Legislature(1997 - 1998)

05/05/1998 02:00 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
           HOUSE FINANCE COMMITTEE                                             
              May 5, 1998                                                      
                 2:00 P.M.                                                     
                                                                               
TAPE HFC 98 - 153, Side 1                                                      
TAPE HFC 98 - 153, Side 2                                                      
TAPE HFC 98 - 154, Side 1                                                      
TAPE HFC 98 - 154, Side 2                                                      
TAPE HFC 98 - 155, Side 1                                                      
                                                                               
CALL TO ORDER                                                                  
                                                                               
Co-Chair Gene Therriault called the House Finance Committee                    
meeting to order at 2:00 p.m.                                                  
                                                                               
PRESENT                                                                        
                                                                               
Co-Chair Therriault   Representative Kohring                                   
Representative Davies  Representative Martin                                   
Representative Davis   Representative Moses                                    
Representative Grussendorf Representative Mulder                               
Representative Kelly                                                           
                                                                               
Co-Chair Hanley  and Representative Foster were absent from                    
the meeting.                                                                   
                                                                               
ALSO PRESENT                                                                   
                                                                               
Senator Jerry Mackie; Representative Joe Ryan; Jim Hornaday,                   
Staff, Representative Kott; Jerry Reinwand, Lobbyist, Blue                     
Cross Blue Shield, Juneau; Marianne Burke, Director,                           
Division of Insurance, Department of Commerce and Economic                     
Development; Dean Guaneli, Chief Assistant Attorney General,                   
Criminal Division, Department of Law; Brett Huber, Staff,                      
Senator Halford; Barbara Huff Tuckness, Teamsters Union;                       
Wendy Redman, Vice President, Statewide Programs, University                   
of Alaska; Dwight Perkins, Special Assistant, Department of                    
Labor; Robert Pearson, Intern, Senator Leman; Barbara                          
Miklos, Child Support Enforcement Division, Department of                      
Health and Social Services; Paul Fuhs, Lobbyist, City of                       
Yakatat; Ben Brown, Staff, Senator Kelly; Brook Mils, Alaska                   
Public Officers Commission; Dan Branch, Human Services                         
Section, Assistant Attorney General, Department of Law; Neil                   
Slotnick, Assistant Attorney General, Commercial Section,                      
Department of Law.                                                             
                                                                               
The following testified via the teleconference network:                        
Jennifer Taylor, Fairbanks; Ed Linguist, Anchorage School                      
District, Anchorage; Dick Mylius, Division of Land,                            
Anchorage.                                                                     
                                                                               
SUMMARY                                                                        
                                                                               
HB 344 "An Act relating to paternity establishment and                         
child support; relating to the crimes of criminal                              
nonsupport and aiding the nonpayment of child                                  
support; and amending Rule 37(b)(2)(D), Alaska                                 
Rules of Civil Procedure; and providing for an                                 
effective date."                                                               
                                                                               
 CSHB 344 (FIN) was REPORTED out of Committee with                             
"no recommendation" and with five zero fiscal                                  
notes, three by the Department of Administration,                              
one by the Department of Revenue, one by the                                   
Department of Community and Regional Affairs; and                              
one fiscal impact note by the Department of                                    
Administration.                                                                
                                                                               
HB 490 "An Act relating to insurance premium taxes."                           
                                                                               
CSHB 490 (FIN) was REPORTED out of Committee with                              
"no recommendation" and with a fiscal impact note                              
by the Department of Commerce and Economic                                     
Development.                                                                   
                                                                               
SB 105 "An Act relating to legislative ethics; relating                        
to the filing of disclosures by certain                                        
legislative employees and officials; and providing                             
for an effective date."                                                        
                                                                               
SB 105 was HELD in Committee for further                                       
consideration.                                                                 
                                                                               
SB 218 "An Act relating to the crime of murder and to                          
murder of children."                                                           
                                                                               
 HCS CSSB 218 (FIN) was REPORTED out of Committee                              
with a "do pass" recommendation and with two zero                              
fiscal notes, one by the Department of                                         
Corrections, dated 2/12/98 and one by the                                      
Department of Labor, dated 2/12/98; and one fiscal                             
impact note by the Department of Administration,                               
dated 2/12/98.                                                                 
                                                                               
SB 281 "An Act relating to general grant land                                  
entitlements for the City and Borough of Yakutat;                              
and providing for an effective date."                                          
                                                                               
HCS CSSB 281 (CRA) was REPORTED out of Committee                               
with a "do pass" recommendation and with a fiscal                              
impact note by the Department of Natural                                       
Resources.                                                                     
                                                                               
SB 336 "An Act relating to excluding professional hockey                       
team members from worker's compensation coverage."                             
                                                                               
CSSB 336 (L&C) was REPORTED out of Committee with                              
"no recommendation" and with a Department of                                   
Labor.                                                                         
HOUSE BILL NO. 490                                                             
                                                                               
"An Act relating to insurance premium taxes."                                  
                                                                               
JAMES HORNADAY, STAFF, REPRESENTATIVE PETE KOTT testified in                   
support of HB 490.  He explained that Representative Kott                      
sponsored the legislation by request.  The legislation                         
exempts premiums paid by employers who participate in the                      
Public Employees' Retirement System (PERS) or in the                           
Teachers' Retirement System (TRS) and premiums paid under                      
contracts purchased under AS 39.30 from the tax levied on                      
insurers in AS 21.09.310.  He maintained that the                              
legislation would encourage participation in these programs                    
and assist individual employees.                                               
                                                                               
