Legislature(1995 - 1996)

03/07/1996 01:34 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 7, 1996                                         
                           1:34 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Ivan Ivan, Co-Chair                                            
 Representative Alan Austerman, Co-Chair                                       
 Representative Jerry Mackie                                                   
 Representative Kim Elton                                                      
 Representative Al Vezey                                                       
 Representative Pete Kott                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Irene Nicholia                                                 
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 * HOUSE BILL NO. 474                                                          
 "An Act relating to violations of municipal ordinances and                    
 regulations; and amending the definition of the jurisdiction of the           
 superior court and the Department of Health and Social Services               
 over delinquent minors to add a further exclusion from that                   
 jurisdiction for a minor's violation of a municipal ordinance or              
 regulation that is punishable as an infraction or violation, and              
 making a related technical amendment to that jurisdictional                   
 definition."                                                                  
                                                                               
      -  PASSED OUT OF COMMITTEE                                               
                                                                               
 * HOUSE BILL NO. 488                                                          
 "An Act relating to matching funds requirements for municipal                 
 school construction grants."                                                  
                                                                               
      -  HEARD AND HELD                                                        
                                                                               
 CS FOR SENATE BILL NO. 54(RLS) am                                             
 "An Act relating to exclusive service areas for utilities                     
 certificated to provide electric utility service and to the                   
 definition of `general public' for utilities furnishing electric              
 service; and relating to employees and terms of members of the                
 Alaska Public Utilities Commission."                                          
                                                                               
      -  HEARD AND HELD; ASSIGNED TO SUBCOMMITTEE                              
                                                                               
 (* First public hearing)                                                      
                                                                               
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 474                                                               
 SHORT TITLE: VIOLATIONS OF MUNICIPAL ORDINANCES & REGS                        
 SPONSOR(S): REPRESENTATIVE(S) TOOHEY, Kelly                                   
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 02/07/96      2648    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/07/96      2649    (H)   CRA, HES, JUDICIARY                               
 02/28/96      2944    (H)   COSPONSOR(S): KELLY                               
 02/29/96              (H)   CRA AT  1:00 PM CAPITOL 124                       
 02/29/96              (H)   MINUTE(CRA)(cancelled meeting)                    
 03/07/96              (H)   CRA AT  1:30 PM CAPITOL 124                       
                                                                               
 BILL:  HB 488                                                               
 SHORT TITLE: SCHOOL DISTRICT MATCHING FUND REQUIREMENT                        
 SPONSOR(S): REPRESENTATIVE(S) LONG, Foster                                    
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 02/09/96      2693    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/09/96      2693    (H)   CRA, HES, FINANCE                                 
 02/19/96      2813    (H)   COSPONSOR(S): FOSTER                              
 02/29/96              (H)   CRA AT  1:00 PM CAPITOL 124                       
 02/29/96              (H)   MINUTE(CRA)(cancelled meeting)                    
 03/07/96              (H)   CRA AT  1:30 PM CAPITOL 124                       
                                                                               
 BILL:  SB  54                                                               
 SHORT TITLE: ELECTRIC UTIL SERVICE/ APUC                                      
 SPONSOR(S): LABOR & COMMERCE BY REQUEST                                       
                                                                               
 JRN-DATE     JRN-DATE             ACTION                                      
 01/26/95        95    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 01/26/95        95    (S)   STA, L&C, FIN                                     
 02/14/95              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 02/14/95              (S)   MINUTE(STA)                                       
 02/21/95              (S)   MINUTE(STA)                                       
 03/09/95              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 03/09/95              (S)   MINUTE(STA)                                       
 03/10/95       576    (S)   STA RPT  CS  2DP 2NR      SAME TITLE              
 03/10/95       576    (S)   FISCAL NOTE W/FY97 IMPACT (DCED)                  
 03/21/95              (S)   L&C AT  1:30 PM FAHRENKAMP RM 203                 
 03/21/95              (S)   MINUTE(L&C)                                       
 03/22/95       743    (S)   L&C RPT  CS  2DP 3NR       NEW TITLE              
 03/22/95       744    (S)   PREVIOUS FN FY97 IMPACT (DCED)                    
 04/06/95              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/11/95              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/11/95              (S)   FIN AT  2:30 PM SENATE FINANCE 532                
 04/12/95              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/12/95              (S)   FIN AT  2:30 PM SENATE FINANCE 532                
 04/13/95              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 04/13/95              (S)   FIN AT  2:30 PM SENATE FINANCE 532                
 04/13/95              (S)   MINUTE(FIN)                                       
 04/18/95      1056    (S)   FIN RPT  CS  2DP 1DNP 3NR  NEW TITLE              
 04/18/95      1057    (S)   PREVIOUS FN W/FY97 IMPACT (DCED)                  
 04/19/95              (S)   RLS AT  0:00 AM FAHRENKAMP ROOM 203               
 04/20/95              (S)   RLS AT  7:30 PM FAHRENKAMP ROOM 203               
 04/30/95              (S)   RLS AT  5:40 PM FAHRENKAMP RM 203                 
 04/30/95              (S)   MINUTE(RLS)                                       
 01/22/96              (S)   RLS AT 11:25 AM FAHRENKAMP RM 203                 
 01/22/96              (S)   MINUTE(RLS)                                       
 01/30/96      2251    (S)   RLS RPT  CS  4DP AND CAL 1NR NEW TITLE            
 01/30/96      2251    (S)   ZERO FISCAL NOTE TO CS (DCED)                     
 01/30/96      2251    (S)   RULES TO CALENDAR  1/30/96                        
 01/30/96      2252    (S)   READ THE SECOND TIME                              
 01/30/96      2252    (S)   RLS  CS ADOPTED Y15 N3 E1 A1                      
 01/30/96      2253    (S)   ADVANCED TO THIRD READING UNAN CONSENT            
 01/30/96      2253    (S)   READ THE THIRD TIME  CSSB 54(RLS)                 
 01/30/96      2253    (S)   PASSED Y14 N4 E1 A1                               
 01/30/96      2253    (S)   Taylor  NOTICE OF RECONSIDERATION                 
 01/31/96      2265    (S)   RECON TAKEN UP - IN THIRD READING                 
 01/31/96      2265    (S)   RETURN TO SECOND FOR AM 1 UNAN CONSENT            
 01/31/96      2265    (S)   AM NO  1     MOVED BY HALFORD                     
 01/31/96      2266    (S)   AM NO  1     ADOPTED Y13 N7                       
 01/31/96      2266    (S)   AUTOMATICALLY IN THIRD READING                    
 01/31/96      2266    (S)   PASSED ON RECONSIDERATION Y14 N6                  
 01/31/96      2268    (S)   TRANSMITTED TO (H)                                
 02/02/96      2595    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/02/96      2595    (H)   C&RA, L&C, STATE AFFAIRS                          
 03/05/96              (H)   CRA AT  1:00 PM CAPITOL 124                       
 03/05/96              (H)   MINUTE(CRA)(cancelled meeting)                    
 03/07/96              (H)   CRA AT  1:30 PM CAPITOL 124                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 CYNTHIA TOOHEY, Representative                                                
 Alaska State Legislature                                                      
 State Capitol Building, Room 104                                              
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4919                                                    
 POSITION STATEMENT:  Presented sponsor statement for HB 474.                  
                                                                               
 BOB BAILEY, Member, Board of Directors                                        
 Anchorage Chamber of Commerce; and                                            
    Co-Chair, Chamber Crime Prevention Committee                               
 P.O. Box 91598                                                                
 Anchorage, Alaska  99509                                                      
 Telephone:  (907) 279-3511                                                    
 POSITION STATEMENT:  Supported HB 474.                                        
                                                                               
 ANNE CARPENETI, Assistant Attorney General                                    
 Central Office                                                                
 Criminal Division                                                             
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska  99811-0300                                                    
 Telephone:  (907) 465-3428                                                    
 POSITION STATEMENT:  Provided department's position and answered              
                      questions regarding HB 474.                              
                                                                               
 JACK CHENOWETH, Legislative Counsel                                           
 Legal Services Division                                                       
 Alaska State Legislature                                                      
 Goldstein Building, Room 406                                                  
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-2450                                                    
 POSITION STATEMENT:  As bill drafter for HB 474, answered                     
                      questions.                                               
                                                                               
 DUANE UDLAND, Deputy Chief                                                    
 Anchorage Police Department                                                   
 4501 South Bragaw                                                             
 Anchorage, Alaska  99507                                                      
 Telephone:  (907) 786-8500                                                    
 POSITION STATEMENT:  Testified on HB 474.                                     
                                                                               
 L. DIANE WORLEY, Director                                                     
 Division of Family and Youth Services                                         
 Department of Health and Social Services                                      
 P.O. Box 110630                                                               
 Juneau, Alaska  99811-0630                                                    
 Telephone:  (907) 465-3191                                                    
 POSITION STATEMENT:  Provided department's position and answered              
                      questions regarding HB 474.                              
                                                                               
 DON LONG, Representative                                                      
 Alaska State Legislature                                                      
 State Capitol Building, Room 405                                              
 Juneau, Alaska  99801                                                         
 Telephone:  (907) 465-4833                                                    
 POSITION STATEMENT:  Provided sponsor statement for HB 488.                   
                                                                               
 MICHAEL MOORE, Total Quality Manager                                          
 Northwest Arctic Borough                                                      
 P.O. Box 1110                                                                 
 Kotzebue, Alaska  99752                                                       
 Telephone:  (907) 442-2500                                                    
 POSITION STATEMENT:  Testified on HB 488.                                     
                                                                               
 JOHN ROGERS, Special Assistant to the Superintendent                          
 Northwest Arctic Borough School District                                      
 P.O. Box 51                                                                   
 Kotzebue, Alaska  99752                                                       
 Telephone:  (907) 442-3472                                                    
 POSITION STATEMENT:  Supported HB 488.                                        
                                                                               
