Legislature(1997 - 1998)
03/18/1998 01:45 PM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 18, 1998
1:45 P.M.
TAPE HFC 98 - 67, Side 1
TAPE HFC 98 - 67, Side 2
CALL TO ORDER
Co-Chair Gene 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 was absent from the meeting.
ALSO PRESENT
Representative Alan Austerman; Cliff Stone, Staff,
Representative Austerman; Representative Fred Dyson; Lisa
Torkelson, Staff, Representative Dyson; Jim Hornaday, Staff,
Representative Kott; Mary Gore, Staff, Senator Miller; Pam
Varni, Executive Director, Legislative Affairs Agency; Keith
Laufer, Alaska Industrial Development and Export Authority,
Department of Commerce and Economic Development; Guy Bell,
Director, Division of Retirement and Benefits, Department of
Administration.
SUMMARY
HB 367 "An Act relating to part-time public school
students; and providing for an effective date."
HB 367 was REPORTED out of Committee with a "do
pass" recommendation and with and a fiscal impact
note by the Department of Education, dated
3/11/98.
HB 411 "An Act relating to issuance of a winery license
in a local option area."
HB 411 was HELD in Committee for further
consideration.
HB 467 "An Act relating to employees of the legislature
who are employed under a personal services
contract."
HB 467 was REPORTED out of Committee with a "do
pass" recommendation and with a fiscal impact note
by the Legislative Affairs Agency and a zero
fiscal note by the Department of Administration.
SB 261 "An Act relating to the Special Olympics World
Winter Games to be held in Anchorage in the year
2001; establishing a reserve fund for the games;
providing certain duties and authority for the
Alaska Industrial Development and Export Authority
regarding financing for those games; and providing
for an effective date."
SB 261 was HELD in Committee for further
consideration.
HOUSE BILL NO. 411
"An Act relating to issuance of a winery license in a
local option area."
Representative Alan Austerman noted that a constituent in
Point Lyons on Kodiak Island requested the legislation. The
constituent wants to start a winery using natural berries.
Winery licenses are not contained in the local option
section of the statutes. The legislation would add a winery
license in statute. He noted that the Alcohol Beverage
Control Board has the ability to restrict the retail sale of
wine by the winery. The activity would be strictly
wholesale.
Co-Chair Therriault clarified that the wine cannot be
produced in Point Lyons without the statute change.
Representative Austerman noted that the Alcohol Beverage
Control Board (ABC) supports the legislation. The Board
indicated, to Representative Austerman, that the omission of
winery licenses was an oversight. He stated the Point Lyons
winery would only be approved for wholesale operations.
Retail sales of alcohol are not allowed in Port Lyons.
Wineries are not currently covered under state statutes.
Co-Chair Therriault clarified that if the legislation is
enacted that Port Lyons would have to have another election
to allow the winery operation.
In response to a question by Representative Foster,
Representative Austerman explained that a winery could
produce wine a dry village without being allowed to sell the
wine retail.
Co-Chair Hanley questioned if beer making was covered in
current statutes.
Representative Davies observed that the legislation does not
distinguish between wholesale and retail. There is no
option for strictly wholesale operation.
CLIFF STONE, STAFF, REPRESENTATIVE AUSTERMAN recalled that
conversations with the ABC Board and the Department of
Revenue indicated that the ABC Board would prohibit retail
sales in dry or wet areas. He acknowledged that the
legislation does not specify that retail sales would be
limited.
Representative Davies observed that the village would have
to trust that retail sales would not occur.
Representative Moses did not think the legislation would
open up consumption in a dry community. He thought that a
retail license would be needed.
Representative Davies maintained that the vote would not
prohibit someone from seeking a retail license.
Representative Austerman thought that a retail license would
be needed.
Co-Chair Therriault observed that "wholesale" could be
added. Representative Austerman clarified that the intent
is to only allow wholesale operation. Co-Chair Hanley
recommended that the intent be clarified in the legislation.
Representative Austerman suggested that "wholesale" be added
before "winery". Co-Chair Therriault questioned if there
would be a special license for a wholesale winery versus a
retail winery or would it be a licensed winery that is
producing for wholesale only.
Representative Moses did not think that anything would
change except that the community would allow the production
of wine. He reiterated his belief that a retail license
would be needed.
Co-Chair Therriault observed that the legislation would
leave the interpretation up to the ABC Board.
Representative Austerman did not think that wine could be
dispensed in the village without a retail license. He
thought that a retail license would have to be approved by a
vote of the residents.