REPRESENTATIVE JOE RYAN addressed section 3.  He noted that                    
the state of Alaska charges a 2.7 percent yearly premium                       
tax.  No premiums are written in Alaska with a value of $100                   
hundred thousand dollars or more.  There are approximately                     
12,000 premiums written offshore.  Insurance polices are                       
written for $500 million to several billion dollars with                       
premiums as high as $200 million dollars a year.  The                          
principle is put into a trust for the beneficiary at the                       
death of the policyholder.  This is considered a gift.  The                    
55 percent state tax is not applicable on the trust.  He                       
noted that the legislation would allow Alaska to be                            
competitive by reducing the premium tax on policies greater                    
than $100 thousand dollars a year to one-tenth of one                          
percent.  He noted that offshore jurisdictions have no                         
premium tax.                                                                   
                                                                               
JERRY REINWAND, LOBBYIST, BLUE CROSS BLUE SHIELD, JUNEAU                       
explained in response to a question by Representative Kelly,                   
that the basic question is whether public entities should be                   
subject to the tax.  He noted that the state of Washington                     
passed legislation in 1994, which raised their tax to 2                        
percent.  The retaliatory tax was implemented in response to                   
the state of Washington's tax.  The state of Alaska exempted                   
itself from the tax.  The statute remained silent in regards                   
to the University of Alaska.  He believes that the                             
University is a state entity and is covered by the                             
exemption.  He questioned if school districts and                              
municipalities would fall under the law.  He noted that                        
there would be a loss in revenue from the repeal of the                        
retaliatory tax.  He noted that Blue Cross is the only                         
company that is subject to the retaliatory tax, since it is                    
the only company that sells insurance in the state of                          
Washington and the state of Alaska.  He estimated that the                     
loss in income would be $250 thousand dollars.                                 
                                                                               
Co-Chair Therriault expressed concern that another state's                     
legislature is impacting the premiums charged in the state                     
of Alaska.                                                                     
                                                                               
Mr. Reinwand noted that there is a question in regards to                      
the state's taxing authority and taxing of political                           
subdivisions.                                                                  
                                                                               
Representative Martin asked if the law should be repealed.                     
                                                                               
Representative Ryan noted that there are no Alaskan based                      
health insurance companies.                                                    
                                                                               
Representative Davies referred to page 2, line 16.  He                         
questioned if other taxation issues would be affected by the                   
change from section to chapter.  Co-Chair Therriault noted                     
that both the retaliatory and premium taxes would be                           
affected.  He stated that he would offer an amendment to                       
make reference specifically to the retaliatory section AS                      
21.09.027.                                                                     
                                                                               
Representative Ryan noted that New York Life recently sold                     
NYLCare.  New York Life is considering opening a full owned                    
subsidiary in Alaska to sell life insurance.                                   
                                                                               
Co-Chair Therriault noted that section 3 pertains to the                       
retaliatory tax.  He observed that there are municipalities                    
and school districts that would benefit from sections 1 and                    
2.                                                                             
                                                                               
ED LINGUIST, ANCHORAGE SCHOOL DISTRICT, ANCHORAGE spoke in                     
support of the legislation.  He noted that the District is                     
paying the retaliatory tax. Each employee pays approximately                   
$120 dollars a year.  He observed that state employees do                      
not have to pay the tax.                                                       
                                                                               
BARBARA HUFF TUCKNESS, TEAMSTERS UNION spoke in support of                     
HB 490.  She noted that teamster members working for the                       
Anchorage School District would be impacted by the                             
legislation.                                                                   
                                                                               
In response to a question by Representative Martin, Ms. Huff                   
explained that the tax is charged based on the company's                       
place of domicile.                                                             
                                                                               
MARIANNE BURKE, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT                    
OF COMMERCE AND ECONOMIC DEVELOPMENT spoke in support of the                   
legislation.  She observed that there is an exemption for                      
the state of Alaska and insurance purchased under Title 9.                     
She observed that there are differing attorney general                         
decisions regarding whom is covered under Title 9.  Some                       
governmental entities and political subdivisions are paying                    
premium tax.  The premium tax is 2.7 percent charged on the                    
gross.  She stressed that it is difficult to enforce.  An                      
attempt has been made to identify who would qualify.  Some                     
political subdivisions cannot afford to belong to PERS.  She                   
noted that the state of Washington changed the tax on                          
companies headquartered in that state.  As a result the                        
premiums collected under Washington law was higher.  The                       
retaliatory tax was created to protect health insurance                        
companies headquarter in Alaska.  She noted that there are                     
no health insurance companies domiciled in Alaska.  Premiums                   
collected in the state of Alaska were approximately $1                         
million dollars in 1995.  Blue Cross is the only company                       
affected since it is the only carrier domiciled in the state                   
of Washington that is doing business in Alaska.  She noted                     
that Aetna is domiciled in the state of Connecticut.  Blue                     
Cross is at a competitive disadvantage.  She urged the                         
Committee to identify the definition of political                              
subdivision.                                                                   
                                                                               
Co-Chair Therriault questioned if the retaliatory tax should                   
be repealed.  Ms. Burke noted that if a company was                            
domiciled in Alaska that the retaliatory tax may need to be                    
revisited.                                                                     
                                                                               
In response to a question by Representative Martin, Ms.                        
Burke stated that any change would have to be initiated by                     
the state of Alaska.  She emphasized that the "playing                         
field" is uneven and stated that the appropriate place to                      
address the problem is in the Alaskan legislature.                             
                                                                               
Representative Mulder asked the fiscal cost of sections 1                      
and 3.  Ms. Burke noted that the fiscal impact for sections                    
1 and 3 is unknown.  The 2.65 million-dollar fiscal note                       
only pertains to section 2.  She explained that some                           
governmental entities are being taxed that were not intended                   
to be taxed.  She suggested that the tax be evenly applied.                    
She pointed out that there is no data to quantify the amount                   
of retaliatory tax being collected on school districts,                        
municipalities, REAA's and other political subdivisions.                       
The fiscal note is based on attached assumptions.                              
                                                                               
