Legislature(1997 - 1998)
04/15/1997 01:48 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 15, 1997
1:30 P.M.
TAPE HFC 97-97, Side 1, #000 - end.
TAPE HFC 97-97, Side 2, #000 - end.
TAPE HFC 97-98, Side 1, #000 - end.
TAPE HFC 97-98, Side 2, #000 - end.
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:45 p.m.
PRESENT
Co-Chair Hanley Representative Kelly
Co-Chair Therriault Representative Kohring
Representative Davies Representative Martin
Representative Davis Representative Moses
Representative Foster Representative Mulder
Representative Grussendorf
ALSO PRESENT
Senator Lyda Green; Lynne Smith, Staff, Representative
Bunde; Nancy Buell, Director, Division of Teaching and
Learning Support, Department of Education; James Popham, IOX
Assessment Associates; Tuckerman Babcock, Staff, Senator
Green; Marty Rutherford, Deputy Commissioner, Department of
Natural Resources; John Baker, Assistant Attorney General,
Department of Law.
SUMMARY
HB 146 "An Act relating to competency testing
requirements for secondary students; and providing
for an effective date."
HB 136 was HELD in Committee for further
consideration.
HB 244 "An Act relating to cost-of-living adjustments to
state employee compensation; and providing for an
effective date."
HB 244 was reported out of Committee with a "do
pass" recommendation and with three zero fiscal
notes by the Office of the Governor, the
Legislative Affairs Agency, and the Alaska Court
1
System.
SB 109 "An Act relating to land used for agricultural
purposes and to state land classified for
agricultural purposes or subject to the
restriction of use for agricultural purposes only;
and annulling certain program regulations of the
Department of Natural Resources that are
inconsistent with the amendments made by this
Act."
HCS CSSB 109 (FIN) was reported out of Committee
with a "do pass" recommendation and with five
fiscal impact notes, three by the Department of
Natural Resources, one by the Department of Law,
and one by the Alaska Court System.
HOUSE BILL NO. 146
"An Act relating to competency testing requirements for
secondary students; and providing for an effective
date."
LYNNE SMITH, STAFF, REPRESENTATIVE BUNDE, testified in
support of HB 146. She asserted that many high school
graduates are finishing school and receiving high school
diplomas without the skills necessary to survive in the
world.
Ms. Smith noted that over twenty states now conduct student
competency tests for a standard high school diploma. The
students in these states must pass a test with a minimum
score before they are allowed to graduate. Three states
also have an exit exam for an "Endorsed Diploma." To earn
this, the students not only have to pass the test, but must
score at a designated level, higher than the minimum
required for a regular diploma. "Honors Diplomas" are
awarded in three states for higher testing levels.
Ms. Smith observed that under the provisions of CS HB 146
(HES), a student is required to pass a competency
examination in the areas of reading, English, mathematics,
science, Alaska and United States history before receiving a
high school diploma. The test would be selected by the
Department of Education. A pupil who failed this
examination and was no longer in attendance would get a
certificate of attendance. It would indicate the number of
years of attendance, but would also show that the pupil has
neither passed a competency examination nor received a
diploma. The pupil would have the opportunity to be re-
examined, within three years after the pupil left high
school.
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Representative Martin provided members with Amendment 1
(copy on file). He noted that the amendment would begin
testing earlier.
NANCY BUELL, DIRECTOR, DIVISION OF TEACHING AND LEARNING
SUPPORT explained that it is important for students to have
multiple opportunities to take the test and be remediated.
Co-Chair Therriault summarized that the test would be
administered to earlier grades so that there would be a
number of years for students to be brought up to speed.
Ms. Buell noted that the Department could not only
administer the test in the senior years. Co-Chair
Therriault observed that the test would be administered in
grades 9 through 12.
Representative Mulder noted that the committee substitute
would test United States and Alaska history.
Ms. Buell noted that social science tests are developmental.
She stressed that social science is a broad field. She
stated that social science tests are more complex. She
emphasized that it would be difficult to estimate the cost
of these tests.