Co-Chair Hanley referred to the definition of "winery" under
AS 04.11.140. The license authorizes the holder to sell
wine in quantities of less then five gallons to individuals
on the licensed premise. He summarized that the winery
license would allow retail sells on the premise.
Co-Chair Therriault noted that the Committee agrees with the
intent of the legislation. He concluded that the winery
should be allowed to produce for wholesale purposes in a dry
area, but not engage in retail sales.
Representative Davies observed that both operations could be
available in the legislation. An additional subsection
could be added for wholesale only operations.
HB 411 was HELD in Committee for further consideration.
HOUSE BILL NO. 367
"An Act relating to part-time public school students;
and providing for an effective date."
FRED DYSON, SPONSOR testified in support of HB 367. He
observed that HB 158 was passed during the 1997 legislative
session. House Bill 158 provided that school districts
could not discriminate against part-time students. He
observed that the Anchorage School District has not complied
with the intent of the legislation. The Anchorage School
District has used a regulation stating that requests by
part-time students would be filled after requests by full-
time students have been satisfied. He maintained that HB
158 and the Alaska State Constitution provide that part-time
students be treated equally. He clarified that preferences
could be given to students who needed a class to graduate,
but that both part-time and full-time students must be
treated the same. He observed that the State Board of
Education would meet during the next week. He expressed the
hope that the Board would modify 4AAC 45.035(b) to bring the
regulations into compliance with HB 158.
Representative Dyson referred to a letter by Patrick Hickey,
Assistant Superintendent, Kenai Peninsula Borough School
District, dated 2/6/98. He noted that Mr. Hickey inferred
that part-time students should be treated in the same manner
as tourist or out-of-state hunters that have to pay an extra
fee. He pointed out that the parents of part-time students
pay taxes.
Representative Dyson observed that the Department of
Education's fiscal note is indeterminate. He acknowledged
that it would be impossible to determine how many students
would take advantage of the legislation, but did not thin
that the number would be great. He observed that 96 of the
42,000 students in Anchorage attend part-time.
Co-Chair Therriault disagreed with Mr. Hickey's assessment
that the legislation would create a preference for part-time
students. He observed that a policy allowing graduating
seniors preference would be within the scope of the
legislation, as long as part-time and full-time students
were treated equally.
Representative Dyson acknowledged concerns that part-time
students not be enrolled in multiple districts.
Representative Davies observed that students can attend any
school in a district. If the school is outside of their
attendance area then they are admitted on a first come
basis. He maintained that part-time students should not
have priority over full-time students. He observed that the
Valdez superintendent did not anticipate a large impact as a
result of the legislation. The Valdez superintendent
observed that 10 percent of the full-time students dropped
classes to become part-time students as a result of HB 158.
Representative Davies expressed concern with this unintended
affect.
Representative Dyson stated that part-time students should
be treated the same as full-time students in regards to
attendance in schools outside of their attendance areas. He
observed that some part-time students are taking college
classes or working while they finish their high school
requirements.
Representative Davies asked if the legislation would apply
to elementary students. He observed that it could be
disruptive to elementary classes to have children come and
go through the day. Representative Dyson noted that special
needs children have benefited by a gradual exposure to the
public school environmental.
LISA TORKELSON, STAFF, REPRESENTATIVE DYSON recounted a case
where a child was having difficulty reading. The child
benefited from a combination of home schooling and public
school attendance. She observed that the number of
elementary students attending on a part-time basis is
minimal.
Representative Foster MOVED to report HB 367 out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
HB 367 was REPORTED out of Committee with a "do pass"
recommendation and with and a fiscal impact note by the
Department of Education, dated 3/11/98.
HOUSE BILL NO. 467
"An Act relating to employees of the legislature who
are employed under a personal services contract."
Jim Hornaday, Staff, Representative Kott spoke in support of
the legislation. He observed that the purpose of the bill
is to add the option of hiring legislative employees using a
personal services contract and eliminate the Public
Employees Retirement System (PERS) membership requirement
for the employment under the contract.
Mr. Hornaday explained that most State agencies have the
ability to hire temporary or nonpermanent employees who do
not receive retirement benefit credit while they are
employed. Temporary or nonpermanent employees are short
term, often paid on an hourly basis, and may not receive
other benefits such as medical insurance, or leave benefits.
However, because of language in the PERS statute (AS 39.35)
the Legislature does not have the same ability as other
State of Alaska Agencies to hire temporary employees during
a legislative session unless the employee participates in
the retirement system.