(Tape Change, HFC 98 - 153, Side 2)                                            
                                                                               
Ms. Burke explained that the retaliatory tax was first                         
collected in 1996.  Blue Cross filed for a refund based on                     
the ambiguity of the law.  The refund is still pending.                        
                                                                               
Representative Davies questioned if political subdivision                      
needs to be clarified.  Ms. Burke observed that political                      
subdivision is defined in AS 01.10.060.  However, it                           
includes municipalities but not boroughs and school                            
districts.  Case law has held that boroughs and school                         
districts are political subdivisions.  Ms. Burke noted that                    
it is questionable if the Public Employees Retirement System                   
(PERS) is a political subdivision.                                             
                                                                               
Representative Davies asked if employers that participate in                   
PERS and TRS would be exempt under this section.  Ms. Burke                    
expressed concern that their exemption would lead other                        
entities to request exemptions.  She noted that there are                      
governmental entities that are not included under PERS and                     
TRS.                                                                           
                                                                               
In response to a question by Representative Davies, Ms.                        
Burke noted that AS 39.30 is the statute that exempts the                      
state of Alaska from collecting premium tax on itself.                         
                                                                               
Representative Davies questioned if the intent is to exempt                    
political subdivisions.  Ms. Burke suggested that political                    
subdivisions include a city, municipality, borough, public                     
school district, Rural Education Attendance Area (REAA),                       
public school, university or community college.                                
                                                                               
Representative Davies noted that "municipality" is defined                     
under AS 29.71.800 as a political subdivision incorporated                     
under state law.                                                               
                                                                               
Co-Chair Therriault suggested that the Committee not try to                    
distinguish between the municipality of Anchorage and the                      
Parking Authority in regards to the exemption.  He thought                     
that the retaliatory tax should be repealed. He emphasized                     
that the decision of charging a premium tax on political                       
subdivisions and the definition of political subdivision                       
should be held for further discussion.  He noted that                          
sections 1 and 3, which would reduce tax on life insurance                     
policies could be positive for the state of Alaska.                            
                                                                               
Co-Chair Therriault proposed that section 2 be deleted and a                   
new section be added to repeal AS 21.09.270.                                   
                                                                               
Representative Davies suggested that the retaliatory tax in                    
section 2 would be beneficial if an Alaskan insurance                          
business were in operation.  Co-Chair Therriault noted that                    
the retaliatory tax has been in existence since 1966.  There                   
have been no Alaskan insurance companies during this time.                     
                                                                               
In response to a question by Co-Chair Therriault, Ms. Burke                    
explained that sections 1 and 3 would attract policies                         
written in the state of Alaska.  The insurance companies do                    
not have to be domiciled in Alaska.                                            
                                                                               
Representative Davies noted that Blue Cross has already paid                   
the retaliatory tax.  Ms. Burke observed that Blue Cross is                    
one of the largest insurance writers for municipalities,                       
boroughs, and school districts.  She observed that the state                   
of Alaska pays and collects the tax for these political                        
subdivisions.  Co-Chair Therriault noted that other private                    
businesses and individuals are also paying the retaliatory                     
tax.  He questioned the cost to the State of repealing the                     
tax.  Ms. Burke observed that Blue Cross pays approximately                    
$1 million dollars a year.  She observed that Blue Cross                       
requested the legislation.  The Division of Insurance agrees                   
that the retaliatory tax is unfair.                                            
                                                                               
Co-Chair Therriault MOVED to delete section 2 and add a                        
section repealing AS 21.09.270.  There being NO OBJECTION,                     
it was so ordered.  He noted that there would be a revised                     
fiscal note.                                                                   
                                                                               
Representative Mulder MOVED to report CSHB 490 (FIN) out of                    
Committee with the accompanying fiscal note.    Co-Chair                       
Therriault clarified that the immediate effective date would                   
remain.  There being NO OBJECTION, it was so ordered.                          
                                                                               
CSHB 490 (FIN) was REPORTED out of Committee with "no                          
recommendation" and with a fiscal impact note by the                           
Department of Commerce and Economic Development.                               
SENATE BILL NO. 218                                                            
                                                                               
"An Act relating to the crime of murder and to murder                          
of children."                                                                  
                                                                               
BRETT HUBER, STAFF, SENATOR HALFORD, testified in support of                   
SB 218.  He noted that the death of a child is always among                    
the gravest of situations.  He asserted that when a child's                    
death results from the commission of a crime, the                              
consequences should be certain and the punishment severe.                      
Senator Halford introduced this legislation to give law                        
enforcement, prosecutors and the courts additional tools to                    
address crime involving the murder of children.                                
                                                                               
HCS CSSB 218(JUD) makes the following changes to criminal                      
statutes:                                                                      
                                                                               
? amends current law by adding a new form of first                             
degree murder when the death of a child results from                           
the commission or attempted commission of                                      
kidnapping, or of a sexual offense,                                            
? expands the list of offenses constituting felony                             
murder to include sexual abuse of a minor in the                               
first and second degrees,                                                      
? elevates criminally negligent homicide from a class                          
C to a class B felony,                                                         
? establishes a twenty year mandatory minimum sentence                         
for a person convicted of a murder of a child under                            
the age of sixteen,                                                            
? increases the mandatory minimum sentence (from five                          
to seven years) for manslaughter, when the victim is                           
a child under the age of sixteen,                                              
? establishes a new sentencing provision, which allows                         
for a term of  unsuspended imprisonment that exceeds                           
the presumptive term, for certain felony offenses if                           
the victim is a child under the age of 16,                                     
? establishes the crime of custodial interference in                           
the first degree if a person violates AS 11.41.330                             
and causes a child or incompetent person to be                                 
removed or kept outside the state.                                             
                                                                               