Representative Mulder spoke in support of testing in
mathematics, English and reading. He failed to see how a
diploma could be denied to a child that did not have an
understanding of Alaska history. Ms. Buell observed that
the Department cautioned against the inclusion of this
subject area.
Representative Martin maintained that the development of
humanity and civilization are basic subjects. He stated
that the Department of Education should be able to evaluate
the students. He noted that Amendment 1 would test children
in grades 4, 8 and 11, and make sure remedial courses are
available.
Ms. Buell clarified that the Department of Education doesn't
have the expertise to develop tests that will withstand
legal scrutiny, from the state level, to deny a diploma.
She observed that teachers throughout the districts are
adequately testing competency. She emphasized that there
are no mandated curriculums or standards in the State.
Representative Kelly questioned why there is a three year
limit on the test. Ms. Smith observed that the Sponsor felt
that it would be a good idea to enable the student to have
another chance. She observed that Representative Bunde felt
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that three years was a reasonable amount of time to retake
the test.
Representative Kelly spoke in support of extending the time
that a student could take the test.
Representative Grussendorf noted that good students may not
be able to pass the test. He asked what would happen to
children that cannot pass the test. Ms. Buell stated that
the Department is concerned about students that do not pass
the test. She observed that studies in Texas show that
adequate students have dropped out of school after failing
the test, due to test anxiety or other reasons. She
stressed that students that could succeed in secondary
education will fail the test due to other factors.
Representative Grussendorf stated that the system sometimes
fails in the delivery of the initial skills, such as reading
and writing.
Co-Chair Hanley clarified that the legislation would not
affect GED's. Ms. Buell noted that GED's cannot be given to
anyone who is currently in school. Co-Chair Hanley noted
that the student has three years after they leave high
school to pass the test. He felt that three years was a
reasonable extension.
Ms. Buell noted that other states have begun testing in the
8th or 9th grades. She stated that it takes 3 to 4 years to
get everyone through the test. She added that there will be
a substantial dropout rate following the institution of the
test.
Co-Chair Hanley stated that it is clear that testing needs
to start earlier. He maintained that if able students are
failing the test then the test is flawed. He stated that,
ideally, it would be up to each individual school district,
starting in the first grade, to make sure their students
were trained. He observed that the question is "at what
place do we as a State mandate, so that the school districts
that aren't doing their jobs are forced to do have a test."
Representative Davis expressed concern that the test would
compete with the GED program. He asked how the content of
the test would relate to the GED test.
Co-Chair Therriault noted that pupils have to meet all the
requirements of high school and pass the test to get a high
school diploma.
JAMES POPHAM, IOX ASSESSMENT ASSOCIATES testified via the
teleconference network. He stated that he has developed
4
assessment tests and has testified regarding assessment
tests. He explained that the motivation behind assessment
tests is to increase the caliber of the education that the
State's children are receiving. He observed that Alaska is
in a position to profit from the experiences of other
states. He emphasized that the nature of the test is the
most important issue. He maintain that if the test is
inappropriate or cheaply purchased that education in Alaska
will not benefit.
Mr. Popham explained that the tests measure the important
knowledge and skills that legislators think a high school
student ought to possess before receiving a high school
diploma. He stated that if the test conceptualizes those
skills in a manner that the teachers of the state can
address then the test becomes a powerful catalyst to
improving the quality of the instruction. If the test is
not well designed it can be an impediment to high quality
instruction. The test functions as a curriculum magnet.
Whatever is assessed becomes a target of instruction for the
state's teachers. He cautioned against an "off the shelf"
test, such as a standardized achievement test. He noted
that these tests are not designed as instructional targets.
He observed that these tests cannot be defended in court.
He stated that it costs between $150 and $250 thousand
dollars to develop a test per subject matter. He stressed
that this level of funding has to be available to assure
that the test will withstand litigation.
Co-Chair Hanley observed that HB 146 provides that the
Department of Education develop and score the test. He
asked what areas are the most commonly tested.