Mr. Hornaday noted that for short-term temporary employment
this requirement results in a needless cost to the
Legislature and a tax disadvantage to the employee. For
example, the summer tour guides in the Capitol, most of who
are students earning money for school must be placed in the
retirement system. Money is deducted from their paychecks
for retirement which they may withdraw after leaving
employment, but because it was tax deferred, they must not
only pay the tax, but they also must pay a penalty for early
withdrawal. This is a waste of time and money. This same
situation applies to the laborers who work to load and
unload the moving vans, and these people generally only work
a few days at a time.
Mr. Hornaday pointed out that the same retirement issue
caused an even more significant problem when the Legislative
Affairs Agency needed to fill the Chief of Security position
for the 1998 session. In this case, the stringent
qualifications for the position almost dictate that the only
qualified applicants be former Alaska law enforcement
officers who are retired under PERS. Individuals who are
retired under PERS cannot accept a position covered by the
retirement system without terminating their retirement.
Because of the short-term nature of the position,
terminating retirement is generally an unacceptable option.
Mr. Hornaday observed that in the past "professional
services" contracts have been utilized to hire individuals
for certain jobs to avoid the retirement problem. However,
this solution has become less and less of an option because
of IRS rules on contractor versus employee relationships.
Under the IRS guidelines the duties and responsibilities of
the Chief of Security, as well as the tour guides and
laborers, make them clearly an employee. Using a "personal
services" contract clearly classifies the individuals as an
employee in order to satisfy IRS requirements and this bill
eliminates the conflict with PERS requirements.
Mr. Hornaday observed that the bill does not adversely
affect any current employees. The current PERS law protects
the rights of legislative staff and employees by recognizing
that they work in a different environment than most state
employees. This bill will not change that language. House
Bill 467 only adds an additional option in those cases when
participation in the retirement plan is too restrictive or
not appropriate. It gives the Legislature the same
flexibility afforded to other State Agencies.
PAM VARNI, EXECUTIVE DIRECTOR, LEGISLATIVE AFFAIRS AGENCY
spoke in support of HB 467. She observed that the
legislation would provide the Agency flexibility to hire
temporary or non-permanent employees. She explained that
the problem dates to the 1970's when the Legislature had
daily paid employees. At that time, the Legislature began
to provide retirement and health benefits. There were
inequities between daily paid and monthly paid employees.
Retirement legislation was passed to end these inequities.
The way the legislation was written removed the flexibility
to hire temporary employees. She observed that professional
contracts have been used, but have created problems
regarding worker's compensation and the employee/employer
relationship. She pointed out that the legislation would
save money. No current legislative employees would be
affected.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION spoke in support of the
legislation. He stated that there would be no impact to the
Public Employees Retirement System.
Representative Foster MOVED to report HB 467 out of
Committee with the accompanying fiscal notes. There being
NO OBJECTION, it was so ordered.
HB 467 was REPORTED out of Committee with a "do pass"
recommendation and with a fiscal impact note by the
Legislative Affairs Agency and a zero fiscal note by the
Department of Administration.
SENATE BILL NO. 261
"An Act relating to the Special Olympics World Winter
Games to be held in Anchorage in the year 2001;
establishing a reserve fund for the games; providing
certain duties and authority for the Alaska Industrial
Development and Export Authority regarding financing
for those games; and providing for an effective date."
MARY GORE, STAFF, SENATOR MILLER observed that she is also
the Area Director, for the Special Olympics, Juneau. Ms.
Gore noted that the Legislation is a result of hard work by
a variety of people to guarantee that Anchorage would be
awarded the Special Olympics World Winter Games in 2001.
Ms. Gore observed that, several years ago, Jim Belamaci,
Executive Director of Special Olympics Alaska, decided it
would be a great thing to bring the World Winter Games to
Anchorage. He enlisted the help of Senator Ted Stevens. An
organizing committee was formed. Last summer the Anchorage
organizing committee was told by the Special Olympics
International (SOI) that in order to be awarded the bid, the
state would need to be the financial guarantor. The Special
Olympics International would not go in the hole as a result
of any location being awarded the bid. She observed that
the money does not need to be appropriated prior to the bid
being awarded but state support must be demonstrated.
Ms. Gore stressed that the State must be on the record as
the obligor if the money is not raised by private sources.
This legislation "morally obligates" the state to make up
the difference, up to $4 million dollars if the organizing
committee does not raise the funds. She maintained that the
risk to the State is minimal. The total budget for the
games is $8 million dollars, with $4 million dollars in cash
and $4 million dollars in kind contributions. Thus far
about $1 million dollars in cash has been raised. The
organizing Committee has 3 years to raise the remainder.