Mr. Huber maintained that children, society's most                             
vulnerable members, deserve a responsible level of care when                   
entrusted to an adult.  The legislation is intended to                         
establish a level of punishment more commensurate with the                     
crime and send the clear message of deterrence that if you                     
kill a child, you're going to jail for a very long time.                       
                                                                               
Mr. Huber provided members with Amendment 1 (copy on file).                    
He observed that the amendment would correct a drafting                        
error.  "Natural parent, step parent, adopted parent," would                   
be added on page 3, line 27.  The Department of Law                            
suggested the language.  He observed that the Anchorage                        
Police Department brought the legislation to Senator                           
Halford's attention.                                                           
                                                                               
Representative Mulder questioned if there have been cases                      
that would have been affected by the legislation.                              
                                                                               
DEAN GUANELI, CHIEF ASSISTANT ATTORNEY GENERAL, CRIMINAL                       
DIVISION, DEPARTMENT OF LAW observed that the Anchorage                        
Police Department did compile a list of cases involving                        
manslaughter, criminal negligent homicide, and second degree                   
murder.  He noted that sentences ranged from 18 months to 10                   
years.  An 18-month sentence would be raised to a 3 to 4                       
year sentence for criminal negligent homicide.  Manslaughter                   
sentences of 5 years would be increased to 7 years.  Second-                   
degree murder sentences of 10 years would be increased to 20                   
years.  He noted that the intent is to provide uniformity                      
and to eliminate some of the variability of cases around the                   
state of Alaska.  He noted that there would only be a few                      
cases affected by the legislation.                                             
                                                                               
In response to a question by Representative Grussendorf, Mr.                   
Guaneli explained that criminal negligent homicide would be                    
elevated from a class C felony to class B felony.  He                          
estimated that some borderline cases of criminal negligence                    
and manslaughter might be plea-bargained down.                                 
                                                                               
Representative Mulder MOVED to ADOPT Amendment 1.  There                       
being NO OBJECTION, it was so ordered.                                         
                                                                               
Representative Kohring MOVED to report HCS CSSB 218 (FIN)                      
out of Committee with the accompanying fiscal note.  There                     
being NO OBJECTION, it was so ordered.                                         
                                                                               
HCS CSSB 218 (FIN) was REPORTED out of Committee with a "do                    
pass" recommendation and with two zero fiscal notes, one by                    
the Department of Corrections, dated 2/12/98 and one by the                    
Department of Labor, dated 2/12/98; and one fiscal impact                      
note by the Department of Administration, dated 2/12/98.                       
SENATE BILL NO. 336                                                            
                                                                               
"An Act relating to excluding professional hockey team                         
members from worker's compensation coverage."                                  
                                                                               
ROBERT PEARSON, INTERN, SENATOR LEMAN testified in support                     
of SB 336.  He observed that the bill amends Worker's                          
Compensation provisions by adding professional hockey teams                    
to the list of persons not covered under AS 23.30.230. In                      
exchange for this exemption, a team owner would have to                        
provide a medical and disability program to cover the                          
players.  Coaches and others associated with the team in the                   
same Worker's Comp risk category would also be covered.                        
They would not be required to cover office personnel.                          
Players would be covered 24 hours a day, whether on duty,                      
travel or their own time.  The owner is responsible for the                    
cost of the premiums.  The idea was taken from Florida's                       
approach to this problem.                                                      
                                                                               
The committee was asked to introduce this legislation by the                   
sole professional hockey team in the state, the Anchorage                      
Aces.                                                                          
                                                                               
The Department of Labor, Division of Worker's Compensation                     
has reviewed the legislation and is neutral on the bill.                       
                                                                               
Representative Grussendorf asked if the players support the                    
legislation.  Mr. Pearson stated that the players were not                     
in objection to the legislation.                                               
                                                                               
Co-Chair Therriault observed that players are required to                      
have other coverage on or off the ice.                                         
                                                                               
Representative Martin expressed concern that the legislation                   
is exclusive.  Representative Davies did not think that the                    
legislation would fall under special interest legislation.                     
Co-Chair Therriault observed that the legislation could be                     
written to include any hockey teams anywhere in the state of                   
Alaska.  Representative Davies questioned if the bill could                    
be written to allow a second professional hockey team in                       
Alaska to be covered.  Co-Chair Therriault noted that if a                     
second team did not meet the criteria that they would not                      
have the exemption granted.                                                    
                                                                               
DWIGHT PERKINS, SPECIAL ASSISTANT, DEPARTMENT OF LABOR                         
responded to questions by Committee members.  He explained                     
that where there is compensation by an employer there must                     
be workers' compensation.  This concern was alleviated by                      
subsection (9), which provides that they must have workers'                    
coverage.  He noted that another team could be covered by                      
the exemption.  The legislation does not alleviate the                         
employer's responsibility for injury during the performance                    
of their duties.                                                               
                                                                               
Representative Mulder noted that workers' compensation                         
provides a shield for the employer from being sued, as well                    
as protection the employee.  The exemption would remove the                    
employer's shield.  He noted that players have testified in                    
support of the legislation.                                                    
                                                                               
(Tape Change, HFC 98 -154, Side 1)                                             
                                                                               
Mr. Perkins noted that sports officials would be included                      
under the exemption.  He explained that the legislation does                   
not require mandatory participation.                                           
                                                                               
Representative Davies observed that a second hockey team                       
could opt to participate under workers' compensation.  If                      
they do not have insurance for the worker's protection they                    
would have to participate in workers' compensation.                            
                                                                               
Representative Martin reiterated constitutional concerns                       
regarding the legislation's exclusive nature.                                  
                                                                               
