thousand.  He referred to Representative Elton's            
 comments concerning approval by the voters and he said the language           
 was originally put in because the voters would have had to pick up            
 the cost.  In today's economy the state only pays about 6.8 percent           
 of the total taxes exempted.  Anything exempted over $75 thousand             
 the voter/taxpayer would have to pick up.  He believed this was an            
 attempt to give the voter the opportunity to ask whether they                 
 wanted to cover the extra cost.  This was how the language was                
 originally written.                                                           
                                                                               
 Number 540                                                                    
                                                                               
 CO-CHAIR IVAN asked for comments or questions from the committee              
 members.  He invited Tom Pitman to testify.                                   
                                                                               
 Number 543                                                                    
                                                                               
 TOM PITMAN, Municipal Assessor, Municipality of Anchorage,                    
 testified via teleconference from Anchorage, stating he had                   
 reviewed the committee substitute, and the position of Anchorage              
 was to bring attention to comments already stated, in that it                 
 appeared to be inequitable.  He said the municipality of Anchorage            
 was neutral on HB 185, as it was currently written.                           
                                                                               
 Number 549                                                                    
                                                                               
 CO-CHAIR IVAN invited Pat Carlson to testify.                                 
                                                                               
 Number 552                                                                    
                                                                               
 PAT CARLSON, Assessor, Kodiak Island Borough; and President, Alaska           
 Association Assessing, testified via teleconference from Kodiak in            
 support of HB 185.  He appreciated the authority given on a local             
 level to go ahead and exempt those in need.  He stated he was                 
 concerned about the inequity between the seniors and disabled                 
 veterans, but Kodiak currently didn't have exemptions for disabled            
 citizens.  He believed everyone should be treated on a level plane.           
                                                                               
 Number 564                                                                    
                                                                               
 CO-CHAIR IVAN asked for questions or comments from the committee.             
 He invited Jane Demmert to testify.                                           
                                                                               
 Number 567                                                                    
                                                                               
 CONNIE SIPE, Director, Division of Senior Services, stated Jane               
 Demmert was a new member to the Alaska Commission on Aging, which             
 is part of the Division of Senior services.  She said her testimony           
 was similar to that of the Community and Regional Affairs testimony           
 from the week before.  She stated she hadn't taken an official                
 position, but was concerned and appreciated the compromise.  The              
 uniform mandatory exemption of the first $75 thousand of valuations           
 would assist the most vulnerable seniors who are low income but               
 lucky enough to still own their home.  The Commission on Aging, the           
 Division of Senior Services, believed there should be a local                 
 option in the section of the committee substitute that allows a               
 city to exempt up to $150 thousand.  She would be interested in               
 language similar to the original HB 185 allowing that additional              
 option be based on hardships so cities could recognize them.  She             
 said if there was going to be a local option to go up to the $150             
 thousand valuation exemption.  She suggested having a provision               
 where the senior could get the full valuation exemption or the city           
 could put in an additional hardship option.  Ms. Sipe said this               
 language was in the option section in the original HB 185.  The               
 exemption could be based on hardship criteria each city would                 
 establish.  As Representative Elton pointed out, if cities have to            
 pass an ordinance the voters had to then affirmatively vote to pass           
 it, there might be a different political climate and reception to             
 the idea of a valuation exemption at $150 thousand for all seniors.           
 This perhaps would fail in some cities, but voters might be willing           
 to pass a hardship exemption.  Another provision examined by                  
 seniors would be if a hardship provision is inserted, they would              
 like cities to do it with some amount of confidence rather than               
 introduced by a senior at city council.  She suggested language               
 that if a hardship exemption is instituted by cities, the action on           
 the hardship exemption request could be treated as an exception to            
 the open meeting laws.                                                        
                                                                               
 Number 630                                                                    
                                                                               
 CO-CHAIR IVAN asked for questions or comments from committee                  
 members.  He invited Gene Daw to testify.                                     
                                                                               
 Number 637                                                                    
                                                                               
 GENE DAW, VFW, DAV, AARP, stated he opposed the original HB 185,              
 but currently supported the committee substitute to HB 185.   He              
 approved the changes because it would be treating disabled veterans           
 as a status quo.  He was unhappy with the $75 thousand limit                  
 imposed on senior citizens because many veterans fall into that               
 category but don't qualify for coverage under the disabled veterans           
 exemptions.  He would go along with the committee substitute.  He             
 wanted the committee to think and realize absolutely nothing could            
 overshadow or replace what veterans have done for the United                  
 States.  He said to consider what senior citizens over the age of             
 65 have done for the state of Alaska.                                         
                                                                               