Mr. Popham cautioned against installing measures of content
that would not be considered mainline for United States
citizens to possess, such as Alaska history. He stated that
it would be a violation of a child's constitutional right to
be refused a diploma for not passing a test on Alaska
history. He observed that most tests focus on reading,
language arts and mathematics. Newer tests have included
science and social studies. He noted that the first tests
were developed to assess basic skills. He noted that there
are four major areas reading/language arts, mathematics,
science, and social studies.
In response to a question by Representative Martin, Mr.
Popham noted that tests have been installed because
legislators did not believe that students were receiving a
proper education. Tests have been used as a lever to
increase quality. He cautioned that the installation of a
badly conceived test has negative impacts.
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Representative Martin noted that legislators are expressing
the frustration of parents, employers and colleges. Mr.
Popham agreed that citizens have cried out for the tests.
He noted that tests, that are built properly, benefit
structural planning decisions and improve the quality of
schooling.
Representative Mulder asked if the scope was limited to only
reading, writing, and mathematics, would the State have a
more defensible test. Mr. Popham indicated that limiting
the subject matter would make it easier to build first rate,
legally defensible tests. He noted that there has been
ample experience and guidance in the area of basic skills.
He observed that the work of other states could be used.
Mr. Popham noted that educators and non-educators must
review each item for bias. Representatives of individual
minority groups must review each item. He emphasized that
it is too important not to do the job well.
Representative Mulder asked if the State would save money by
limiting the scope. Mr. Popham agreed that the State would
save money by limiting the scope. He emphasized that any
time an exotic area, such as social studies, is considered
the cost is greater. He noted that social studies includes
history, geography and government. He recommended that the
State start with what is well known.
Representative Martin maintained that if a person is going
to be a full citizen of America they must learn the full
political process.
(Tape Change, HFC 97-97, Side 2)
Mr. Popham observed that the inclusion alone of social
studies as a test area would not be contested in court.
However, if the test was not properly developed, with
involvement of all concerned constituencies, it could lead
to a court challenge. He stated that tests cost
approximately $200 to $250 thousand dollars per subject
area.
Co-Chair Hanley stated that the intent is to test for skills
versus understanding. He observed that the ability to read
allows learning in a lot of areas. He emphasized the
benefit of verbal and written communication. He asked how
often tests should be issued.
Mr. Popham recommended that the law not include all the
details. He stated that students should be given four years
notice that they are going to master the skills that are
going to be tested. He observed that no state has been able
6
to require testing with less than three years notice.
Students should begin testing in the ninth or tenth grade.
Multiple forms of the test are needed.
Co-Chair Therriault summarized that the first test would be
offered to ninth graders two years from now. The test would
be phased in over four years.
Mr. Popham stated that parents and children should be
notified in advance of the first test. He observed that
some lawsuits have claimed that students have been
emotionally marked by doing bad on the first test. Parents
should be given a sample test.
Representative Martin emphasized that parents and educators
need to be responsible. Mr. Popham stated that teachers and
administrators do not like testing. He agreed that the
focus should be on the educational delivery system. He
stressed that the notion is to have reform stimulated by the
tests.
Representative Grussendorf observed that many tests depend
on memory. He asked if a true skills test could be
constructed.
Ms. Buell stated that the Department of Education does not
have the expertise to construct the test. She referred to
the Alaska Student Content Standards. She observed that the
standards address learning in a more sophisticated way. She
stated that the CAT 5 could not be used as an exit exam.
Representative Martin MOVED to adopt Amendment 1 (copy on
file). He observed that the amendment incorporates
recommendations by Anchorage educators. Amendment 1 would
assess students at grades 4, 8 and 11. The amendment would
also require intervention plans to be developed to assist
students whose assessments reveal they have not mastered
skills required for the exit exam.
Co-Chair Therriault noted that there will be multiple
chances for students to be tested. He observed that school
districts can implement testing at earlier grades. He asked
if the fiscal impact of remedial instruction had been
considered. Representative Martin responded that he did not
know the impact of remedial instruction requirements.