Mr. Perkins estimated that 4 or 5 other states have similar                    
exemptions.  He noted that coverage would be the same as the                   
coverage offered under workers' compensation.  The premiums                    
may be less than the premium for workers' compensation.  He                    
did not think the Department would support expansion of the                    
legislation to include any professional team.                                  
                                                                               
In response to a question by Representative Kohring                            
regarding coverage for semi-professional hockey teams, Mr.                     
Perkins clarified that if there is wage compensation they                      
must be covered under the Workers' Compensation Act.                           
                                                                               
Representative Mulder MOVED to report CSSB 336 (L&C) out of                    
Committee with the accompanying fiscal note.  There being NO                   
OBJECTION, it was so ordered.                                                  
                                                                               
CSSB 336 (L&C) was REPORTED out of Committee with "no                          
recommendation" and with a Department of Labor.                                
SENATE BILL NO. 281                                                            
                                                                               
"An Act relating to general grant land entitlements for                        
the City and Borough of Yakutat; and providing for an                          
effective date."                                                               
                                                                               
SENATOR JERRY MACKIE, SPONSOR, testified in support of SB
281.  Senator Mackie read the sponsor statement.  He noted                     
that SB 281 was introduced to complete the formation of the                    
Yakutat Borough and the land entitlements that the state                       
grants to support local government.  Yakutat's petition to                     
incorporate as a borough in 1992 was considerably reduced in                   
size by the Local Boundary Commission.  The land entitlement                   
for the new borough by the formula of 10% of "vacant,                          
unappropriated, and unreserved" (vuu) state lands was a mere                   
138 acres.                                                                     
                                                                               
The City and Borough of Yakutat subsequently petitioned the                    
Local Boundary Commission to reclaim much of the area on its                   
northern boarder.  In a reversal of its earlier decision,                      
the Local Boundary Commission approved the annexation, which                   
contains a substantial amount of state "vuu" lands. It is                      
estimated that if the annexed area had been included for the                   
original borough formation, the municipal land entitlement                     
would have amounted to 33,000 acres.                                           
                                                                               
Senator Mackie observed that it has been a long established                    
policy for the state to assist the formation and operation                     
of local governments with generous grants of state land.  He                   
maintained that SB 281 corrects the defects in the borough                     
formation process that resulted in such a small land                           
entitlement for the City and Borough of Yakutat by                             
increasing its entitlement to 21,500 acres.  The bill also                     
gives additional authority to the Director of the Division                     
of Lands in the Department of Natural Resources to condition                   
and restrict any of the municipality's selections made under                   
this increased grant.                                                          
                                                                               
Senator Mackie reiterated that the City and Borough of                         
Yakutat only received 138 acres of land as an entitlement.                     
The original legislation would have granted a 30,000-acre                      
entitlement.  This was reduced to 21,500 in the Senate                         
Community and Regional Affairs Committee.  The Senate                          
Resource Committee reduced the entitlement to 8,552 acres.                     
The entitlement was increased back to 21,500 in the House                      
Community and Regional Affairs Committee.   He emphasized                      
that the University of Alaska, Department of Natural                           
Resources, Department of Fish and Game and the regional                        
native corporation supported an entitlement of 21,500 acres.                   
He reviewed the selection process through the Division of                      
Land in the Department of Natural Resources.                                   
                                                                               
Co-Chair Therriault questioned if the Borough anticipates                      
selecting the log transfer site.                                               
                                                                               
PAUL FUHS, LOBBYIST, CITY OF YAKATAT stated that the                           
community does plan to ask for the log transfer site.  He                      
observed that there is no guarantee that the City's request                    
would be approved.  He explained that no fee would be                          
charged to the agencies, University or to the Mental Health                    
Lands Trust during the lifetime of their cut.  He stressed                     
that there would be reasonable fees for the University if                      
they receive more land.                                                        
                                                                               
In response to a question by Representative Martin, Mr. Fuhs                   
noted that there are approximately 800 individuals in the                      
Borough.  Representative Martin compared entitlements to                       
other Boroughs.  Senator Mackie emphasized that every                          
community is different and availability of state land must                     
be considered.                                                                 
                                                                               
Representative Martin felt that the grant was too large.                       
Mr. Fuhs spoke in support of the entitlement.  He observed                     
that Yakutat is no longer a single site school district.  He                   
added that fishing and timber receipts are down.                               
                                                                               
Representative Davies spoke in support of the legislation.                     
He noted language allowing stipulations.  Mr. Fuhs explained                   
that stipulations would be applied to alleviate concerns by                    
the Department of Fish and Game regarding habitat.                             
                                                                               
Representative Davis spoke in support of the legislation.                      
                                                                               
Co-Chair Therriault asked if the community's memorandum of                     
understanding with the Mental Health Trust differs from the                    
current one with the University of Alaska.  Mr. Fuhs stated                    
that the memorandum with the Mental Health Trust is                            
different than the memorandum with the University of Alaska.                   
He explained that the Mental Health Trust is a fee simple                      
title owner.  The University would have to renegotiate for                     
additional property.  Mr. Fuhs clarified that the City would                   
charge a reasonable rate on future operations.  The City's                     
agreement with the Mental Health Trust is for free access                      
during the current period.  A lease fee would be charged on                    
future cuttings based on an accessed value.                                    
                                                                               
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY                   
OF ALASKA spoke in support of the legislation.  She noted                      
that the University is working on a memorandum of agreement                    
with the Borough.  She estimated that they would reach                         
agreement in the next couple of days.                                          
                                                                               
Senator Mackie stressed that the Borough wants to maintain a                   
good relationship with the University.                                         
                                                                               
In response to a question by Representative Kohring, Mr.                       
Fuhs stated that the community supports land sale to private                   
holders.                                                                       
                                                                               
