Legislature(1997 - 1998)
01/19/1998 03:03 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
January 19, 1998
3:03 P.M.
TAPE HFC 98 - 1, Side 1
TAPE HFC 98 - 1, Side 2
CALL TO ORDER
Co-Chair Gene Therriault called the House Finance Committee
meeting to order at 3:03 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
Representative Rokeberg; Representative Jeannette James;
Representative Bill Hudson; Representative Alan Austerman;
Representative Kim Elton; Mike Greany, Director, Division of
Legislative Finance; Barbara Belknap, Director, Alaska
Seafood Marketing Institute; Dean Paddock, Juneau.
SUMMARY
HB 73 "An Act extending the termination dates of the
salmon marketing programs of the Alaska Seafood
Marketing Institute and the salmon marketing
assessment; and providing for an effective date."
HB 73 was REPORTED out of Committee with a "do
pass" recommendation and with two fiscal impact
notes, one by the Department of Commerce and
Economic Development, and one by the Office of the
Governor.
HJR 2 Proposing an amendment to the Constitution of the
State of Alaska relating to repeal of regulations
by the legislature.
HJR 2 was REPORTED out of Committee with a "do
pass" recommendation and with a zero fiscal note
by the Department of Commerce and Economic
Development.
HOUSE BILL NO. 73
"An Act extending the termination dates of the salmon
marketing programs of the Alaska Seafood Marketing
Institute and the salmon marketing assessment; and
providing for an effective date."
REPRESENATIVE BILL HUDSON testified in support of HB 73.
He noted that the legislation would extend the 1-percent
domestic salmon marketing assessment, which would otherwise
sunset on June 30, 1998. He observed that the industry has
suffered from low returns and competition from farm salmon.
He emphasized the importance of marketing. He observed that
the amount and manner of collection would not be changed.
Revenues from the tax assessment would be approximately
$2.35 million dollars in FY 98.
Representative Martin questioned if the industry should
administer the program. He asked the amount of general fund
dollars spent by the Department of Revenue to collect the
tax.
Representative Hudson noted that the buyer collects from the
harvester. The Department of Revenue collects and accounts
for the assessment. He observed that the law states that
the Legislature may appropriate the funds back to the Alaska
Seafood Marketing Institute (ASMI). He spoke in support of
maintaining state collection of the assessment. He
emphasized that the State of Alaska manages and oversees
program quality and coordinates all aspects of the industry,
including growth and development.
Representative Martin reiterated that private enterprise
"left to its own, would do the best for itself."
Co-Chair Therriault observed that the tax is a designated
receipt passed through to ASMI. He noted that there is no
mechanism to force the private sector to join an association
and pay dues.
Representative Hudson clarified that there are no general
fund dollars in the program. The tax is collected from the
harvester and the processor. There is no general fund
match. He observed that federal dollars were matched with
processor fees. He noted that funding was taken from the
domestic market and used as a state match for federal
funding of the overseas program.
In response to a question by Representative Kelly,
Representative Hudson explained how taxes are distributed
within ASMI. There are three sources of funds for ASMI.
ASMI receives federal funds through the federal overseas
marketing program in the Department of Agriculture. This
amounts to approximately $3.4 million dollars, which is
appropriated through the Legislative Budget and Audit
Committee. These funds require a state match of
approximately $500 hundred thousand dollars and can only be
spent on overseas markets. Processors voted to initiate a
self-assessment of three-tenths of a percent on every pound
of fish purchased. The one-percent marketing tax was an
effort to move into the domestic market when Norwegian
farmed salmon began to usurp Alaskan product.
Representative Kohring questioned if government is the
appropriate vehicle to collect taxes.
Representative Davis noted that the Department of Revenue
administers the program.
BARBARA BELKNAP, DIRECTOR, ALASKA SEAFOOD MARKETING
INSTITUTE clarified that the Department of Revenue collects
the assessment as part of the three-percent municipal fish
tax. One-percent goes to ASMI and two-percent goes to the
municipalities.
Representative Hudson acknowledged that there is probably
some cost to the Department of Revenue for the collection of
the tax. He emphasized that the cost is minimal.
MIKE GREANY, DIRECTOR, LEGISLATIVE FINANCE DIVISION
clarified that the are no unrestricted direct general funds
appropriated to match the federal funds. He explained that
the assessments are not classified as part of the statutory
designated funds. They remain general fund program receipts
because of their status as a tax. All funds collected for
the program are accounted for separately and reappropriated
to the program.
Co-Chair Therriault pointed out that the Department of
Commerce and Economic Development's fiscal note should be
corrected to reflect the assessment's status as general fund
program receipts.
Mr. Greany observed that the fish taxes were not included as
designated program receipts. He explained that the
Constitution (Article IX, Section 7) states that all
proceeds from any state tax shall not be dedicated to any
special purpose. These funds remain part of the state
treasury. He noted that general fund program receipts go
to the general fund, but are accounted for separately. He
acknowledged that funds that are not considered part of the
general fund are often perceived as dedicated funds. He
observed that appropriations are divided into general funds
or other funds. General fund program receipts are
designated as "general funds". Designated program receipts
are designated as "other funds".