Co-Chair Therriault reiterated that testing will occur in
grades 9 through 12. Representative Martin stressed that
testing should begin in earlier grades.
Ms. Buell explained that the Department will have bench
marks available to school districts, of what students will
7
need to know in each grade. Co-Chair Therriault observed
that most states administer exit tests in high school.
Co-Chair Hanley noted that under the amendment the
Department of Education would determine the examination, but
the district would set their own standards. Representative
Martin responded that perhaps the Department of Education
would be a better facilitator.
Co-Chair Therriault pointed out that individual districts
can do what they want to prepare their students. The State
establishes the hurdle for graduation.
Representative Martin noted frustration by teachers.
A roll call vote was taken on the MOTION to adopt Amendment
1.
IN FAVOR: Martin, Grussendorf, Foster, Kohring, Kelly
OPPOSED: Mulder, Davis, Hanley, Therriault
Representatives Moses and Davies were absent from the vote.
The MOTION PASSED (5-4).
Representative Mulder discussed Amendment 2 (copy on file).
Amendment 2 would delete the requirement for testing
science, and social science. He stated that the amendment
would leave in the basic areas of reading, writing and
mathematics. He stressed that the amendment would reduce
the fiscal note and future litigation costs.
Representative Kelly MOVED to rescind the Committee's action
in adopting Amendment 1. Representative Kelly expressed
concern with the fiscal cost of the amendment. There being
NO OBJECTION, it was so ordered.
Representative Martin spoke in support of Amendment 1. He
maintained that the amendment will be minor in relationship
to the failure of students in earlier school years. Co-
Chair Therriault asserted that establishment of the test
will cause school districts to reevaluate their students.
Representative Davis emphasized that the legislation has
been drafted around other states' experiences. He stressed
that the amendment should be addressed in separate
legislation. He stated that the legislation is the first
step. Representative Mulder agreed that HB 146 is the
starting point from which to expand. He emphasized that if
the legislation is too broad and encompassing it will fail.
8
A roll call vote was taken on the MOTION to adopt Amendment
1.
IN FAVOR: Grussendorf, Kohring, Martin
OPPOSED: Mulder, Davis, Foster, Kelly, Moses,
Hanley, Therriault
Representative Davies was absent from the vote.
The MOTION FAILED (3-7).
Representative Mulder MOVED to adopt Amendment 2. There
being NO OBJECTION, it was so ordered.
Representative Mulder asked if the Department of Education's
fiscal note could be revised downward. Ms. Buell stated
that the Department's fiscal note was underestimated. She
stressed that the fiscal note is conservative. She observed
that the fiscal note did not anticipate implementation of
tests for two years. She observed that funding should be
transferred from personal services to the contractual line.
She stressed the need for expertise. She did not think the
fiscal impact of the first year would be changed. She
emphasized that if the test security is lost it has to be
redeveloped and reprinted.
In response to a question by Co-Chair Therriault, Ms. Buell
stated that additional clerical support should be
maintained. She noted that Department of Education staff
has to oversee security, confidentially, scoring, and
transmission of data. She estimated that one higher level
staff person could be eliminated. She observed that the
Department of Education currently has one person for all
assessment tests, with no clerical support. She noted that
this is almost the only general fund position that "does
this kind of thing". Other positions are supported with
federal funds. She emphasized that it is not possible to
redeploy staff from other tasks.
Co-Chair Hanley recounted that the cost to develop the test
is around $200 thousand dollars per test. He observed that
reading and English would be one test. He stressed that
only two tests would be developed.
Ms. Buell noted that travel is necessary to convene groups
of people who will scrutinize the test.
Co-Chair Therriault noted that the educational specialist II
position, at range 21A, costs $71,602 thousand dollars. He
suggested that this amount be removed from personal
services. He stated that he would support $400 thousand
dollars in contractual. Ms. Buell stated that this would be
9
the minimum amount needed. She maintained that reading is a
separate area from the rest of language arts.
Representative Kohring spoke against the legislation. He
questioned the cost of the legislation. Ms. Buell noted
that Hawaii's assessment budget is $500 thousand dollars per
year. Hawaii's student population is similar to Alaska's.