                                                                               
 MICHAEL MORGAN, Special Projects Manager                                      
 School Finance                                                                
 Department of Education                                                       
 801 West Tenth Street, Suite 200                                              
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-8665                                                    
 POSITION STATEMENT:  Answered questions regarding department's                
                      fiscal note for HB 488.                                  
                                                                               
 BRUCE D. SCOTT, Director                                                      
 Member and Public Relations                                                   
 Matanuska Electric Association, Incorporated                                  
 P.O. Box 2929                                                                 
 Palmer, Alaska  99645                                                         
 Telephone:  (907) 745-9215                                                    
 POSITION STATEMENT:  Supported SB 54.                                         
                                                                               
 SAM COTTEN, Commissioner                                                      
 Alaska Public Utilities Commission                                            
 1016 West Sixth, Suite 400                                                    
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Opposed SB 54.                                           
                                                                               
 ALYCE HANLEY, Commissioner                                                    
 Alaska Public Utilities Commission                                            
 1016 West Sixth, Suite 400                                                    
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Opposed SB 54.                                           
                                                                               
 PAUL MORRISON, Chief                                                          
 Engineering Section                                                           
 Alaska Public Utilities Commission                                            
 1016 West Sixth, Suite 400                                                    
 Anchorage, Alaska  99501                                                      
 Telephone:  (907) 276-6222                                                    
 POSITION STATEMENT:  Answered questions on SB 54.                             
                                                                               
 DAVID HUTCHENS, Executive Director                                            
 Alaska Rural Electric Cooperative Association                                 
 703 West Tudor, Suite 200                                                     
 Anchorage, Alaska  99503                                                      
 Telephone:  (907) 561-6103; (907) 463-3636                                    
 POSITION STATEMENT:  Testified on SB 54.                                      
                                                                               
 ROBERT MARTIN, JR., General Manager                                           
 Tlingit-Haida Rural Electric Association                                      
 P.O. Box 210149                                                               
 Auke Bay, Alaska  99821                                                       
 Telephone:  (907) 789-3196, Extension 35                                      
 POSITION STATEMENT:  Supported SB 54.                                         
 BOB CRAIG                                                                     
 P.O. Box 20422                                                                
 Juneau, Alaska  99802                                                         
 Telephone:  (907) 586-9091                                                    
 POSITION STATEMENT:  Opposed SB 54.                                           
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-17, SIDE A                                                            
 Number 0001                                                                   
                                                                               
 CO-CHAIR IVAN IVAN called the House Community and Regional Affairs            
 Committee meeting to order at 1:34 p.m.  Members present at the               
 call to order were Representatives Ivan, Austerman, Mackie, Elton             
 and Vezey; Representative Kott arrived at 1:35 p.m.  Absent was               
 Representative Nicholia.                                                      
                                                                               
 HB 474 - VIOLATIONS OF MUNICIPAL ORDINANCES & REGS                          
                                                                               
 Number 0073                                                                   
                                                                               
 CO-CHAIR IVAN noted that committee packets for HB 474 included the            
 bill; a sectional analysis; zero fiscal notes from the Department             
 of Community and Regional Affairs, Department of Health and Social            
 Services and the Department of Public Safety; the sponsor                     
 statement; and letters of support.  He invited Representative                 
 Toohey to introduce the bill.                                                 
                                                                               
 Number 0116                                                                   
                                                                               
 REPRESENTATIVE CYNTHIA TOOHEY, sponsor of HB 474, presented the               
 bill:                                                                         
                                                                               
 "We all know that the juvenile justice system has some problems.              
 Too often, young offenders are finding there is no meaningful                 
 consequence for their delinquent behavior.  This is particularly              
 true for those who commit minor offenses, since the justice system            
 is already overwhelmed with serious offenders.  Knowing this,                 
 juvenile offenders have become increasingly dangerous and blatant             
 regarding their offenses, since they know the overloaded system can           
 do little to them.  House Bill 474 would allow municipalities to              
 respond to less serious juvenile behavior by expanding its                    
 jurisdiction to include the abilities to subject juvenile offenders           
 to civil infractions and/or mediation.  This will allow the                   
 juvenile justice system to focus on the more serious criminal                 
 activities while assuring that juvenile offenders of less serious             
 offenses receive more immediate consequences for their actions."              
                                                                               
 Number 0314                                                                   
                                                                               
 BOB BAILEY, Member, Board of Directors, Anchorage Chamber of                  
 Commerce, and Co-Chair, Chamber Crime Prevention Committee,                   
 testified via teleconference.  He indicated the Municipality of               
 Anchorage had brought before the Crime Prevention Committee a                 
 package of proposed crime-related legislation.  Due to lack of                
 jurisdiction, Anchorage had been "nearly helpless" in addressing              
 problems relating to juveniles.  "We've heard such horror stories             
 as juveniles shoplifting in Dimond Center because they knew they'd            
 get a ride back downtown by the police but the state couldn't                 
 prosecute," he said.  While HB 474 would not solve juvenile                   
 problems, Mr. Bailey believed it would allow local municipalities             
 to use their resources as a first line of defense against                     
 offenders.  "It's been shown over and over again that many                    
 juveniles commit crimes simply because they know they won't be                
 prosecuted due to the overcrowding of the state system," Mr. Bailey           
 said.  "And they get away with it once and they offend again."                
 While fines did not necessarily deter serious criminals, his                  
 committee believed that fines might keep first-time juvenile                  
 offenders from becoming repeat offenders.  On December15, the                 
 Anchorage Chamber of Commerce Board of Directors passed a                     
 resolution supporting the entire package of crime-related                     
 legislation.  Today, they were asking for passage of HB474, which             
 they saw as an important first step in fighting juvenile crime.               
                                                                               
 Number 0474                                                                   
                                                                               
 REPRESENTATIVE AL VEZEY asked if there was a relationship between             
 HB 474 and shoplifting.                                                       
                                                                               
 MR. BAILEY replied he was not sure there was a direct relationship.           
 "It's my understanding that minor shoplifting offenses could be               
 addressed under this bill as a citation," he said.                            
                                                                               
 REPRESENTATIVE VEZEY asked for clarification about "citation."                
                                                                               
 MR. BAILEY clarified it was a violation.  He explained his                    
 understanding that a ticket would be issued for shoplifting.                  
                                                                               
 REPRESENTATIVE VEZEY again asked for clarification, saying he                 
 thought shoplifting was a misdemeanor under Alaska statute.                   
                                                                               
 MR. BAILEY asserted his understanding that the municipality could             
 pass a local ordinance to address shoplifting, as well.                       
                                                                               
 Number 0591                                                                   
                                                                               
 ANNE CARPENETI, Assistant Attorney General, Central Office,                   
 Criminal Division, Department of Law, said, "concealment of                   
 merchandise in our Alaska statutes varies according to the value of           
 the merchandise that's concealed."  She indicated it went from a B            
 misdemeanor to a C felony.                                                    
                                                                               
 REPRESENTATIVE VEZEY asked what that had to do with HB 474, which             
 appeared to address violations and infractions.                               
                                                                               
 Number 0653                                                                   
                                                                               
 JACK CHENOWETH, Legislative Counsel, Legal Services Division,                 
 Alaska State Legislature, offered that he was the bill drafting               
 attorney.  He explained:                                                      
                                                                               
 "In the current law, municipalities are permitted to identify                 
 conduct and criminal laws through ordinances.  When they enact                
 ordinances that carry a criminal penalty, [indisc.] under the law             
 as it currently reads, unless there is an exception in state law,             
 the way that the penalty is enforced is through DFYS.  The minor is           
 handled through the delinquency process.  What Anchorage has asked            
 is that the exceptions to treatment through the delinquency process           
 be expanded, so that if a municipality chooses to write ordinances            
 and treat more activities - more conduct by minors - in a criminal            
 sense, that these kids could be prosecuted in the district court.             
 And that's what Section 3 of this bill does.                                  
                                                                               
 "At the current time, the only exception for municipal ordinances             
 that takes them out from under delinquency treatment and allows a             
 direct prosecution, is the exception for traffic ordinances or                
 regulations.  That's page 2, lines 26 and 27 of the bill.  The                
 provisions of this subsection apply when a minor is accused of                
 violating a traffic ordinance or regulation by a municipality.                
 What Anchorage has asked for is an expansion of that authority.               
 And what we've given them is paragraph 6, so that the exception is            
 broadened, so that any ordinance or regulation of a municipality              
 that's punishable as an infraction or violation can be taken to the           
 district court and tried and prosecuted and sentence can be entered           
 there."                                                                       
                                                                               
 Number 0772                                                                   
                                                                               
 MR. CHENOWETH continued:  "The wrinkle on this is that the kinds of           
 conduct that this is being expanded to cover includes things that             
 can only be punished as infractions or violations, only minor                 
 offenses, only minor conduct, as it's called in the court rules, so           
 that there is no threat of a minor having to put in any kind of               
 jail sentence.  There is no threat of incarceration, there is no              
 threat of any penalty whatsoever, except for payment of a fine, and           
 under the general authority, of payment of restitution if there's             
 property damage done.  Limiting it to a minor offense means that              
 provisions of law that would require trial before a jury or                   
 appointment of public counsel would not be applicable.  In other              
 words, if the only penalty - the only potential penalty - is the              
 payment of a fine, treatment of this as a violation would mean that           
 there would be no requirement that a municipality choosing to                 
 enforce its ordinances this way would be required to go before a              
 jury to prosecute this minor or no requirement that there be a                
 court-appointed counsel.  So, essentially, what Anchorage is asking           
 is that the opportunity be expanded beyond traffic offenses and               
 other sorts of conduct that minors might engage in be criminalized            
 and enforced in this manner."                                                 
                                                                               