Representative Mulder MOVED to report HCS CSSB 281 (CRA) out                   
of Committee with the accompanying fiscal note.  There being                   
NO OBJECTION, it was so ordered.                                               
                                                                               
HCS CSSB 281 (CRA) was REPORTED out of Committee with a "do                    
pass" recommendation and with a fiscal impact note by the                      
Department of Natural Resources.                                               
HOUSE BILL NO. 344                                                             
                                                                               
"An Act relating to paternity establishment and child                          
support; relating to the crimes of criminal nonsupport                         
and aiding the nonpayment of child support; and                                
amending Rule 37(b)(2)(D), Alaska Rules of Civil                               
Procedure; and providing for an effective date."                               
                                                                               
BARBARA MIKLOS, CHILD SUPPORT ENFORCEMENT DIVISION,                            
DEPARTMENT OF HEALTH AND SOCIAL SERVICES reviewed the                          
proposed committee substitute, work draft # 0-GH2007\F,                        
5/4/98.  She observed that 4 sections were removed after the                   
Division learned that the federal government did not require                   
them.  She referred to a memorandum by Terri Lauterbach,                       
Legislative Council, dated 5/4/98 (copy on file).  She                         
agreed with Ms. Lauterbach's interpretation.  Section 5 was                    
removed.  This section made aiding the nonpayment of child                     
support punishable by the loss of hunting and sport fishing                    
licenses.  Section 11 was removed.  Sections pertaining to                     
court rule changes were also removed.  She stressed that the                   
legislation fulfills federal requirements without doing more                   
then is required by the federal government.                                    
                                                                               
Co-Chair Therriault observed that section 37 would delete                      
the sunset.  He spoke in support of retaining the sunset.                      
                                                                               
Ms. Mikolos explained that section 36 accompanies section 2.                   
                                                                               
Representative Martin questioned if the biological parents                     
are pursued once a child is placed in a foster home.  Ms.                      
Mikolos clarified that both biological parents are pursued,                    
either jointly or individually, based on income.                               
                                                                               
Ms. Mikolos observed that if the sunset provision is                           
retained the Division would be before the Legislature in                       
1999.  In response to a question by Representative Martin,                     
Ms. Mikolos noted that the Division has three investigators.                   
She noted that other employees assist on some                                  
investigations.  Investigators only do the most serious                        
cases.  There is one halftime district attorney assisting                      
the Division.                                                                  
                                                                               
JENNIFER TAYLOR, FAIRBANKS expressed concern with the use of                   
social security numbers.  Co-Chair Therriault noted that                       
social security information would be available to the                          
Department, but not to the general public.  She emphasized                     
the need to provide for the survival of children born to                       
single poor mothers.  She stressed that statutes should be                     
written for general comprehension.  She maintained that                        
culpability should be the same regardless of income.  She                      
spoke in support of state statutes that are serious enough                     
to provide absolute enforcement.                                               
                                                                               
(Tape Change, HFC 98 - 154, Side 2)                                            
                                                                               
In response to a question by Co-Chair Therriault, Ms.                          
Mikolos explained that language contained in the previous                      
version was found to be over reaching.  The Division                           
consulted with the federal government and they agreed.  She                    
added that section 24 might still be too broad.                                
                                                                               
DAN BRANCH, HUMAN SERVICES SECTION, ASSISTANT ATTORNEY                         
GENERAL, DEPARTMENT OF LAW suggested that "has a" and                          
"obligated" be deleted and replaced with "owes overdue."  He                   
explained that this change would provide that the only                         
persons that could have their fish and game licenses                           
affected by failure to comply with a child support subpoena                    
or warrant are those that owe overdue child support.                           
                                                                               
Co-Chair Therriault MOVED to delete "has a" and "obligated"                    
and insert "owes overdue."  There being NO OBJECTION, it was                   
so ordered.                                                                    
                                                                               
Co-Chair Therriault MOVED to delete section 37.  He                            
explained that this would retain the sunset review.                            
Representative Davies suggested that the sunset date be                        
extend to the year 2001.  Ms. Mikolos spoke in support of a                    
2001-year sunset review.  Co-Chair Therriault WITHDREW the                     
MOTION to delete section 37.                                                   
                                                                               
Representative Davies MOVED to amend section 37 to provide a                   
sunset date of 2001.  There being NO OBJECTION, it was so                      
ordered.                                                                       
                                                                               
Representative Davies questioned what provisions would be                      
taken to keep social security numbers confidential.  Ms.                       
Mikolos noted that there is a federal felony penalty for                       
failure to maintain confidentiality.   She noted that they                     
have an agreement with the Department of Fish and Game to                      
black out social security numbers on licenses.                                 
                                                                               
Representative Davies MOVED to ADOPT work draft # 0-                           
GH2007\F, 5/4/98.  There being NO OBJECTION, it was so                         
ordered.                                                                       
                                                                               
Representative Davies MOVED to report CSHB 344 (FIN) out of                    
Committee with the accompanying fiscal notes.                                  
Representative Kohring OBJECTED.  He expressed concern that                    
too much control is being given to the Child Support                           
Enforcement Division.  He also expressed concern with the                      
inclusion of social security numbers and federal mandates.                     
                                                                               
A roll call vote was taken on the motion.                                      
                                                                               
IN FAVOR: Davies, Grussendorf, Moses,  Davis, Foster, Kelly,                   
Martin, Therriault                                                             
                                                                               
OPPOSED: Kohring                                                               
                                                                               
Co-Chair Hanley and Representative Mulder were absent for                      
the vote.                                                                      
                                                                               
The MOTION PASSED (8-1).                                                       
                                                                               