Representative Kohring emphasized the need to reduce the
budget.
Ms. Buell stressed that the Department of Education cannot
support the legislation if it is not adequately funded.
In response to comments by Representative Martin, Co-Chair
Therriault emphasized that tests have to be defensible in
court.
HB 146 was HELD in Committee for further consideration.
(Tape Change, HFC 97-98, Side 1)
SENATE BILL NO. 109
"An Act relating to land used for agricultural purposes
and to state land classified for agricultural purposes
or subject to the restriction of use for agricultural
purposes only; and annulling certain program
regulations of the Department of Natural Resources that
are inconsistent with the amendments made by this Act."
Co-Chair Therriault provided members with a new work draft,
SENATOR LYDA GREEN reviewed the work draft. She noted that
page 6, lines 6 - 14 allow a perpetual covenant. Perpetual
covenant is extended to cover homestead entry properties.
The right to construct housing in a subdivided parcel is
granted upon a $4 thousand dollars fee, paid to the State.
Senator Green noted that there is a six year statute of
limitation on actions brought against a parcel owner.
Senator Green stated that the $4.0 thousand dollar fee, for
the right to construct housing, shall be adjusted to
correspond with the change in the consumer price index
(CPI).
Senator Green observed that the construction of condominiums
is not permitted. Representative Davis questioned if
consideration was given to the language "non-commercial
entities." Senator Green observed that the owner has the
right to construct needed housing for farm related
10
activities.
Co-Chair Hanley noted that the fee was reduced from $6
thousand dollars to $4 thousand dollars, adjusted for CPI.
Senator Green clarified that Point McKenzie is set aside as
different from the other agricultural areas. She emphasized
that some of the parcels are so remote that the addition of
a home does not increase the value. The right to construct
housing on Point McKenzie parcels on future subdivision
would be based on an appraisal. Future Point McKenzie
parcels owners would not have the choice of paying the $4
thousand dollars fee.
Co-Chair Hanley pointed out that he purchased a condo at
half of what it sold for in 1981. He maintained that CPI
does not always reflect market price. Senator Green stated
that the purchaser has the option to do an appraisal.
Senator Green referred to an omission in the work draft.
She stated that the intention is that anyone currently on
Point McKenzie land will fall under the same requirements as
other agricultural land holders. Therefore, they could
choose to pay the $4 thousand dollars fee or have an
appraisal. In the future, land conveyed by the State to an
individual will be subdivided by appraisal only.
TUCKERMAN BABCOCK, STAFF, SENATOR GREEN discovered that
language governing appraisals was inadvertently deleted by
the drafter.
In response to a question by Representative Davis, Co-Chair
Therriault explained that agricultural land holders receive
two rights to the land. The legislation would add other
rights. Land holders would pay an incremental cost for the
additional right. Representative Davis asserted that the $4
thousand dollar fee does not relate to the value of the
land.
Mr. Babcock explained that the appraisal is on the
additional value on the right to construct housing.
Appraisal values are estimated at between 0 to $8 thousand
dollars.
Co-Chair Hanley expressed concern that the fee could rise to
$10 thousand dollars with inflation, over-time. He observed
that an appraisal would protect the landowner.
Representative Davis questioned if future transfers to
children of the landowners would be consistent with Article
VIII, Section 1 of the Constitution. He observed that
preferential conveyance is not in the public interest.
Senator Green did not think there would be a constitutional
11
problem. She stressed that the intention is to take the
State off the title of the land.
SB 109 was HELD in Committee for further consideration.
HOUSE BILL NO. 244
"An Act relating to cost-of-living adjustments to state
employee compensation; and providing for an effective
date."
Co-Chair Hanley stated that the legislation makes the non-
union salary increases subject to legislative approval. He
explained that language in the operating budget denying the
contracts did not deny increases for non-union members since
they are set in statutory schedule. The legislation will
add language that will make non-union salary increases
subject to funding from the Legislature.