 Number 0869                                                                   
                                                                               
 MR. CHENOWETH continued:  "Now, having said that, let me also say             
 that Anchorage has a wrinkle on this that differs from, as I                  
 understood it, from most, if not all, of the municipalities.  About           
 a year and a half ago, Anchorage expanded its civil enforcement               
 ordinance, so that rather than prosecute before the district court,           
 or rather than take these cases, if they gain the benefit of this             
 change in law, what they proposed to do would be to expand the use            
 of their civil enforcement mechanism that's in place and handle it            
 that way.  But for most municipalities - Fairbanks, where you're              
 from, Juneau, and other places where the norm would be to adopt               
 ordinances that speak to criminal conduct - what we're asking, or             
 what the bill is asking, what the sponsor is asking, is that the              
 opportunities be given to municipalities to enforce their                     
 ordinances directly in the district court, rather than requiring              
 that these be handled as delinquency proceedings initiated by                 
 DFYS."                                                                        
                                                                               
 Number 0926                                                                   
                                                                               
 REPRESENTATIVE VEZEY said he had thought the bill was trying to               
 give municipalities more authority to deal with violations.  "But             
 then, the example was given of shoplifting," he said, "and you                
 elaborated that we have statutes that criminalize shoplifting, like           
 the misdemeanor, and we would be giving municipalities the right to           
 supersede that statute and make it a violation, prosecute people              
 for a violation of what under state law would be a misdemeanor or             
 perhaps a felony.  Nobody in the municipality of Anchorage would              
 voluntarily be prosecuted for a felony when they could choose to be           
 prosecuted for a violation."                                                  
                                                                               
 Number 0970                                                                   
                                                                               
 MR. CHENOWETH replied it was not a question of choice.  It was a              
 question of how a municipality chose to enforce or penalize                   
 criminal conduct.  He referred to shoplifting as an example and               
 indicated that nothing said a municipality could not come along and           
 make substantially similar conduct a violation with a fine for a              
 penalty.  "And the choice then, really, would be up to law                    
 enforcement officials and the prosecutors of the city or borough,             
 whichever it would happen to be, as to how to prosecute.  If they             
 chose not to prosecute at the municipal level, it could go before             
 the district attorney's office and be prosecuted by the state, I              
 assume, or vice versa.  The district attorney might turn it down              
 and the municipality might decide that it would choose to                     
 prosecute.  But nothing prevents the municipalities from enacting             
 an ordinance now that says that shoplifting is conduct that is                
 punishable as a violation."                                                   
                                                                               
 Number 1039                                                                   
                                                                               
 REPRESENTATIVE VEZEY indicated he could envision a double-jeopardy            
 possibility.                                                                  
                                                                               
 MR. CHENOWETH said that would be true only if they were prosecuted            
 by both the state and the municipality.                                       
                                                                               
 REPRESENTATIVE VEZEY replied, "But if the state chose to prosecute            
 as a felony violation and the person's saying, `no, no, I committed           
 this in the municipality where it's only a violation, not a felony,           
 I would prefer to be prosecuted for a violation.'"                            
                                                                               
 MR. CHENOWETH emphasized it was not the alleged offender's decision           
 but the prosecutor's decision.                                                
                                                                               
 Number 1076                                                                   
                                                                               
 REPRESENTATIVE JERRY MACKIE said that Representative Vezey was on             
 point with some concerns he also had.  He noted that many larger              
 communities prosecuted DWI violations, for example, under municipal           
 ordinances, using city attorneys to prosecute the cases.  "But                
 you'll find serious felonies and murder and other types of things             
 are always charged under state statute," he said, "because then               
 it's the responsibility of the district attorney and the state to             
 pay for those.  Representative Mackie cited examples of offenses              
 that might be bailable for fines that could be mailed in, including           
 traffic regulations, possession of tobacco, fish and game statutes,           
 and parks and recreation violations.  He referred to the new                  
 language on page 3, lines 3-7, where it said "an ordinance or                 
 regulation that is punishable as an infraction or violation."  "My            
 question is," he said, "other than the ones that are already                  
 stated, what is there out there that is punishable by a violation             
 that could be adopted by ordinance without getting into the area              
 that Representative Vezey talked about where all of a sudden,                 
 municipalities are adopting ordinances that are normally criminal             
 offenses, misdemeanor charges under state statutes, and opting to             
 go to infraction-type ordinances?"  He clarified, "What are some of           
 the things they're asking to be able to serve violation citations             
 on?"                                                                          
                                                                               
 Number 1189                                                                   
                                                                               
 MR. CHENOWETH replied he did not have a list of what Anchorage, for           
 example, might be concerned about.  Typical low-level criminal                
 conduct, he suggested, might be things like littering, dog control,           
 or curfew violations.                                                         
                                                                               
 REPRESENTATIVE MACKIE responded that they could do all those things           
 under ordinance now.                                                          
 MR. CHENOWETH said, "Yes, but when they come to enforce those ...             
 there is no exception that says they are to be prosecuted in the              
 district court.  Consequently, they get put through the delinquency           
 system.  That is to say, they are presented to or by DFYS and                 
 handled through DFYS.  What Anchorage folks are asking is that the            
 use of the availability of the district court as a means, just as             
 we do now, for - just as municipalities do now - to enforce their             
 traffic ordinances, that that be expanded, so that other kinds of             
 ordinances, other subject matter, could be prosecuted - minors                
 could be prosecuted - in the district court in the same way.  And             
 I say that and then I have to hasten to add that Anchorage at this            
 point does not use that.  They are thinking in terms of expanding             
 the use of a parallel civil enforcement remedy that they adopted              
 about a year and a half ago.  But that doesn't mean that other                
 municipalities might not also want to have the opportunity to                 
 enforce their own regulations, or their own ordinances [indisc.]              
 through a district court criminal prosecution."                               
                                                                               
 Number 1294                                                                   
                                                                               
 REPRESENTATIVE TOOHEY noted that Duane Udland was available and               
 asked Mr. Udland if he could answer that question.                            
                                                                               
 DUANE UDLAND, Deputy Chief, Anchorage Police Department, testified            
 via teleconference that he was also representing the City of                  
 Anchorage.  "Our whole request for this bill lies in the fact and             
 the belief that minor offenses often go unpunished when you're                
 dealing with juveniles," he said, expressing the need for early               
 consequences when a juvenile was first caught by the police.  He              
 suggested that juvenile intake did not have the time or resources             
 to deal with petty offenses.  This legislation would allow                    
 Anchorage to either cite a juvenile in district court or take it              
 through the civil road, as they were currently doing with curfew              
 violations.  He cited types of violations that the state courts               
 never saw.  "We think we have a problem with juveniles that we                
 would like to start charging them with some of these ordinances,"             
 he said.  "But right now, unfortunately, we can charge, but the               
 system at the state level just is not going to deal with it."  He             
 emphasized that Anchorage was asking for enabling legislation.                
                                                                               
 Number 1428                                                                   
                                                                               
 REPRESENTATIVE MACKIE asked if the focus of the bill related to               
 jurisdiction more than the ability to put new laws on the books.              
 "Because I can't imagine any of the infractions that you can't put            
 on the books right now, already, under current law, by ordinance,"            
 he said.                                                                      
                                                                               
 MR. UDLAND replied, "You're exactly right.  We've got a whole host            
 of them that we could charge the kids with right now.  It's just              
 that the state has the jurisdiction to prosecute.  We're asking for           
 that jurisdiction to prosecute them, either civilly or taking them            
 directly into district court."                                                
                                                                               
 Number 1450                                                                   
                                                                               
 REPRESENTATIVE MACKIE asked if there was a fiscal note from the               
 courts.  He wanted to know what kind of impact it would have on               
 state courts, prosecution, court time and the judges.  He further             
 wondered if the fines eventually went to the municipality of                  
 Anchorage, what was in it for the state for the utilization of the            
 state courts.                                                                 
                                                                               
 MR. UDLAND said he did not know how many kids they were talking               
 about.  He indicated the assembly was interested in the civil                 
 process, where Anchorage would have its own Anchorage hearing                 
 officer.  He thought the impact on district court would be minimal.           
                                                                               
 Number 1542                                                                   
                                                                               
 REPRESENTATIVE VEZEY referred to page 2, lines 14 through 16, and             
 said it appeared to be double jeopardy.  "You're talking about                
 prosecuting for a violation for somebody that's been convicted of             
 a crime, which implies that there was a misdemeanor or a felony               
 involved, they were convicted, then it talks about prosecuting for            
 violations," he said.  "I'm confused by what we're trying to do               
 there."                                                                       
                                                                               
 Number 1578                                                                   
                                                                               
 MR. CHENOWETH said, "Section 2 is intended to address the question            
 of a concern on the part of Anchorage that if you allow us to                 
 prosecute, don't put on us the burden of requiring that these                 
 things go before a jury or requiring that we have to pay for court-           
 appointed counsel.  You don't have to take a case to a jury and you           
 don't have to provide a lawyer at public expense if you are                   
 prosecuting what the court has identified as a minor offense -                
 that's their term.  And we looked at what the court meant by minor            
 offense."  He explained the term arose out of a judicial decision.            
 "And we were looking for something that would indicate what the               
 court was thinking of in terms of qualifying as a minor offense.              
 If we met that, we would be able to exempt the municipalities from            
 having to carry the burden of trying a minor before a jury or                 
 appointing an attorney.  We found the clue to that in something               
 called District Court Criminal Rule 8.  And essentially, paragraphs           
 2 and 3, lines 7-16 of that page, pick up the characteristics out             
 of the district court rule and set them down in state law in a way            
 that, hopefully, keeps the municipality from having to carry the              
 burden of putting their cases before a jury or of having to appoint           
 an attorney at public expense."                                               
                                                                               