The legislation has a set of checks and balances. The
Alaska Industrial Development and Export Authority will
oversee fundraising and report to the legislature on January
2 of each year as to the status of their efforts. She
maintained that in the event that the Committee falls
behind, a gentle push from the legislature could put them
back on track.
Ms. Gore concluded that the legislation only "morally
obligates" future legislatures. In the year 2001, the
legislature would need to appropriate the funding and
authorize expenditures for use if it were needed.
Co-Chair Therriault expressed concern that the state of
Alaska not be responsible for more than the initial $4
million dollars. Ms. Gore assured him that the state of
Alaska's liability would not exceed that amount.
Representative Martin questioned Ms. Gore in regards to
housing. Ms. Gore clarified that the intention is to use
housing available at Anchorage military bases. Athletes
would be housed at Fort Richardson and the Elmendorf Air
Force Base. She noted that Camp Carroll had been used in
the past for Alaskan Special Olympic activities, but that
the military bases were preferable. Athletes could be
housed in a semblance of an Olympic village. Athletes want
to be able to stay together.
(Tape Change, HFC 98 -67, Side 2)
Co-Chair Hanley observed that the Committee could raise more
than $4 million dollars, and still spend more than they
raised. He concluded that the state of Alaska could be
liable for the amount that was spent beyond what was raised,
even though the initial $4 million dollars was met. Ms.
Gore emphasized that it is not the intent that the state of
Alaska be responsible for more than the initial $4 million
dollars. She observed that the budget was developed based
on previous games.
Co-Chair Hanley reiterated concerns that the State not be
responsible for amounts over budget. He stressed that the
legislation must clarify that the state of Alaska is not
responsible for expenditures, if the Committee does not
stick within their budget.
KEITH LAUFER, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT
AUTHORITY, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT
(AIDEA) testified in support of SB 261. He emphasized that
the moral obligation guarantee makes sense. He observed
that AIDEA would provide a finding of reasonable due
diligence and work on a financial plan. The Alaska
Industrial Development and Export Authority has had
experience reviewing financial plans. He stressed that
AIDEA will watch to make sure that the budget stays within
the financial plan.
Representative Martin clarified that an AIDEA representative
would be at the financial meetings.
In response to a question by Representative Martin, Ms. Gore
stated that they did not know how many athletes would be
competing. She estimated that there would be 6,000 to 7,000
thousand people participating. This includes athletes,
trainers, coaches, families and press. Eight hundred to a
thousand athletes are expected to participate.
Representative Davies observed that the Legislature would be
morally obligated to a cumulative total of $4 million
dollars if there is insufficient money from the other
sources to satisfy the finance plan. He pointed out that
the finance plan is not limited to $4 million dollars in
cash.
Mr. Laufer observed that the International Special Olympics
Committee sought a straight $4 million dollar guarantee by
the state of Alaska. A $4 million dollar moral obligation
was offered in place of a straight guarantee. Co-Chair
Therriault questioned if the guarantee would be on the first
$4 million dollars or on subsequent money. Mr. Laufer
clarified that the guarantee would be on the last $4 million
dollars needed for the game. He pointed out that the
legislation requires the financial plan to minimize the cost
to the State. The cost to the State would be after all
other sources are insufficient.
Ms. Gore stressed that if additional cash is raised that the
intent is that they be able to spend the money. Co-Chair
Therriault questioned if the state of Alaska would be
responsible for money expenditures beyond $4 million
dollars. Ms. Gore stated that the intent of the legislation
is to exempt the state from obligation once the $4 million
dollars is spent.
Mr. Laufer referred to section 4(d). He noted that AIDEA
has to find after reasonable due diligence that the plan
minimizes the cost to the state of Alaska. The budget would
only be increased after a finding that the burden of the
state has been minimized to zero.
Co-Chair Hanley suggested that the state of Alaska's
guarantee should be up to the first $4 million dollars in
cash.
Representative Martin asked if transportation costs are paid
for the athletes. Ms. Gore noted that athletes pay for
their own transportation. Food is the major cost. Some
venues will be free or at a reduced cost. She clarified
that food, transportation and housing would be purchased at
a reduced cost from the military.
Co-Chair Therriault noted his intent to draft a committee
substitute to clarify that the state of Alaska's would only
guarantee the first $4 million dollars in cash.
SB 261 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 2:50 p.m.
House Finance Committee 10 3/18/98
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