Co-Chair Hanley observed that there is no fiscal impact to
the legislation. Without the legislation the departments
would have to absorb the cost of the increase.
Representative Martin MOVED to report HB 244 out of
Committee with individual recommendations and with the
accompanying fiscal notes.
Co-Chair Hanley reiterated that there is no savings or
impact from the legislation. Without the legislation the
departments would have to absorb the cost of the increase.
There being NO OBJECTION, HB 244 was moved from Committee.
HB 244 was reported out of Committee with a "do pass"
recommendation and with three zero fiscal notes by the
Office of the Governor, the Legislative Affairs Agency, and
the Alaska Court System.
SENATE BILL NO. 109
"An Act relating to land used for agricultural purposes
and to state land classified for agricultural purposes
or subject to the restriction of use for agricultural
purposes only; and annulling certain program
regulations of the Department of Natural Resources that
are inconsistent with the amendments made by this Act."
Co-Chair Therriault MOVED to adopt work draft, #O-LS0690/L,
Chenoweth, 4/15/97. There being NO OBJECTION, it was so
ordered.
Senator Green provided members with Amendment 1 (copy on
file). The amendment would add back the appraisal language.
12
Senator Green reviewed Amendment 1:
* Page 8, line 6, after "parcel" delete the remainder of
the sentence and insert:
(1) is $4,000 for the parcel, subject to
adjustment under (h) of this section; or
(2) shall be determined by an appraisal by an
appraiser under contract to the landowner in the
parcel; the appraisal must:
(A) be based upon the value of the parcel at
the time of the original state conveyance of the
agricultural rights, subject to adjustment under
(h) of this section; and
(B) include the value, determined as of the
date of subdivision, of the right to construct
housing by the landowner under (d)(3) of this
section.
* Page 9, Line 29, Delete "all
Insert "the"
* Page 9, Line 29 After "land" insert "estate"
* Page 11, Line 1 After "Act" insert: for those
landowners who purchase parcels
conveyed by the state after the
effective date of this act."
Co-Chair Hanley noted that the appraisal must be based upon
the value of the parcel at the time of the original state
conveyance of the agricultural rights, subject to adjustment
under (h) of this section; and include the value, determined
as of the date of subdivision, of the right to construct
housing by the landowner under (d)(3) of this section.
Mr. Babcock explained that there are two options. The first
option would be to pay the $4 thousand dollars. The second
option would be to have an appraisal. The appraiser is
instructed to base the value of the parcel on the value at
the time of the original state conveyance, adjusted for
inflation. The value of the agricultural rights land
adjusted for inflation is compared to the incremental value
for the right to construct housing. There is no inflation
adjustment for the right to construct housing.
Co-Chair Hanley argued that the value would still be based
on the CPI. He questioned why it would be necessary to
establish a value and then adjust it by the CPI on the
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parcel.
Mr. Babcock observed that the drafter thought that the
procedure was the only vehicle for someone to appraise the
difference in the value of the land with agricultural rights
only and the additional right to construct housing. He
stated that subsection (A) or (B) could be deleted.
Co-Chair Hanley noted that the appraisal would be based on
the value of the property adjusted for the CPI. Mr. Babcock
suggested that subsection (A) be deleted.
Senator Green noted that the intent was to base the
comparison on what it would have cost to buy agricultural
rights or patent land at the time of purchase, adjusted for
today's price.
Representative Moses maintained that there is no reason to
get an appraisal. In response to a question by
Representative Moses, Senator Green clarified that the land
holder determines which method will be used.
Co-Chair Hanley spoke in support of allowing the owner to
have an appraisal. He noted that if the CPI applied to the
dollar amount is over the market value the owner would
benefit from an appraisal.
Senator Green reiterated that the owner has the choice. Mr.
Babcock noted that the Department supports allowing the
owner discretion.
Co-Chair Hanley MOVED to delete subsection (A). The revised
amendment would read:
* Page 8, line 6, after "parcel" delete the remainder of
the sentence and insert:
(1) is $4,000 for the parcel, subject to
adjustment under (h) of this section; or
(2) shall be determined by an appraisal by an
appraiser under contract to the landowner in the
parcel; the appraisal must include the value,
determined as of the date of subdivision, of the
right to construct housing by the landowner under
(d)(3) of this section.