 Number 1658                                                                   
                                                                               
 MR. CHENOWETH continued:  "One of the other characteristics of a              
 minor offense is that the penalty could not give rise to any                  
 disability or legal disadvantage based on conviction of a crime.              
 Your voting rights couldn't be taken away.  You couldn't lose a               
 license to practice, practice law, practice medicine, operate a               
 business.  No other disability or legal disadvantage attaches to              
 the conviction apart from payment of a fine.  Period.  If the                 
 ordinance were drafted in any way that said that for violation of             
 this ordinance, some other penalty attaches beyond payment of a               
 fine, then paragraph 3 would say that the enacting municipality               
 could not take advantage of the minor offense exception, and                  
 therefore, it would be treated as a normal criminal offense and               
 various other things would come into play, including right to trial           
 by jury and right to court-appointed counsel if you couldn't afford           
 it.  So, what we're trying to do is meet the court's definition of            
 minor offense in all of the facets in the district court rule."               
                                                                               
 Number 1723                                                                   
                                                                               
 REPRESENTATIVE VEZEY said his interpretation in reading it was that           
 there was a conviction involved.  He understood Mr. Chenoweth to be           
 saying there was no disability or legal disadvantage that would               
 accrue from a conviction.                                                     
                                                                               
 MR. CHENOWETH replied that an ordinance that the municipality chose           
 to enforce this way could not include a provision that penalized              
 the defendant, upon conviction, beyond payment of a fine.                     
                                                                               
 Number 1764                                                                   
                                                                               
 REPRESENTATIVE VEZEY explained that he understood what Mr.                    
 Chenoweth was saying but questioned whether the bill language said            
 that.  He asked if Mr. Chenoweth was comfortable that the language            
 said that.                                                                    
                                                                               
 MR. CHENOWETH indicated he had cribbed the language from the                  
 district court rule.                                                          
                                                                               
 Number 1777                                                                   
                                                                               
 REPRESENTATIVE MACKIE reiterated that he wanted to know if there              
 was a fiscal note from the court.  Furthermore, he wished to know             
 the position of the Administration or the Department of Law on this           
 particular bill.                                                              
                                                                               
 Number 1799                                                                   
                                                                               
 MS. CARPENETI testified on behalf of the Department of Law, saying            
 the department opposed HB 474.  She explained that the                        
 Administration opposed automatic waivers of juveniles to adult                
 court, especially for minor offenses.  Shoplifting was the type of            
 offense that the Administration thought should be dealt with in the           
 juvenile system.                                                              
                                                                               
 Number 1838                                                                   
                                                                               
 MS. CARPENETI explained that the district court in Alaska had no              
 probation supervision, so that a person would go to court and be              
 fined without having any follow-up.  Nor did the bill provide for             
 restitution.  "And we're not sure exactly what offenses may be                
 dealt with under this system," she said.  "If it's concealment of             
 merchandise, it might be a violation in Anchorage, then it's a B              
 misdemeanor or an A misdemeanor or a C felony outside of                      
 Anchorage."  Ms. Carpeneti acknowledged there was frustration with            
 the juvenile system.  "And we would recommend that you wait while             
 the Governor's Commission on Youth and Justice addresses the                  
 problem," she said.  "I think the system is creaking under too many           
 people and too many demands made of it.  But we would oppose this             
 approach to alleviating whatever problems that are seen with the              
 juvenile system."                                                             
                                                                               
 Number 1893                                                                   
                                                                               
 REPRESENTATIVE MACKIE said he could appreciate the position of                
 automatic waivers of juveniles into court.  "What we're talking               
 about is not jail time," he said.  "We're talking about minor                 
 offenses, which is under a bailable schedule.  With certain                   
 parameters on there, ... wouldn't the Administration look to this             
 as, perhaps, a mechanism for relief from a juvenile justice system            
 that is obviously very broke?"  He suggested that Anchorage would             
 not be asking for relief unless it was a serious problem.                     
                                                                               
 Number 1930                                                                   
                                                                               
 MS. CARPENETI thought it would be useful to hear from the Division            
 of Family and Youth Services (DFYS) and added, "I think that may be           
 a misconception that these cases are just not dealt with.  And it's           
 the Administration's position that if you don't deal with them at             
 the beginning, then you might end up with a juvenile who has not              
 been addressed in terms of how to help that person steer away from            
 committing offense after offense.  And you end up with a juvenile             
 who's in more trouble, and who's in serious trouble, and you've               
 lost the chance to help that individual, to steer him or her away             
 from bad behavior."                                                           
                                                                               
 Number 1956                                                                   
                                                                               
 REPRESENTATIVE ELTON asked who would determine what a minor                   
 infraction was.  He wondered whether the municipality, by                     
 ordinance, would say what were waivable offenses, rather than                 
 having determinations made by DFYS or the state.                              
                                                                               
 Number 1999                                                                   
                                                                               
 MS. CARPENETI believed that the way the bill was drafted, if the              
 municipality adopted an ordinance with only a fine attached to it,            
 they could, by that very act, define what is a waivable offense.              
 For example, if they prohibited concealment of merchandise and made           
 the only consequence a fine, that would, by definition, make it               
 waivable under this bill.  She added that she believed minor                  
 consuming was already waived to district court.                               
                                                                               
 Number 2034                                                                   
                                                                               
 MR. UDLAND emphasized Anchorage's willingness to take on the                  
 problem.  He said, "I'd be testifying in the opposite if we were              
 talking about waiving the kids into district court where they would           
 be sentenced to jail, as opposed to being handled by juvenile                 
 intake.  But that's not the case."  He added, "I think that if                
 there's concerns about the extent that the municipality would                 
 pursue this, for instance, would be going to serious misdemeanors             
 and then sort of declassifying them to violations, perhaps you                
 could put some language into the bill that would somehow ensure               
 that that wouldn't occur, but I don't know how to do that.  But it            
 would seem to me that this bill really does relieve the state of              
 Alaska from some burden that I've always heard in the past that               
 you'd like to get rid of."                                                    
                                                                               
 Number 2130                                                                   
                                                                               
 L. DIANE WORLEY, Director, Division of Family and Youth Services              
 (DFYS), Department of Health and Social Services (DHSS), testified            
 that the department opposed HB 474.  "While it has been noted that            
 there are times we would probably relieve ourselves of some of                
 these obligations, the reality is we do not feel it is in the best            
 interest of the youth," she said.                                             
                                                                               
 Number 2163                                                                   
                                                                               
 MS. WORLEY pointed out that in the bill, as designed, each                    
 municipality would have the ability to adopt the ordinance of their           
 choice.  The department was concerned that throughout the state,              
 youth would be treated differently for the same violations.  A                
 second concern was that when a youth went into court, DFYS had no             
 mechanism for receiving that information.  Someone who had been to            
 district court previously could come into the DFYS system as a                
 first-time offender.  Similarly, there was no notification to                 
 district court when a youth was on probation in the juvenile                  
 system.                                                                       
                                                                               
 Number 2229                                                                   
                                                                               
 MS. WORLEY emphasized that DHSS felt the juvenile justice system              
 was the best mechanism for handling youth.  She discussed                     
 misperceptions and statistics relating to the system.  On                     
 misdemeanor referrals for 1995, she said, DHSS adjusted with a                
 letter 18 percent of the time and with a referral 29 percent of the           
 time, resulting in payment of restitution, going to youth court or            
 mediation, or performing community service.  The department                   
 adjusted with a conference almost 21 percent of the time, in which            
 parents were involved and worked out a plan of action with the                
 youth and probation officer, including ongoing follow-up.  In 13              
 percent of the cases, juveniles were petitioned to court.  About 5            
 percent received ongoing probation for a period of time.  Ms.                 
 Worley emphasized that the system was trying to find methods of               
 rehabilitation.  She acknowledged they were not always successful.            
 However, they felt that if parents were involved and the youth were           
 engaged in community service, probation, monitoring or other                  
 methods, there was a better opportunity for keeping an eye on the             
 youth.                                                                        
                                                                               
 Number 2313                                                                   
                                                                               
 MS. WORLEY expressed concern that youths would fail to pay the                
 fines.  "As you all well know," she said, "our youth facilities are           
 more than full and we have grave concern about how many of these              
 kids decide not to pay a fine, get a contempt of court charge, and            
 then we have to take them in for a period of time for an offense              
 that could be as small as skateboarding in the wrong place of town            
 because there was a municipal ordinance against skateboarding on              
 that part of the street."                                                     
                                                                               
 Number 2345                                                                   
                                                                               
 MS. WORLEY emphasized that they supported municipalities taking a             
 more active role.  "Anchorage is a wonderful example," she said.              
 "We would really like the opportunity to work with municipalities             
 and have them help us develop alternatives for placement and                  
 referrals for these youth."                                                   
                                                                               
 Number 2369                                                                   
                                                                               
 REPRESENTATIVE TOOHEY expressed amazement that DHSS opposed                   
 allowing the municipality to take on this problem.  She asked if              
 the problem was going to be addressed in the Governor's new youth             
 bill.                                                                         
                                                                               
 MS. WORLEY replied that was certainly part of it.  "And I serve on            
 the prevention working group of the Governor's Conference," she               
 said.  "There's the prevention, there's the youth-at-risk and then            
 there's dealing with the juvenile code.  So we are dealing with all           
 aspects of that."                                                             
                                                                               
 Number 2401                                                                   
                                                                               
 REPRESENTATIVE TOOHEY asked, "But will he address this issue that             
 is a major problem in Anchorage?  If he doesn't, then that's what             
 I'm saying.  This bill is a specific problem in our Anchorage area            
 with the youth.  They're running rampant in Anchorage.  We need               
 some way to stop them in the very beginning.  Now, whether the                
 state wants to get involved in a five-dollar shoplifting or in                
 spray-painting an office building, maybe that's something they want           
 to do.  And if that is, then the fiscal note should be totally                
 different.  As it is now, it is something that Anchorage feels they           
 can handle."                                                                  
                                                                               
 Number 2430                                                                   
                                                                               
 REPRESENTATIVE MACKIE referred to earlier testimony about attitudes           
 by juvenile offenders who did not worry about prosecution.  He                
 asked if there were minor offense charges currently under the                 
 state's juvenile justice system being dismissed because of lack of            
 resources.                                                                    
                                                                               