 Number 663                                                                    
                                                                               
 CO-CHAIR IVAN welcomed others to testify on HB 185.                           
                                                                               
 Number 669                                                                    
                                                                               
 JOHN HOPE, Alaska Native Brotherhood (ANB), was standing in for the           
 president of the Grand Camp Executive Committee, who couldn't make            
 it.  He opposed HB 185 in its modified condition.  He said the                
 problem with penalizing other people is they already have made a              
 major contribution to the state.  He started paying taxes over 50             
 years ago, including school taxes even though his children couldn't           
 go to school.  Those being hurt are those that love Alaska and want           
 to stay.  He said that as a senior citizen, expenses piled up and             
 one had to pay according to importance of the bills.                          
                                                                               
 Number 702                                                                    
                                                                               
 REPRESENTATIVE ELTON stated the seniors were one age group that               
 paid state income taxes when there was a tax to be paid.                      
                                                                               
 TAPE 95-8, SIDE A                                                             
 Number 000                                                                    
                                                                               
 CO-CHAIR IVAN asked if there were others wishing to testify on HB
 185.  He asked for questions or comments from committee members or            
 the desire of the committee concerning HB 185.                                
                                                                               
 Number 005                                                                    
                                                                               
 REPRESENTATIVE KOTT referred to comments made about inequity which            
 he believed was a concern.  He wasn't sure whether this bill                  
 violated the equal protection clause, not only in Alaska's                    
 Constitution but also in the U.S. Constitution.  He believed the              
 bill didn't, as it wasn't taking away their fundamental rights or             
 segregating people.  He noted that this bill didn't challenge                 
 anything constitutionally.                                                    
                                                                               
 Number 030                                                                    
                                                                               
 REPRESENTATIVE ELTON said he had considerable concerns over HB 185            
 pointing out two things.  First, he would rather have the                     
 compromise language require a municipality take an affirmative                
 action to reduce the exemption to $75 thousand rather than an                 
 affirmative action to boost it up to $150 thousand.  Second, he's             
 concerned about leaving in the provision that requires an ordinance           
 by the people.  He said mandated elections pitting one class of               
 property taxpayers against another was not good.  He wasn't sure if           
 removing voting requirements was doing something bad.  He's                   
 bothered by the fact HB 185 makes a backwards affirmative and by              
 the fact a vote of the people is required to increase it.  He                 
 believed this provision could lead to an ugly electoral situation.            
                                                                               
 Number 073                                                                    
                                                                               
 CO-CHAIR IVAN believed these to be good points.  He stated the                
 bill's intent was to give as much local control and option to                 
 municipalities in the state.  He said they were closer to their               
 governing bodies and were more aware of their local concerns.  He             
 wanted under the unfunded mandate to give local municipalities all            
 the options available.  He believed the government should give                
 local municipalities a chance to govern their future.  He said                
 there was an open process at every level for individuals and groups           
 to address these issues.                                                      
                                                                               
 Number 111                                                                    
                                                                               
 REPRESENTATIVE ELTON said neither suggestions removes the ability             
 of a municipality to make those decisions.  He listed two                     
 amendments, the first being on page 3, line 1 of the committee                
 substitute, to delete after the word "ordinance" the words                    
 "approved by the voters".  He said the effect of this amendment               
 would be a municipality can make a decision on adding back in above           
 the $75 thousand level to the $150 thousand.  This decision could             
 be made by ordinance rather than be required to make it by                    
 ordinance and a vote.  He made a motion to move the amendment.                
                                                                               
 Number 153                                                                    
                                                                               
 CO-CHAIR IVAN heard no objection, and it was so ordered.                      
                                                                               
 Number 154                                                                    
                                                                               
 REPRESENTATIVE ELTON discussed his second proposed amendment.  This           
 would be on page 2, lines 16, 17, 18 and 19 up to the words                   
 "limited to".  At the end of line 19 after the word "property," he            
 added the words "unless a municipality by ordinance lowers the                
 exemption to an amount not less than $75 thousand for individuals             
 who qualify under 1 or 3 of the Subsection."  He read the new                 
 language as being "The real property owned and occupied is a                  
 primary residence and permanent place of abode by a 1) resident 65            
 years of age or older, 2) disabled veteran, 3) resident at least 60           
 years old who is the widow or widower of a person who qualified for           
 an exemption under 1 of the Subsection."  Deleted would be the                
 words "or 2."  Continuing, "or 4) resident at least 60 years old              
 who is the widow or widower of a person who qualified for an                  
 exemption under 2 of this Subsection, is exempt from taxation on              
 the first $150 thousand of assessed value of the real property                
 unless a municipality by ordinance lowers the exemption to an                 
 amount not less than $75 thousand for individuals who qualify under           
 1 or 3 of this Subsection."  Representative Elton stated the effect           
 of this amendment would be municipalities would still have a choice           
 and still could lower to $75 thousand the amount of property tax              
 exempted for senior citizens.  Instead of this being automatic, the           
 municipality would have to do this by ordinance.   It would remain            
 at $150 thousand unless a municipality decided to lower it to $75             
 thousand or any amount in between.                                            
                                                                               