* Page 9, Line 29, Delete "all
Insert "the"
* Page 9, Line 29 After "land" insert "estate"
* Page 11, Line 1 After "Act" insert: for those
14
landowners who purchase parcels
conveyed by the state after the
effective date of this act."
There being NO OBJECTION, the amendment was adopted.
Co-Chair Therriault MOVED to adopt Amendment 1 as amended.
There being NO OBJECTION, it was so ordered.
Representative Kelly MOVED to adopt Amendment 2 (copy on
file). Amendment 2 would delete "or spousal equivalent of
the person." He maintained that it should not be the policy
of the State to encourage benefits without the contract of
marriage.
Senator Green did not object to the amendment.
Representative Moses thought that the amendment would result
in problems due to common law. Co-Chair Therriault pointed
out common law marriages do not exist in Alaska.
Representative Kohring added his name to Amendment 2 as a
sponsor.
There being NO OBJECTION, Amendment 2 was adopted.
Representative Martin referred to the Department of Law's
fiscal note. He noted that the Department of Law will
defend challenges to the land instead of the grantee.
(Tape Change, HFC 97-98, Side 2)
JOHN BAKER, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
clarified that currently the State retains the underlying
fee interest. Under current law, the State can move to
foreclose by bringing an administrative hearing against
owners that abuse the agricultural covenant. Under the
legislation, the State would be required to bring an
original action into court to enforce any alleged
violations.
Representative Martin noted that this change would result in
additional cost to the state.
Senator Green stressed that the Department of Law's fiscal
note was based on the anticipation that some people would be
disgruntled by the fact that there was no charge for the
right to construct housing. She concluded that since the
legislation now charges for this right there will be less
litigation.
MARTY RUTHERFORD, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL
15
RESOURCES added that since the fiscal note was compiled the
legislation has been amended to allow neighbors or citizens
to bring civil action if someone abused the agricultural
covenant. Soil and Water Conservation Districts have also
been added as arbitrators to ensure that people are aware of
the agricultural requirements. She maintained that much of
the onerous for management of the covenant has been shared
by people in the district.
Representative Martin asserted that the person who brings
suit should be responsible for the cost.
Ms. Rutherford clarified that if the State pursues the civil
action the cost would be born by the State. If a citizen
pursues a civil action they would bear the cost. She
maintained that abuses occur because people are not aware of
the limitations. She stressed that there have not been many
abuses under current law. She did not anticipate that many
actions would be pursued.
Mr. Baker agreed that the burden of enforcement would be
spread by the private action. He pointed out that the State
would still have to monitor any actions that are filed. The
State will also have to monitor the parcels and any
subdivision or conveyance of the parcels for violations. He
noted that there is only one full-time assistant attorney
general representing the Division of Agriculture. That
position is funded through the Agricultural Revolving Loan
and would not be available for this type of enforcement. He
emphasized that during 1988 - 1992 there were approximately
70 - 80 litigations at any given time with two and one-half
full time attorneys working on the litigation. He observed
that under any new legal regime there is a period of
adjustment where parties test the parameter of the law.
Co-Chair Hanley observed that the intent is to give owners
title with a restrictive covenant. The covenant has to be
followed. Any actions restricted by the covenant can
continue until the owner is sued. If the activity continues
over a period of time the court can rule that the covenants
are waived for non-enforcement. He pointed out that the
Department of Natural Resources anticipates visiting each
parcel once every three years to see if the covenants are
being followed. He stressed that most violations will be
unintentional. He expressed concern that the Department of
Law's fiscal note allocates a full-time attorney. He noted
that there are 475 parcels. He did not think that there
would be 40 cases a year. He suggested that the Department
of Law's fiscal note is too high. He acknowledged that it
is difficult to anticipate caseloads.