 TAPE 96-17, SIDE B                                                            
 Number 0001                                                                   
                                                                               
 REPRESENTATIVE MACKIE asked if DFYS could be notified when there              
 was a violation.  "If it's being adjudicated by a district court              
 judge anyway, there would be a record of it," he said, "and                   
 certainly, something like that could be passed on."  He asked why             
 Ms. Worley did not see the bill as an asset to the system.                    
                                                                               
 Number 0025                                                                   
                                                                               
 MS. WORLEY responded, "You bring up a number of good points, as               
 does Representative Toohey.  And I think it's important to                    
 understand that it's not that we don't feel the municipality can              
 handle it."  However, DFYS was concerned that payment of a fine,              
 while often immediate, was not a real deterrent nor would it keep             
 juveniles on the right track down the road.  "There could even be             
 said that it provides a benefit to those who have higher economic             
 status," she said.  "It's easy to pay a fine if you have a wealth             
 of money.  If you don't, it becomes a greater burden.  I guess my             
 concern continues to be that I believe, through the juvenile                  
 justice system, we can have a stronger, continuing relationship, a            
 monitoring process, to keep in touch with these youth and to see              
 where they're going.  Certainly a fine for some kids is going to be           
 a deterrent."  She reiterated the fear that many would not pay the            
 fines and would end up in contempt of court, resulting in their               
 placement in the youth facilities.                                            
                                                                               
 Number 0085                                                                   
                                                                               
 MS. WORLEY agreed the department could probably set up a system to            
 receive notification from the courts.                                         
                                                                               
 REPRESENTATIVE MACKIE asked if it were a policy of DFYS to not                
 issue fines because of a belief that fines did not serve as a                 
 deterrent.  He noted that paying money had been a deterrent to him            
 as a youth.  Representative Mackie then referred back to his                  
 earlier question about youth not being prosecuted or receiving                
 follow-through in the system and asked if that was the case.                  
                                                                               
 Number 0113                                                                   
                                                                               
 MS. WORLEY stated that according to the statistics for FY 1995,               
 6percent of misdemeanors were dismissed for various reasons.  Lack            
 of resources precluded them from dealing with every single case as            
 thoroughly as they wanted to.  "But we certainly try to evaluate              
 each case and make a good determination as to what steps can be               
 taken and we try to have some type of consequence in every case,"             
 she said.  Althought DFYS did not normally impose fines, they                 
 required a lot of restitution, particularly in cases where there              
 was property damage or stolen merchandise.                                    
                                                                               
 Number 0209                                                                   
                                                                               
 REPRESENTATIVE MACKIE said, "So, there's not an inordinate number             
 of offenders that are falling through the cracks, then, in your               
 opinion?"                                                                     
                                                                               
 MS. WORLEY replied, "It's hard to answer that.  I think there are             
 kids who are falling through the cracks, definitely.  I don't know            
 if there is an inordinate number.  I think a lot of it is on                  
 perception of what is a consequence.  In some people's minds, a               
 fine is a concrete consequence, whereas community service is not a            
 concrete consequence."                                                        
                                                                               
 Number 0237                                                                   
                                                                               
 REPRESENTATIVE TOOHEY said, "If municipalities would get together             
 and absorb 10 or 15 percent of these minor cases, it certainly                
 would leave your hands free, and the money free, to prosecute the             
 more serious offenses."  She asked Mr. Udland about the numbers of            
 cases being dismissed.                                                        
                                                                               
 Number 0254                                                                   
                                                                               
 MR. UDLAND replied, "I can't give you numbers.  I think `dismissed'           
 is actually the wrong terminology."  He said he had heard people              
 from Juneau intake say they were so busy that if they could write             
 a letter, that might be all they would do because of lack of time.            
 "And I don't think that would count as a dismissal," he said.  "It            
 would probably be a disposition, and therefore, I don't think the             
 dismissals would show up as a true, accurate picture."  He noted              
 that street officers were frustrated because the only consequence             
 was a letter in the mail.  "I've always defended juvenile intake              
 and the work that they do," he said.  "I think they do a wonderful            
 job.  But the problem is, is there aren't enough of them.  And                
 they're getting overwhelmed.  I wish I could get every kid into               
 juvenile intake for every minor event.  I think they have the                 
 ability and the desire.  They just don't have the resources.  I               
 guess there's a question, can the municipality enter into this one            
 limited area and help out?  I think we can."                                  
                                                                               
 Number 0333                                                                   
                                                                               
 CO-CHAIR AUSTERMAN pointed out that with 18 percent letters and 6             
 percent dismissals, that was 24 percent, almost a quarter of the              
 cases, which did not have fines or actions against them.  With                
 another 21 percent going to conference with parents, nearly 45 to             
 50 percent of the caseload was not being petitioned to court, going           
 to referrals or in the ongoing probation period.  "So, using those            
 numbers, it sounds to me like there is a problem," he said.  "And             
 maybe this would be one way of helping your department solve some             
 of the problems that you've got out there."  He indicated he                  
 supported the bill and wanted to move it from committee.                      
                                                                               
 Number 0369                                                                   
                                                                               
 CO-CHAIR IVAN commented that he was not totally convinced by DFYS.            
 He saw the bill as a tool and thought it would give the                       
 municipalities the authority to deal at the local level, getting              
 the authority closer to parents and enforcement in the communities.           
                                                                               
 Number 0422                                                                   
                                                                               
 REPRESENTATIVE ELTON thought they were taking a philosophy adopted            
 by the state over a long period of time and "turning it on its                
 head."  He said, "I really do believe that part of the problem with           
 juvenile misbehavior is that we've got to get them into a system              
 where they can get some help."  He was not sure that taking                   
 juveniles straight into the court system would do that.  He                   
 suggested the proposed legislation was, at most, a partial solution           
 that could possibly be adopted as part of a package.  "I don't see            
 anything in here that guarantees that there's going to be                     
 retribution," he said.  "I don't see anything in here that speeds             
 up the docket in district court.  I don't see anything in here that           
 tells me how much this is going to cost the court system.  I don't            
 think we've even asked the court system how much it's going to                
 cost."  He advised that until there were answers to those kinds of            
 questions, the bill should not move on.                                       
                                                                               
 Number 0539                                                                   
                                                                               
 REPRESENTATIVE TOOHEY responded, "This is for a municipality to               
 adopt.  Juneau obviously doesn't have that problem.  It is                    
 obviously a problem for Anchorage.  It may be for Fairbanks; I'm              
 not sure.  But the court system said that it would be so minor that           
 it might incur a $2,000 court problem, $2,000 a year, if that."               
 She emphasized her belief that it was a solution to 14- and 15-               
 year-olds starting into a life of crime.  "Some of them it's going            
 to stop," she said.  "If we can save 20 percent by scaring them or            
 by imposing this fine on them, then I think that we're saving                 
 somebody."  She pointed out that the municipalities were not                  
 mandated to do this but were willing to take on this problem.                 
                                                                               
 Number 0582                                                                   
                                                                               
 REPRESENTATIVE MACKIE said he did not necessarily disagree with               
 Representative Elton's comments.  "And I certainly think that DFYS            
 and other agencies try to do the best they can with the                       
 rehabilitation and looking out for the best interest of the kid."             
 However, he recalled getting a ticket at age 14 for driving without           
 a license and the effect that going with his mother before a judge            
 had on him.  He suggested that going before a judge could be a                
 wake-up call.  Representative Mackie referred to the numbers                  
 pointed out by Co-Chair Austerman and said that also concerned him.           
 "There is not a lot of deterrent out there," he added.                        
                                                                               
 Number 0658                                                                   
                                                                               
 REPRESENTATIVE ELTON clarified that although he thought there was             
 a problem, he was not yet ready to buy into the solution.  He                 
 indicated that as a youth, he would have been more frightened by              
 his parents receiving a letter than by going before the district              
 court judge.  He recalled an incident where he was one of 150 kids            
 who jaywalked in front of the high school one afternoon.  "We                 
 thought that was the biggest, most fun thing we had that whole                
 week," he said.  "We got the afternoon off and we all went to court           
 and he told us not to do it again."  He thought there should not be           
 too much concern about 21 percent getting a letter because if it              
 worked right, a lot of those kids would not be back in the system.            
 "Frankly, I think the best solution is, give DFYS the ability, the            
 resources they need, to do a good job," he said.                              
                                                                               
 Number 0766                                                                   
                                                                               
 CO-CHAIR AUSTERMAN moved that HB 474 move from committee with                 
 accompanying fiscal notes and individual recommendations.  There              
 being no objection, it was so ordered.                                        
                                                                               
 CO-CHAIR IVAN recessed the committee at 2:40 p.m. for a short                 
 break.                                                                        
                                                                               
 HB 488 - SCHOOL DISTRICT MATCHING FUND REQUIREMENT                          
                                                                               
 Number 0796                                                                   
                                                                               
 CO-CHAIR IVAN called the meeting back to order at 2:45 p.m.  There            
 was no longer a quorum.  Co-Chair Ivan noted that committee packets           
 for HB 488 contained the bill; the affected statutes; a zero fiscal           
 note from the Department of Community and Regional Affairs; a                 
 fiscal note from the Department of Education; a sponsor statement;            
 data from the Department of Labor; and letters of support.                    
                                                                               
 Number 0828                                                                   
                                                                               
 REPRESENTATIVE DON LONG, sponsor of HB 488, presented the bill.  He           
 said certain school district areas had been neglected because of              
 inability to come up with the matching fund requirement.  He read             
 from the sponsor statement:                                                   
                                                                               
 "This legislation is intended to allow municipalities with an                 
 unemployment rate of 10 percent a waiver towards their                        
 participating share.  At the present time, municipalities with an             
 unemployment rate of 10 percent of greater have a much harder time            
 of paying their local share for school construction.  This high               
 unemployment rate results from a lack of economic development or              
 jobs in a municipality, which translates into low revenue for the             
 local municipalities.                                                         
                                                                               