CSHB 344 (FIN) was REPORTED out of Committee with "no                          
recommendation" and with five zero fiscal notes, three by                      
the Department of Administration, one by the Department of                     
Revenue, one by the Department of Community and Regional                       
Affairs; and one fiscal impact note by the Department of                       
Administration.                                                                
SENATE BILL NO. 105                                                            
                                                                               
"An Act relating to legislative ethics; relating to the                        
filing of disclosures by certain legislative employees                         
and officials; and providing for an effective date."                           
                                                                               
Representative Kelly MOVED to ADOPT work draft #0-LS0074\J,                    
dated 5/4/98.  There being NO OBJECTION, it was so ordered.                    
                                                                               
BEN BROWN, STAFF, SENATOR KELLY reviewed the sectional                         
analysis for HCS CSSB 105 (FIN), #0-LS0074\J.                                  
                                                                               
SECTION 1: AS 15.13.040(i)  DONATION OF SPACE NOT CONSIDERED                   
A  CONTRIBUTION  This section adds a new subsection which                      
allows donation of space for the posting of political signs,                   
for storage, or for an event without consideration of the                      
donation as a campaign contribution.                                           
                                                                               
SECTION 2: AS 15.13.070(e)  LIMITED USE OF CAMPAIGN FUNDS                      
FOR PARTY-RELATED EXPENSES  This section adds a new                            
subsection which allows a candidate to expend up to $1000                      
annually from a campaign account to pay for attendance at                      
political party events, for party membership, or to sponsor                    
party functions.                                                               
                                                                               
SECTION 3: AS 15.13.072(d)  PROHIBITED SOLICITATION &                          
ACCEPTANCE OF CONTRIBUTIONS  This section prohibits                            
legislative candidates from soliciting or accepting                            
contributions while the Legislature is convened in regular                     
or special session, unless the candidate's election is                         
within 90 days and the solicitation or acceptance takes                        
place somewhere other than the capital city.                                   
                                                                               
SECTION 4: AS 15.13.072(g)  PROHIBITED SOLICITATION &                          
ACCEPTANCE OF CONTRIBUTIONS  This section adds a new                           
subsection which prohibits candidates for governor and                         
lieutenant-governor from soliciting or accepting                               
contributions in the capital city while the Legislature is                     
convened in regular or special session.                                        
                                                                               
SECTION 5: AS 15.13.074(c)  PROHIBITED CONTRIBUTIONS  This                     
section prohibits a person or group from contributing to a                     
candidate for governor or lieutenant- governor before the                      
1st of January of a general election year or before the date                   
of a proclamation calling for a special election.  It                          
prohibits a person or group from contributing to a                             
legislative candidate while the legislature is convened in                     
regular or special session, unless the candidate's election                    
is within 90 days and the solicitation or acceptance takes                     
place somewhere other than the capital city.  Section 5                        
lengthens the period of time after an election in which a                      
candidate may continue to raise money to the earlier of                        
either 60 days after the election or the end of the calendar                   
year.                                                                          
                                                                               
Sections 6 - 27 were not changed in work draft J.                              
                                                                               
SECTION 28: AS 24.60.080(c)  GIFT RESTRICTION EXEMPTIONS  A                    
new subsection 8 was added on page 20.  It clarifies that a                    
stay in a vacation home located outside Alaska is not an                       
exempted gift.  It allows legislators and legislative                          
employees to accept discounts while on State business if the                   
discount benefits the State.  It allows legislators and                        
their personal staff (but not other legislative employees)                     
to accept discounts and welcoming gifts in the capital city                    
during session.  Section 28 allows receipt of a gift worth                     
more than $250 of legal services related to a matter of                        
legislative concern.                                                           
                                                                               
SECTION 29: AS 24.60.080(d)  GIFT REPORTING  This section                      
increases the reference to the maximum cumulative annual                       
gift limit from $100 to $250.  It mandates reporting of                        
gifts of travel or legal services within 30 days of receipt.                   
It changes the reporting deadline for gifts not related to                     
legislative status to the 15th of March of the following                       
year, and specifies that the disclosure need include only a                    
description of the gift and the giver's identity (not the                      
actual value).  Section 29 also calls for the Ethics                           
Committee to forward gift disclosures by legislators and                       
legislative directors to the Alaska Public Offices                             
Commission (APOC).                                                             
                                                                               
Sections 30 through 43 were not changed by the committee                       
substitute.                                                                    
                                                                               
SECTION 44: AS 24.60.170(a)  INITIATION OF COMPLAINTS                          
Section 44 removes the committee's ability to initiate                         
complaints on its own aggregate motion, but does not remove                    
any individual committee member's right to initiate a                          
complaint.                                                                     
                                                                               
Sections 45 through 47 remained the same.                                      
                                                                               
SECTION 48: AS 24.60.170(g) CORRECTIVE ACTIONS  New language                   
was added on lines 8 - 13, on page 30.  This section allows                    
the ethics committee to issue an opinion (which must go to                     
both the complainant and the subject) recommending                             
corrective action after finding probable cause that a                          
violation occurred.  It lets the subject request a                             
confidential meeting with the committee within 20 days of                      
receipt of the opinion, at which the committee must explain                    
its reasons for recommending corrective action.  It then                       
allows the subject to comply with the opinion or request a                     
hearing under subsection (j), and lets the committee amend                     
or affirm the opinion after this hearing.  Section 48 sets                     
out that if a subject agrees to comply with an opinion but                     
fails to do so in a timely manner, the committee may                           
formally charge the person under subsection (h) or refer the                   
matter to a supervisory authority.  It empowers the                            
supervisory authority to enforce corrective actions, or                        
decline to do so and refer the matter back to the committee,                   
which retains the power formally to charge the person.                         
                                                                               
Sections 49 and 50 remain the same.                                            
                                                                               