Representative Davies maintained that it is appropriate for
these funds to be included in the "other funds" category.
Representative Martin referred to "shared taxes". Mr.
Greany clarified that the legislation does not pertain to
shared taxes.
DEAN PADDOCK, JUNEAU testified in support of the
legislation. He observed that the State of Alaska serves as
a pass through for the funds. He urged that the program
remain a state collection. He asserted that the majority of
fishermen will support the assessment as long as they are
confident the funds will be used by ASMI. He stressed that
the assessment benefits the entire State of Alaska. He
maintained that tax collection is one of the legitimate
functions of state government.
REPRESENTATIVE ALAN AUSTERMAN spoke in support of the
legislation. He stressed that the State receives revenues
from the fish Alaskans sell on the open market, the more
fish sold the more money the state makes. He noted that, in
FY 96, the Raw Fish Tax amounted to over $7 million dollars.
He stressed that fisheries business taxes, in FY 96, raised
over $18 million dollars. He emphasized that revenues
offset any cost to the Department of Revenue.
REPRESENTATIVE KIM ELTON responded to questions raised by
previous comments. He observed that the ASMI board has
discussed privatization. He noted that former Governor
Hickel requested that ASMI end their privatization effort at
the time of the Bristol Bay salmon strike. He emphasized
that ASMI is funded through industry dollars. He compared
efforts of the tourism and fisheries industries to fund
their effort. He observed that the Alaska Visitors
Association (AVA) is still using state and local tax
dollars.
Representative Grussendorf MOVED to report HB 73 out of
Committee with accompanying corrected fiscal notes. Co-
Chair Therriault stated that the Department of Commerce and
Economic Development's fiscal note would be corrected to
reflect the proper fund source.
HB 73 was REPORTED out of Committee with a "do pass"
recommendation and with two fiscal impact notes, one by the
Department of Commerce and Economic Development and one by
the Department of Revenue.
HOUSE JOINT RESOLUTION NO. 2
Proposing an amendment to the Constitution of the State
of Alaska relating to repeal of regulations by the
legislature.
REPRESENTATIVE NORM ROKEBERG, SPONSOR, HJR 2 testified in
support of HJR 2. He noted that the legislation proposes an
amendment to Alaska's Constitution. He observed that the
legislature has no method to deal with "rogue" regulations
that do not meet the intent of statutes or are objectionable
as a matter of public policy. He acknowledged that similar
proposals have been defeated three times. He provided
members of the Committee with the 1980 proposed
constitutional amendment, as proposed by the legislature and
the ballot question (copies on file). He stressed that the
ballot question did not adequately reflect the resolution
passed by the Legislature. In 1980 the Legislature passed
legislation, which allowed the Legislature to bring a cause
of action, after a request of the Lieutenant Governor, to
change regulations. He acknowledged that previous attempts
to allow the Legislature to annul regulation have failed but
maintained that there has never been an organized effort to
support this issue. He emphasized that there are a number
of organizations that support the concept. He asserted that
the legislation would right an imbalance in the balance of
powers between the legislative and executive branches. He
observed that the Constitutional Convention gave the
executive branch an enormous amount of power.
Representative Rokeberg noted that HJR 2 was amended in the
House Judiciary Committee. "After finding that a regulation
is inconsistent with its enabling statute," was added on
page 1, lines 6 and 7. He recommended that this language be
deleted and the original version of the bill be adopted. He
maintained that the additional language would bind the hands
of the legislature.
REPRESENTATIVE JEANETTE JAMES, CO-SPONSOR, HJR 2 testified
in support of the legislation. She echoed remarks by
Representative Rokeberg. She noted the difficulty of
deleting regulations. She observed that some regulations
are not implemented. She stressed that a regulation can
technically implement the chapter without working. She
spoke in support of the original version of HJR 2.
Representative Martin spoke in support of the legislation
In response to comments by Representative Martin, Co-Chair
Therriault clarified that the statutes allow an individual
or the Legislature to challenge a regulation in Superior
Court.
Representative Davis asked if there is a constitutional
question regarding the separation of powers. Representative
Rokeberg clarified that the legislation would amend the
Constitution.
(Tape Change, HFC 98 - 1, Side 2)
Representative James stressed that by not implementing
regulations for legislation that has been passed, the
executive branch can issue an "out of pocket veto." She
emphasized that the executive branch cannot suppress
legislation by not failing to implement regulations. She
stressed the need for the Legislature to have more "clout".
She asserted that the Legislature needs a "hammer". She
acknowledged that a voluntary process is needed for the
Legislature and the Administration to work together on
regulations. She emphasized that the Legislature writes law
and that regulations implement law. She noted that the
obligation of the Legislature is to write the laws and that
the obligation of the Administration is to administer the
laws. She estimated that the Legislature would not have to
use its clout often.