Mr. Baker reiterated that there were two and one-half, full-
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time attorneys and one full-time paralegal working on a
total of 80 active litigation cases at any one time. He
noted that the cases tend to be fairly complicated with a
project life of 4 - 5 years. He emphasized that the cases
entail a lot of factual issues that can be litigated. The
recurring theme has been the failure to comply with the
legal restrictions. He noted that defenses have been raised
on lender liability. The agricultural land holders have
argued that the State's restrictions made repayment of their
loans impossible, resulting in third party litigation.
Ms. Rutherford pointed out that the current attorney is
funded through the Agricultural Revolving Loan Fund. The
funding for this position will be reduced to $20 thousand
dollars in FY 98. There will be no full-time attorney or
any general funds for the this position in the Division of
Agriculture in FY 98.
Co-Chair Hanley did not think the legislation would result
in the level of litigation that occurred between 1988 to
1992. He questioned how many current cases are currently
being litigated. He did not think that the legislation
would result in 35 cases.
Representative Mulder referred to the Department of Natural
Resources, Division of Land's fiscal note.
JANE ANGVIK, DIRECTOR, DIVISION OF LAND, DEPARTMENT OF
NATURAL RESOURCES discussed the Division's fiscal note. She
observed that the change in revenues is the amount of money
anticipated to come into the Division as a result of
payments for the purchase of building rights. The change in
revenues should be reduced by 20 percent to reflect the
reduction from $6 to $4 thousand dollars. The change in
revenues are anticipated at $60 thousand dollars.
Ms. Angvik noted that the purpose of the bill is to address
concerns by farmers that they cannot borrow money with their
current conveyance documents. The farmers have requested
title to the land with an agricultural restriction to allow
them to borrow on the land. The Department of Natural
Resources supports the concept of the bill. She noted that
the ability to put a house on each of the three newly
subdivided parcels is the principle value that will be
increased. She observed that Point McKenzie can only be
subdivided by appraisal because it is closest to Anchorage.
Ms. Angvik discussed enforcement. She observed that the
State, a neighbor or the municipality can sue a land holder
for their failure to live up to the agricultural covenants.
In addition, Soil and Water Conservation Districts could
sue. She observed that the covenants are recorded at the
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time of sale.
Ms. Angvik observed that similar legislation was vetoed by
the Governor in the past legislative session. She noted
that the previous bill did not require the purchaser to pay
for the additional rights. The Governor was also concerned
that state agricultural rights would not be protected and
the State could convene in the title to terminate the rights
of individuals. She observed that the State has not taken
action against a farmer. There were also concerns that, in
the previous version, the remedy for non-compliance could
only be enforced through a civil suit by the State.
Ms. Angvik noted that the Department of Natural Resources
would prefer a conservation easement to keep the State in
the line of title. The Department of Natural Resources
supports the bill.
Ms. Angvik further discussed the Division's fiscal note.
She noted that the process of converting existing patents
would remain the same. The monitoring and enforcement of
covenants could be reduced. She indicated that she needed
to discuss this component with the Department of Law. She
reiterated that the change in revenues would be reduced to
reflect the reduction from $6 to $4 thousand dollars.
Co-Chair Therriault pointed out that fiscal notes could be
addressed in the Conference Committee.
In response to a question by Representative Davis, Ms.
Angvik agreed that if the covenants are not enforced they
could be lost. Mr. Baker observed that if covenants are not
enforced there is a risk that the court will deem that the
covenant has been waived. The covenants must be enforced
uniformly to prevent an argument that they have been waived.
Ms. Angvik noted that page 8, line 24 indicates that there
is a six year statute of limitation. She clarified that a
conservation easement would run with the agricultural uses
of the land. Everything except the homesite would have the
conservation easement.
Co-Chair Therriault noted that the Department of Natural
Resources would adjust their fiscal note based on the
changes to the bill. He added that all the fiscal notes
would be reviewed by the Conference Committee.
Representative Mulder MOVED to report HCS CSSB 109 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes.
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ADJOURNMENT
The meeting adjourned at 5:09 p.m.
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