 Number 215                                                                    
                                                                               
 CO-CHAIR IVAN invited Mr. Ritchie to come forward again to comment            
 on the proposed amendments.                                                   
                                                                               
 Number 217                                                                    
                                                                               
 MR. RITCHIE stated the first amendment would be acceptable because            
 a municipality could choose to have an election, thereby not taking           
 away from the municipality.  He said the whole issue of a mandate             
 shouldn't exist today and the idea behind the bill was to start               
 from ground zero and guarantee a $75 thousand exemption which is              
 still a mandate and isn't within the purview of the municipalities            
 to do anything about it.  Every community would start from the same           
 place and discuss whether they wanted to provide an exemption and             
 whether it should be based on hardship or be a general exemption or           
 be any certain amount.  He said the state didn't have this to give            
 away as it would be paid for by the municipalities.  The agreement            
 reached by the AARP and the AML was a way of stepping forward in              
 which $75 thousand was the set rate and each community start over             
 to determine the final outcome.  The amendment turns around the               
 intent of this compromise, so the AML would not be in support of              
 the second amendment.                                                         
                                                                               
 Number 248                                                                    
                                                                               
 REPRESENTATIVE ELTON responded the option would still be there.  He           
 said it was easy to start at ground zero with $75 thousand being              
 the lowest, but he looked at it as ground zero being $150 thousand            
 and something was being taken away.  He said the municipality would           
 have the choice of reducing it.  His amendment states the benefit             
 would now be $150 thousand and if a municipality wished to drop it,           
 it would take an ordinance taken through the municipal assembly.              
 He believed this would save some municipalities from a bit of                 
 debate because some may under the current language, wish to restore           
 the exemption back to $150 thousand and undergo an ordinance to do            
 so.                                                                           
                                                                               
 Number 273                                                                    
                                                                               
 MR RITCHIE said there was not another negative option he was aware            
 of that is provided in the property tax code.                                 
                                                                               
 Number 276                                                                    
                                                                               
 CO-CHAIR IVAN said he wouldn't consider the amendment but would               
 leave it up to the desire of the committee.                                   
                                                                               
 Number 284                                                                    
                                                                               
 REPRESENTATIVE ELTON made a motion to have the committee accept his           
 proposed second amendment.                                                    
                                                                               
 Number 286                                                                    
                                                                               
 REPRESENTATIVE KOTT objected.                                                 
                                                                               
 Number 289                                                                    
                                                                               
 CO-CHAIR IVAN tried to sense what the committee desired.  Co-Chair            
 Ivan asked for a show of hands.  The amendment failed due to the              
 majority of no's.  He asked about the desire of the committee                 
 concerning the amended committee substitute for HB 185.                       
                                                                               
 Number 296                                                                    
                                                                               
 REPRESENTATIVE KOTT asked about the first amendment discussion he'd           
 missed.                                                                       
                                                                               
 Number 302                                                                    
                                                                               
 MR. WRIGHT stated there was another amendment earlier suggested by            
 the state assessor, Mr. Van Sant.                                             
                                                                               
 Number 313                                                                    
                                                                               
 CO-CHAIR IVAN asked if there were any objections to the conceptual            
 motion.                                                                       
                                                                               
 Number 316                                                                    
                                                                               
 REPRESENTATIVE KOTT stated the motion was to coalesce with the                
 assessor to insert on page 1, line 14, after plan 45.050 "(i) up to           
 $150 thousand".  The amendment was adopted with unanimous consent.            
                                                                               
 Number 324                                                                    
                                                                               
 CO-CHAIR IVAN said he would hold HB 185 and reschedule it.  He                
 expressed his appreciation for the testimony given by all                     
 testifiers.  He listed the agenda for the Tuesday, March 21                   
 meeting.                                                                      
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CO-CHAIR IVAN adjourned the House Community and Regional Affairs              
 Committee at 3:00 p.m.                                                        
                                                                               

Document Name Date/Time Subjects