Representative Davies stressed that the separation of powers
is routed on the practicality of how much time the
Legislature wants to spend on writing regulations. He
suggested that the Legislature has enough to do dealing with
policy issues. Implementation of the law is the process of
writing regulations, and following the public hearing
process. He did not think that the Legislature should be
involved in this process. He pointed out that there is a
regulation review committee. He suggested that the
executive's ability to veto is an appropriate element in the
balance of power.
Representative Kelly stressed that after a regulation is
repealed there would be a period of time before a new
regulation could be implemented. Representative James noted
that there is a 30-day period before a regulation can be
implemented. Representative Kelly observed that it could
take up to a year for a new regulation to be implemented.
Representative Rokeberg emphasized that it is easier to pass
a resolution than amend statute. He noted that the Governor
can veto bills. He cannot veto a resolution. He stressed
that it is easier to pass a resolution by simple majority
than to overturn a veto. He added that resolutions could be
used as guidance to correct problems in regulations. He
observed that the regulation review process can be speeded
up. He clarified that there is an emergency regulation
process. He stated that the legislation provides a
legislative veto. He observed that, according to the court,
the Governor's veto is there to act as a check upon corrupt
or hasty and ill considered legislation. He pointed out
that there is no process to check a run amok bureaucracy.
He maintained that a legislative veto would be a check upon
corrupt or hasty and ill-considered regulations.
Representative Kelly expressed concern that non-elected
officials can create the force of law through regulations.
He noted that, through the passage of HB 130, the Governor
is ultimately responsible for regulations.
Representative Davis noted that the state of Utah provides
that regulations be reviewed every three years. He
maintained that an automatic review brings awareness to any
problems that exist in regulations. Corrections are made to
prevent repeal of regulations. He spoke in support of the
Legislation.
Representative Grussendorf asserted that political or
special interests have motivated most of the resolutions
that he has seen. He maintained that resolutions do not
receive adequate public hearings. He noted that the 1980
ballot amendment would have allowed regulations to be
annulled by concurrent resolution. He noted that concurrent
resolutions are easier to pass then joint resolutions.
Representative Martin observed that the public gets upset
with the legislature when regulations exceed the law.
Representative Kohring expressed support for the
legislation. He stated that his most common constituent
concerns relate to regulations. He maintained that society
is over regulated.
Co-Chair Hanley MOVED to ADOPT HJR 2 as the version before
the Committee. Representative Davies OBJECTED.
Representative Davies stated that "we don't want the
Legislature running amok." He spoke in support of the House
Judiciary substitute.
Co-Chair Therriault expressed concern that the Judiciary
version opens the legislation to litigation. He questioned
what would be required in regards to the finding.
Representative Grussendorf spoke in support of CSHJR 2
(JUD). He noted that concerns are brought to the
Administrative Regulation Review Committee. The
Administrative Regulation Review Committee makes a statement
of findings. He suggested that the Administrative
Regulation Review Committee can provide findings.
Co-Chair Therriault pointed out that a regulation could be
consistent with statute but still overly burdensome.
Representative Martin spoke against the inclusion of
language requiring a finding.
Representative Grussendorf suggested that the "where as"
section would take the place of a finding.
A roll call vote was taken on the motion to adopt HJR 2 as
the version before the Committee.
IN FAVOR: Davis, Foster, Kelly, Kohring, Martin, Therriault,
Hanley
OPPOSED: Davies, Grussendorf
Representatives Moses and Mulder were absent from the vote.
The MOTION PASSED (7-2).
Representative Davies MOVED to ADOPT Amendment #1 (copy on
file). Amendment # 1 would require adoption of the
resolution by twenty-seven members of the House and fourteen
members of the Senate.
Representative Rokeberg spoke against the amendment.
Representative Davis noted that it only takes a simple
majority to pass a law. Representative Davies pointed out
that a simple majority can pass a bill, but that it is
subject to a veto.
Co-Chair Therriault observed that the original policy by the
Legislature would remain. A resolution would only serve to
direct how the original policy should be implemented.
A roll call vote was taken on the motion to adopt Amendment
IN FAVOR: Davies, Grussendorf
OPPOSED: Davis, Foster, Kelly, Kohring, Martin, Therriault,
Hanley
Representatives Mulder and Moses were absent from the vote.
The MOTION FAILED (2-7).
Representative Kohring MOVED to report HJR 2 out of
Committee with accompanying fiscal note. Representative
Davies OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Davis, Foster, Kelly, Kohring, Martin, Therriault,
Hanley
OPPOSED: Davies, Grussendorf
Representatives Mulder and Moses were absent from the vote.
The MOTION PASSED (7-2).
HJR 2 was REPORTED out of Committee with a "do pass"
recommendation and with a zero fiscal note by the Department
of Commerce and Economic Development.
ADJOURNMENT
The meeting adjourned at 4:35 p.m.
House Finance Committee 8 1/19/98
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