 "Since the adoption of the school district participation grant                
 program in 1973, many schools in Alaska have been neglected due to            
 these municipalities' inability to come up with their participating           
 share of the grant.  I believe this bill would be a step in the               
 right direction in helping economically depressed municipalities in           
 their efforts to receive school construction grants."                         
                                                                               
 Number 0910                                                                   
                                                                               
 REPRESENTATIVE LONG explained that although some schools had                  
 applied for waivers, none had been granted since 1993.  Many of the           
 schools had been on a list for many years, yet had never been                 
 funded.  He felt the only municipalities that could afford matching           
 fund programs would have their schools fixed or constructed.  There           
 was no effective means of helping these municipalities come up with           
 matching funds.                                                               
                                                                               
 CO-CHAIR IVAN noted that there was again a quorum present, with               
 Representatives Austerman, Vezey and Elton present in addition to             
 himself.                                                                      
                                                                               
 Number 0980                                                                   
                                                                               
 REPRESENTATIVE ELTON asked how Representative Long had arrived at             
 the 10 percent figure.  He said Mat-Su, for example, was "on the              
 cusp of maybe being eligible," which he did not think was                     
 necessarily intended.                                                         
                                                                               
 Number 1019                                                                   
                                                                               
 REPRESENTATIVE LONG responded that in discussions with people from            
 his district, they had arrived at an average figure of 10 percent.            
 He noted that in his own district, those figures had gone up to 14            
 or 16 percent in some areas.                                                  
                                                                               
 REPRESENTATIVE ELTON asked why the previous year was being used.              
 He suggested an average of prior years would ensure that it was               
 more than a one-year phenomenon and asked if there had been                   
 discussion about that.                                                        
                                                                               
 Number 1055                                                                   
                                                                               
 REPRESENTATIVE LONG replied, "The discussion was based on that the            
 department would have the ability to prove that they ... meet that            
 requirement of the 10 percent."  He indicated they had not                    
 considered an average over several years.                                     
                                                                               
 CO-CHAIR IVAN noted that he did not plan to move the legislation              
 out today.  "We need more input and questions answered before we              
 proceed," he said.                                                            
                                                                               
 Number 1131                                                                   
                                                                               
 REPRESENTATIVE AL VEZEY said, "Representative Long, I'm not aware             
 that the unemployment rates in different regions of the state have            
 been extremely cyclical in the last, say, eight years."  He noted             
 that with 10 years, there might be cyclical action.  "We have                 
 certain regions of the state which have historically high                     
 unemployment rates," he said.  "When we passed the statutes                   
 providing for the matching funding for the bonding propositions and           
 whatnot, those unemployment conditions were known then.  And I                
 would, on the surface, think that all that was taken into account."           
 He thought going back in now might distort the whole idea of local            
 sharing on these cost programs.                                               
                                                                               
 Number 1232                                                                   
                                                                               
 REPRESENTATIVE LONG responded that it had become apparent that it             
 was hard for a school district to obtain a waiver.  He envisioned             
 this legislation as an additional waiver mechanism for school                 
 districts that would not otherwise qualify.  He said a municipality           
 might have funds but be mandated by another department, for                   
 example, the Department of Environmental Conservation, to spend the           
 money elsewhere, such as in fixing their landfill.                            
                                                                               
 Number 1338                                                                   
                                                                               
 CO-CHAIR AUSTERMAN indicated he had questions for the Department of           
 Education.                                                                    
                                                                               
 MICHAEL MOORE, Total Quality Manager, Northwest Arctic Borough,               
 testified via teleconference from Kotzebue that the borough was               
 having a great deal of difficulty raising the required match for              
 schools.  "What we estimate we need to do for the next 20 years is            
 set aside $750,000 a year at a minimum to meet the match                      
 requirement," he said.  He indicated they faced deficits otherwise            
 totalling $15 million in the next five years.  "So, we don't                  
 believe we're going to be able to do it.  Our unemployment rate               
 over the past three years has averaged approximately 18 percent."             
                                                                               
 Number 1430                                                                   
                                                                               
 REPRESENTATIVE VEZEY asked Mr. Moore what the relationship was in             
 the borough between borough revenues, school district revenues and            
 unemployment.                                                                 
                                                                               
 MR. MOORE responded there was no direct relationship.  "The                   
 unemployment figure is an indicator of the state of the economy,"             
 he said.  "Another indicator would be that we have a number of                
 communities with 30 percent of the people at or below poverty                 
 level.  There's many indicators that could have been used.  I don't           
 have any reason to believe that the unemployment indicator is an              
 incorrect one, but it might need additional factors and that might            
 be something to consider in the bill."                                        
                                                                               
 Number 1494                                                                   
                                                                               
 JOHN ROGERS, Special Assistant to the Superintendent, Northwest               
 Arctic Borough School District, testified via teleconference from             
 Kotzebue.  He said he had been asked by Superintendent Swenson to             
 testify in support of HB 488.  He explained they were in the final            
 design stages of a school facility in Selawik, the first project              
 for which they had received funding that required a local match.              
 "In this particular case," he said, "that requirement was                     
 $1,436,669.  After the money was appropriated by the legislature,             
 we worked with the Department of Education to identify                        
 approximately $245,000 of prior year expenses which qualified for             
 local match purposes.  This left the district with a $1.2 million             
 obligation to complete this requirement for Selawik schools."                 
                                                                               
 Number 1569                                                                   
                                                                               
 MR. ROGERS continued, "Over the last two years, the district has              
 had to utilize all of its cash reserves to meet this obligation.              
 Just recently, the school board appropriated the final $850,000               
 which was necessary for us to go ahead and apply with the local               
 match requirement.  At the same time they were appropriating the              
 $850,000 for construction, they also had to go in and cut                     
 approximately $435,000 out of the operating fund budget.  The                 
 action of the board in this final appropriation for the                       
 construction project in Selawik has utilized all of the district's            
 available cash reserves.  If additional construction funds were to            
 be appropriated by the legislature for our school district, we                
 cannot meet any more local match requirements."                               
                                                                               
 Number 1643                                                                   
                                                                               
 MR. ROGERS indicated that HB 488 provided a method for a waiver of            
 the local match requirement in areas of the state having high                 
 unemployment, such as his borough.  He reiterated the school                  
 district's support of the bill.                                               
                                                                               
 Number 1649                                                                   
                                                                               
 REPRESENTATIVE VEZEY asked Mr. Rogers what the match formula had              
 been.                                                                         
                                                                               
 MR. ROGERS replied he believed the borough's match was 10 percent,            
 providing a 90/10 split.                                                      
                                                                               
 Number 1699                                                                   
                                                                               
 MICHAEL MORGAN, Special Projects Manager, School Finance,                     
 Department of Education, testified that the department acknowledged           
 that districts faced challenges in meeting the local match                    
 requirement.  "And this bill certainly speaks to that," he said.              
 He indicated he was there to answer questions regarding the fiscal            
 note.                                                                         
                                                                               
 CO-CHAIR AUSTERMAN stated his understanding that for the fiscal               
 note, the Department of Education had used the total number of                
 sites, 29.                                                                    
                                                                               
 MR. MORGAN clarified that was municipalities.  "This excludes                 
 REAAs," he said.                                                              
                                                                               
 CO-CHAIR AUSTERMAN stated, "And you've said 11 of them go over the            
 10 percent."                                                                  
                                                                               
 MR. MORGAN replied, "That's correct.  That was using 1995                     
 unemployment figures."                                                        
                                                                               
 Number 1773                                                                   
                                                                               
 CO-CHAIR AUSTERMAN referred to the fiscal note for $873,000 and               
 asked if it was based upon full funding.                                      
                                                                               
 MR. MORGAN clarified it was full funding of the department-                   
 recommended projects for FY 1997.  "This is based on the six-year             
 plan that we put forth within the last couple weeks," he said.                
                                                                               
 CO-CHAIR AUSTERMAN asked if it was full funding for the 11 sites.             
                                                                               
 Number 1805                                                                   
                                                                               
 MR. MORGAN replied, "No, that's based on full funding for all                 
 projects within that fiscal year."  He added, "For the first two              
 fiscal years in the six-year plan, the department targeted, in its            
 six-year plan, a target figure of $100 million a year.  And part of           
 the projects which were recommended for funding under that $100-              
 million-dollar goal were recommended for funding, for example,                
 perhaps, for planning a design only in FY 97, with full funding for           
 construction to follow in FY 98.  So, the $873,000 speaks to the              
 full funding as recommended by the department, but that doesn't               
 necessarily cover the full scope of all the projects in that one              
 year."                                                                        
                                                                               
 CO-CHAIR AUSTERMAN asked if it covered the 11 sites.                          
                                                                               
 MR. MORGAN replied yes.                                                       
                                                                               
 CO-CHAIR AUSTERMAN asked if it covered more than the 11 sites.                
                                                                               
 MR. MORGAN replied, "The $873,000 is just the impact of the 11                
 municipalities that had over the 10 percent.  If you go to                    
 Attachment Number 1, we kind of speak to this by saying -- the                
 first group of figures is total scope and the $873,000 is just the            
 impact if those 11 sites didn't have to pay their participating               
 share for that year."                                                         
                                                                               
 Number 1890                                                                   
                                                                               
 CO-CHAIR AUSTERMAN suggested that over the number of years that               
 they had been funding school construction, not everybody on the               
 list had been funded at once.                                                 
                                                                               
 MR. MORGAN said, "That's correct."                                            
                                                                               
 CO-CHAIR AUSTERMAN pointed out that the department had used a full-           
 list figure for the fiscal note.                                              
                                                                               
 MR. MORGAN replied, "We've used the full-list spread over a six-              
 year period."  He added, "Right now, this six-year period includes            
 more than the full list.  This includes the full list as we                   
 published it this year, plus other projects which have been                   
 currently identified by districts in their six-year plans, which              
 really takes us out into that -- the end of the six-year horizon."            
                                                                               
 Number 1950                                                                   
                                                                               
 CO-CHAIR AUSTERMAN replied, "I guess what I need from you guys is             
 to go back and do an average on what percentage of funding you're             
 getting actually for school construction over the last number of              
 years, what you project to get FY 97, and come back with a figure             
 that shows what you would need, then, for an additional funding for           
 it."                                                                          
                                                                               
 MR. MORGAN said, "If everything on the list was funded this year              
 ... and the 11 districts got waivers, the cost would be $12                   
 million.  That's if all $650 million gets funded in one year, but             
 ... if you total up everything on the current list for                        
 municipalities, excluding REAAs, it comes to $273,983,000.  If the            
 11 districts ... which had over 10 percent unemployment didn't pay            
 their participating share, it would cost an additional                        
 $12,300,000."                                                                 
                                                                               
 CO-CHAIR AUSTERMAN asked for clarification.                                   
                                                                               
 Number 2044                                                                   
                                                                               
 MR. MORGAN referred to Attachment 1, the third page of the fiscal             
 note, and said, "The very top figure is the $273,983,644.  That's             
 total requested by districts right now, on the current list, that             
 aren't REAAs.  Right below it is, out of that 273 [million], 118              
 [million] of it belongs to those 11 districts that had over 10                
 percent unemployment.  If you drop down to the second group of                
 figures, the 57.5 [million], that's how much the participating                
 share is out of the 273 [million] for all those municipalities.               
 The figure right under it is how much the participating share would           
 be for those with over 10 percent unemployment.  In other words,              
 out of the 118 [million], it would be $12,300,000."                           
                                                                               
 CO-CHAIR AUSTERMAN said, "And then, you're saying that the $873,000           
 is based upon what possibly could be funded."                                 
                                                                               
 MR. MORGAN responded, "That was just on our recommended funding.              
 I mean, if we come back to the Governor's plan of $7,100,000, we'd            
 have to go back and look at those individual projects and see how             
 they'd apply.  But that was saying, if we recommended funding of              
 $39,800,000 for districts that were municipalities in FY 97, out of           
 that $39,800,000, the impact of this bill would be the $873,000 in            
 [FY] 97."                                                                     
                                                                               
 Number 2179                                                                   
                                                                               
 CO-CHAIR AUSTERMAN asked if a list was available of the 11 sites or           
 the 33 percent being discussed and then noted it was part of the              
 committee packet.                                                             
                                                                               
 Number 2200                                                                   
                                                                               
 REPRESENTATIVE ELTON expressed concern about the language in the              
 bill that said the exemption will be granted if unemployment                  
 averaged at least 10 percent in the fiscal year immediately before            
 the fiscal year for which the appropriation bill funding the                  
 municipality is passed by the legislature.  He asked, "How many               
 municipalities have those figures that are that recent, or does the           
 Department of Community and Regional Affairs have those figures?              
 Or do they keep them that up-to-date, so that you can just call               
 somebody and say, `what was the unemployment rate?'"                          
                                                                               
 Number 2259                                                                   
                                                                               
 MR. MORGAN replied, "I'm not sure.  I know that in preparing this             
 fiscal note, we had to go back to '95 figures."                               
 REPRESENTATIVE ELTON asked if that was FY 95.                                 
                                                                               
 MR. MORGAN specified it was calendar year 1995, as he understood              
 it.                                                                           
                                                                               
 REPRESENTATIVE ELTON said, "Because this requires that unemployment           
 rates be figured in terms of fiscal years, not calendar years."               
                                                                               
 MR. MORGAN replied, "Right.  And I don't know the answer to that."            
 He noted there were some practical questions that needed to be                
 worked out.                                                                   
                                                                               
 Number 2290                                                                   
                                                                               
 REPRESENTATIVE ELTON pointed out that unemployment rates were not             
 based on fiscal years.  They were based on calendar years.                    
                                                                               
 MR. MORGAN suggested it would probably lap into two calendar years.           
                                                                               
 Number 2345                                                                   
                                                                               
 CO-CHAIR IVAN said he would hold HB 488 in committee for further              
 information.  "As far as unemployment figures are concerned, I                
 believe the Department of Labor can provide that," he added.                  
                                                                               
 SB 54 - ELECTRIC UTIL SERVICE/ APUC                                         
                                                                               
 Number 2381                                                                   
                                                                               
 CO-CHAIR IVAN noted that committee packets for SB 54 included                 
 fiscal notes and sponsor statements, as well as letters of support.           
                                                                               
 TAPE 96-18, SIDE A                                                            
 Number 0026                                                                   
                                                                               
 BRUCE D. SCOTT, Director, Members and Public Relations, Matanuska             
 Electric Association, Incorporated (MEA), testified via                       
 teleconference.  He read the first portion of a four-page document            
 dated March 7, 1996, included in the committee packets.  He                   
 explained that MEA, incorporated since 1941, was now a member-owned           
 nonprofit cooperative serving 29,000 members in Southcentral                  
 Alaska, with a service are of 3,360 square miles.  He discussed the           
 pricing structure of MEA and explained that of the four types of              
 costs to customers, only the wholesale cost of energy went down               
 when MEA lost a customer.  Remaining costs were then spread to                
 fewer customers.  A few large, commercial customers were important            
 to the cooperative; MEA's largest customer represented almost 3               
 percent of total sales, whereas the six largest customers                     
 represented 10 percent.  Therefore, MEA was concerned about "cherry           
 picking," where a competitor might pick up these high-consumption             
 customers, resulting in higher costs to the other consumers.                  
 Therefore, MEA urged passage of SB 54, which he said would allow              
 utilities to preserve their retail loads and avoid                            
 counterproductive and unfair cherry picking.  They suggested the              
 real opportunity for savings was in coordinated planning and                  
 operation of generation facilities.                                           
                                                                               
 Number 0462                                                                   
                                                                               
 SAM COTTEN, Commissioner, Alaska Public Utilities Commission                  
 (APUC), testified via teleconference, indicating the committee had            
 a copy of APUC's position paper on SB 54.  He noted that fellow               
 commissioner Alyce Hanley and Paul Morrison, chief of APUC's                  
 Engineering Section, were also present on teleconference.  Mr.                
 Cotten said the commission unanimously opposed SB 54, basically               
 because it eliminated the opportunity for the commission to analyze           
 potential benefits of competition.  It also eliminated the                    
 potential choice of service options by consumers.  He acknowledged            
 concerns about "cherry picking" and said, "we're not aware of any             
 case where the commission has allowed direct competition.  While we           
 must consider the effect on the current providers, the results                
 could be better rates, better service, more choices."  He added,              
 "the commission feels that protection is already in place and feel            
 that this bill would go against what is a national trend, that I              
 think would apply to Alaska as well, and that's the potential for             
 benefit from competition."                                                    
                                                                               
 ALYCE HANLEY, Commissioner, Alaska Public Utilities Commission,               
 voiced via teleconference that she agreed with Commissioner                   
 Cotten's testimony but had no further comments.                               
                                                                               
 Number 0653                                                                   
                                                                               
 CO-CHAIR AUSTERMAN said, "There's been reference to APUC being able           
 to control competition to some degree.  And is that a correct                 
 statement, that if somebody wants to move into an area, that it               
 does have to come through APUC and some competition, then, is                 
 controlled by APUC?"                                                          
                                                                               
 Number 0695                                                                   
                                                                               
 PAUL MORRISON, Chief, Engineering Section, Alaska Public Utilities            
 Commission, answered via teleconference, saying, "Our current                 
 statutes require a waiver of objection be (indisc.) by a utility              
 trying to get into another utility service area."                             
                                                                               
 MR. COTTEN added, "Basically, the answer is yes.  In order, for               
 example, for somebody to come into Kodiak and compete with Kodiak             
 Electric for providing electric service, they'd have to come to the           
 commission to get permission to do that."                                     
                                                                               
 MS. HANLEY said, "And I think at the present time - there perhaps             
 was one exception - there are no overlapping certificate areas.  I            
 think we basically have just one certificate in each area.  I                 
 think, through some mistake some years ago, there got to be a                 
 portion of an area that overlapped, but for the most part, we have            
 no overlapping.  They're all pretty much monopoly services."                  
                                                                               
 Number 0765                                                                   
                                                                               
 DAVID HUTCHENS, Executive Director, Alaska Rural Electric                     
 Cooperative Association, indicated he had been asked to go through            
 the bill section by section.  He explained:                                   
                                                                               
 "Section 1 is an intent provision that was put in, in one of the              
 committees in the other body last spring, to make it clear that               
 this legislation applies only to service areas for electric                   
 utilities, not any other kind of utility service.                             
                                                                               
 "Section 2 was a provision added in the Finance Committee in the              
 other body that had been something that the APUC had requested so             
 that if the budget ever provides for funding for special assistants           
 to the commissioners, separate from the professional staff of the             
 commission itself, as a whole, that they could be selected outside            
 of the regular state employment system.                                       
                                                                               
 "Section 3 is also something that the commission had recommended.             
 This would eliminate the lame-duck appointment problem that you               
 faced a year ago.  And Section 6 goes with that - it's the                    
 transition provision - so that current commissioners would hold               
 over until early the next year after their term would otherwise               
 have expired in October.                                                      
                                                                               
 "Sections 4 and 5 are the heart of the bill, from our perspective,            
 at least, and we would agree with the commission that the present             
 practice has been that the service areas be separate for electric             
 utilities.  And, frankly, the reason for the legislation is to make           
 sure that it stays that way.  This was the determination made by              
 the state legislature in 1970, that up until that time, you did               
 have overlapping service areas and utilities competing with each              
 other at retail and it was a mess.  And the legislature made the              
 affirmative decision in 1970 to separate these service areas and              
 gave the commission detailed instructions in the statute as to how            
 to separate the service areas.  And we had taken it for granted all           
 these years that that was the natural order that the service areas            
 would remain separate.  But as one spokesman from the commission              
 just now said, there is a good deal of national discussion about              
 some kind of retail competition and that usually goes under the               
 title of retail wheeling.  And this, you know, we have people from            
 the commission in recent years that have been going out to meetings           
 with their counterparts from across the country and they hear a lot           
 of discussion about retail wheeling and they come back, `oh, gee,             
 wouldn't it be nice if we tried retail competition?'  Well, we                
 tried it in this state and it doesn't work very well in the Alaska            
 setting."                                                                     
 Number 0950                                                                   
                                                                               
 MR. HUTCHENS referred to a statement that he had submitted to the             
 committee and said he would not discuss that in the interests of              
 time.  He then referred to a printout from the Kodiak Electric                
 Association that had yellow and pink highlighted lines on it.                 
 "What I'd like to point out with this," he said, "is why it doesn't           
 work very well in the Alaska setting.  You have to have a flexible            
 marketplace for competition to work.  And we don't have that in the           
 Alaska setting, nor are we likely to."  Line 14 of the printout,              
 highlighted in pink, showed that if Kodiak Electric were to lose              
 the fish processors from their system, the rates for everybody else           
 would rise by nearly 15 percent.  He referred to line 6,                      
 highlighted in yellow, and said that showed the amount of                     
 investment devoted to each kilowatt hour of sale in the year.  "You           
 see, what would happen," he said, "is that from '95 to '96, with              
 just losing the fish processors from the system, the amount of                
 investment per kilowatt hour sold would increase from 50 cents to             
 68 cents.  And that would mean a 36 percent stranded investment,              
 investment that would not be utilized in 1996 that was utilized in            
 1995, just from the sheer fact of losing that volume of sales.  The           
 same thing would happen all over the state.  The smaller the                  
 system, the greater the impact."                                              
                                                                               
 Number 1129                                                                   
                                                                               
 REPRESENTATIVE ELTON said, "Using your sheet here, let's assume               
 that somebody wanted to do that.  What would they have to do now to           
 provide service in Kodiak under existing law?"                                
                                                                               
 MR. HUTCHENS replied, "What they would have to do now to provide              
 service, not self-generation, but provide service to somebody else,           
 they would have to make an application to the APUC for authority to           
 serve.  And up to this point, up until very recently, the                     
 commission had always regarded the service areas as exclusive,                
 based on the 1970 statute.  And the last year or two, there have              
 been some sounds coming out of the commission that, `well, we don't           
 really mean those to be exclusive,' that we could provide                     
 overlapping service areas if we chose to do so.  And the authority            
 they cite for that was a 1968 case involving Chugach Electric, but            
 that was before the 1970 act of the legislature that changed all              
 the rules.  But any rate, to answer your question, they'd have to             
 apply to the commission; the commission would have to have a                  
 finding that it was in the public interest to permit this; and then           
 they could take a certificate area away from [an] existing utility            
 and assign it to the new one."                                                
                                                                               
 Number 1211                                                                   
                                                                               
 REPRESENTATIVE ELTON asked if there would be public hearings                  
 throughout that process.                                                      
                                                                               
 MR. HUTCHENS replied, "That is correct.  That's the way we would              
 understand it.  We think it would be unlikely that in a real                  
 thorough test that any of these items could be found in the public            
 interest.  But we've heard some statements from people at the                 
 commission that indicate an intention to proceed in that direction            
 and it's to forestall court tests on this very point is the reason            
 for the legislation."                                                         
                                                                               
 Number 1246                                                                   
                                                                               
 REPRESENTATIVE ELTON thought the use of the fishing industry as an            
 example was interesting, from his perspective, because of the                 
 trouble that industry was facing.  "What would happen if a couple             
 of the fish processing people got together in Kodiak and said,                
 `hey, we've got to cut costs; our production costs are too high, we           
 can't compete with farmed salmon, for example, that's being                   
 produced at x number of cents a pound'?  Under the proposed                   
 legislation, would they be prohibited from going together to                  
 generate their own power?"                                                    
                                                                               
 Number 1278                                                                   
                                                                               
 MR. HUTCHENS replied, "Under the proposed legislation, they would             
 have the absolute right to provide their own self-generation.  But            
 in terms of some entity being created that would sell to the fish             
 processors, they would be prohibited from doing that."                        
                                                                               
 REPRESENTATIVE ELTON asked if they could form a co-op to provide              
 power to themselves.                                                          
                                                                               
 MR. HUTCHENS said, "My understanding of it would be that if it were           
 some kind of a separate entity created, this entity would have to             
 sell power to the fish processors and that would be prohibited."              
                                                                               
 Number 1322                                                                   
                                                                               
 ROBERT MARTIN, JR., General Manager, Tlingit-Haida Rural Electric             
 Association (THREA), noted that he had submitted copies of his                
 testimony, a four-page document.  He discussed the national trend             
 toward competition in the generation and transmission part of the             
 utility business.  He noted that the entire continent was joined in           
 an interconnected grid of transmission and distribution lines                 
 except for Alaska, where only Hyder was connected to the                      
 continental grid.                                                             
                                                                               
 MR. MARTIN mentioned large loads being targeted by neighboring                
 utilities or independent producers.  In many rural communities,               
 there were only one or two large loads, the school and perhaps the            
 village store.  Because of fixed costs for the utility serving                
 residential consumers, rates would necessarily rise to the                    
 remaining customers if those large loads were lost to a competitor.           
 The remaining customers would lower consumption, leading to what              
 was known in the industry as a death spiral.                                  
                                                                               
 Number 1480                                                                   
                                                                               
 MR. MARTIN said, "We support passage of this because it would                 
 protect the rural utilities from unfair competition."  He mentioned           
 steps taken in his region to keep costs down.  "It is important to            
 remember," he said, "that the experience with deregulation in other           
 industries has led to great benefits for the urban areas but has              
 led to decreased service and higher costs in the rural areas."                
                                                                               
 Number 1566                                                                   
                                                                               
 BOB CRAIG testified that he was strongly opposed to SB 54.  "At               
 least in the urban environment, I think there is a need for                   
 competition," he said.  He thought the fiscal note might be                   
 incorrect.  "Competition almost always reduces prices," he said.              
 "We've seen it time and again.  When Mapco came to Juneau, the                
 price of gasoline dropped 30 cents overnight.  With the millions of           
 dollars that the state spends on their power cost equalization                
 program, the state has a great vested interest in seeing more                 
 competition come in and the price being reduced."  He added, "I               
 think the bill should be studied more and at least it should be               
 amended by this committee to exclude large future customers.  Any             
 of the aspects brought up by utilities are for their existing                 
 customers.  They have made an investment and perhaps they should              
 keep those as exclusive.  But future customers, I believe, should             
 be for whoever can produce power at the lowest possible cost, such            
 as the large mines that are coming in around the Juneau area and              
 other communities."  He thought he could produce power                        
 competitively.  "But if I sell it to AEL&P and they resell it,                
 it'll never happen," he added.                                                
                                                                               
 Number 1669                                                                   
                                                                               
 CO-CHAIR AUSTERMAN said, "I've made no bones about my opposition to           
 this bill.  I think that it creates monopolies and I'm against the            
 fact that we would try to run free enterprise out by creating these           
 exclusive areas."  He noted that he was distributing to committee             
 members a letter from Chugach Electric Association to                         
 Representative Mark Hanley that showed that Chugach Electric was              
 also opposed to the bill.                                                     
                                                                               
 Number 1701                                                                   
                                                                               
 CO-CHAIR IVAN indicated he thought more work needed to be done on             
 the bill.  He assigned SB 54 to a subcommittee chaired by                     
 Representative Vezey.                                                         
                                                                               
 REPRESENTATIVE KOTT asked who else would be on the subcommittee and           
 asked Co-Chair Austerman if there were any way to alleviate his               
 concerns.                                                                     
 CO-CHAIR AUSTERMAN replied, "I've looked at this really hard and I            
 don't see any.  I'm concerned with -- in my area, I've got an 18              
 cent kilowatt hour that it costs me to live there and I'm on a                
 hydro project.  So I think if I got a hydro project that also, now,           
 all of a sudden, becomes exclusive at 18 cents a kilowatt hour, I'm           
 very concerned that it's going to be 24 or 30 cents a kilowatt hour           
 before we're done there.  And if there's no competition, I think              
 that's where it might direct."                                                
                                                                               
 Number 1770                                                                   
                                                                               
 REPRESENTATIVE ELTON expressed that he was somewhat in between.  "I           
 think we're trying to deal with different problems in different               
 parts of the state with one approach," he said.  "And I'm not sure            
 that necessarily works, because I think the problems in a rural               
 area where you have very high up-front costs for establishing                 
 infrastructure, and then if you allow cherry picking to occur, I              
 can see where that could be very, very destructive to the                     
 residential consumers, especially.  I'm not so sure that is                   
 something that necessarily occurs in the urban areas."  He cited              
 the example of cable TV in Juneau.  "I happen to think that if                
 there were competition, I wouldn't have to spend $50 a month for              
 cable TV," he said.  "I'm just not sure that we've got an approach            
 that works for both areas."  He suggested that structuring a system           
 in which APUC could use public input to protect the different types           
 of areas was the best way.  "I'm not sure that this bill does it,"            
 he emphasized.                                                                
                                                                               
 Number 1865                                                                   
                                                                               
 CO-CHAIR IVAN noted that he represented a small, rural community.             
 He referred to APUC, which controlled rates depending on population           
 and the amount of revenue, and said "I've enjoyed their                       
 protection."  He asked Representatives Kott and Elton to sit on the           
 subcommittee for SB 54.                                                       
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 There being no further business to conduct, CO-CHAIR IVAN adjourned           
 the House Community and Regional Affairs Committee meeting at 3:49            
 p.m.                                                                          
                                                                               

Document Name Date/Time Subjects