SECTION 51: AS 24.60.170(l)  CONFIDENTIALITY  New language                     
that was added to the end of Section 51 was deleted by the                     
committee substitute.  The Department of Law advised that                      
the new language was unnecessary.  This section provides                       
that ethics committee proceedings are confidential until the                   
determination of probable cause, and that complaints and all                   
documents produced or disclosed in the course of an                            
investigation are confidential as well.  It mandates that                      
the committee transmit information obtained in the course of                   
an investigation to appropriate enforcement authorities.                       
Section 51 clarifies that all meetings of the committee                        
concerning complaints are closed to the public and non-                        
members of the committee, though the committee may permit                      
the subject of a complaint to attend a meeting other than                      
deliberation on probable cause.  It allows the subject to                      
waive the confidentiality provisions of this section.                          
                                                                               
Sections 52 through 58 were not changed.                                       
                                                                               
SECTION 59: AS 24.60.210  DEADLINES FOR FILING  This section                   
changes the deadline for filing an LFD from the 15th of                        
April to the 15th of March.                                                    
                                                                               
SECTION 60: AS 24.60.240  CIVIL PENALTY FOR LATE FILING                        
This section changes the reference to who must file an LFD                     
to include public members of the ethics committee as well as                   
legislative directors and legislators.                                         
                                                                               
SECTION 61: AS 24.60.250(a), (b) & (c)  EFFECTS OF FAILURE                     
TO FILE  This section sets out what APOC must do if an                         
incumbent legislator fails to file an LFD by the 15th of                       
March.  It establishes that APOC notifies the candidate that                   
the report is late, and if the candidate still refuses to                      
file within 30 days, APOC informs the Lieutenant Governor of                   
the failure to file.  The candidate then forfeits nomination                   
to office and may not be seated.  The lieutenant governor                      
may not certify the person's nomination, and the results of                    
the person's election are certified according to                               
39.50.060(b).  Subsection (b) sets out that if a public                        
member fails to file, APOC must notify the appropriate                         
presiding officer.  Subsection (c) sets out that APOC must                     
notify Leg Council or LB&A if a legislative director fails                     
to file.                                                                       
                                                                               
In response to a question by Representative Mulder, Mr.                        
Brown explained that if a disclosure is not made by the 15th                   
of March there is a civil fine of $10 dollars a day.  If                       
disclosure is not made within 30 days of the 15th of March                     
the penalty would be the inability to run for office or a                      
lose of office.                                                                
                                                                               
In response to a question by Representative Martin, Mr.                        
Brown noted that a subject might ask that confidentiality be                   
waived.                                                                        
                                                                               
Representative Mulder noted that the end of year financial                     
report is due on February 15th.  Close economic                                
relationships and LFD's are due on March 15th.  Mr. Brown                      
observed that two reports are being consolidated.                              
                                                                               
Representative Martin emphasized that the public should have                   
the proper information before a person is elected.  He                         
stated that he supported an amendment to require candidates                    
to disclose relationships of themselves, spouse or spousal                     
equivalent with lobbyists.  Mr. Brown noted that candidates                    
file public official disclosure forms under AS 39.50.                          
                                                                               
Sections 62 through 68 were not changed by the committee                       
substitute.                                                                    
                                                                               
SECTION 69: AS 39.50.020 REPORT OF FINANCIAL AND BUSINESS                      
INTERESTS  This section changes the requirements for Public                    
Official Financial Disclosure reports, setting out that                        
public officials listed in 39.50.200 must file reports                         
within 30 days after taking office and in each following                       
year.  It changes the annual filing deadline to the 15th of                    
March, and specifies that all non-municipal officials file                     
with APOC, while municipal officials file with appropriate                     
local authorities.                                                             
                                                                               
References to spouse in AS 39.50 have been amended to                          
include the spousal equivalent.  The definition of                             
"immediate family" has been changed to include the parent,                     
child, or sibling that resides with the person, is                             
financially dependent on the person or shares a substantial                    
financial interest with the person who is filing.                              
                                                                               
Sections 70 through 72 were not changed.                                       
                                                                               
SECTION 73: AS 39.50.060  THIRTY DAY PERIOD AFTER FILING                       
DEADLINE  This section establishes that APOC must notify a                     
candidate that the report is late.  If the candidate does                      
not within 30 days, APOC informs the Lieutenant Governor of                    
the failure to file.  The candidate then forfeits nomination                   
to office and may not be seated.  The lieutenant governor                      
may not certify the person's nomination, and the results of                    
the person's election are certified according to                               
39.50.060(b).  Subsection (b) sets out that if a public                        
member fails to file, APOC must notify the appropriate                         
presiding officer.  Subsection (c) sets out that APOC must                     
notify the Legislative Council or the Legislative Budget and                   
Audit Committee if a legislative director fails to file.                       
New language was added to clarify that a person is                             
considered to have complied if they comply within 30 days                      
after the due date.                                                            
                                                                               
Section 74 remains the same.                                                   
                                                                               
SECTION 75: AS 39.50.090(a)  PROHIBITION ON USE OF OFFICIAL                    
POSITION  This section disallows the use of official                           
position to obtain financial gain for a spousal equivalent.                    
                                                                               
Sections 76 and 77 were not changed in the committee                           
substitute.                                                                    
                                                                               
SECTION 78: AS 39.50.200(a)(9)  DEFINITIONS  This section                      
expands the definition of 'source of income' to include                        
spousal equivalents.                                                           
                                                                               
SECTION 79: AS 39.50.200(a)(10)  DEFINITIONS  This section                     
adds a new definition of 'spousal equivalent' for the                          
purposes of 39.50.                                                             
                                                                               
Statutes relating to the Executive Branch Ethics Act begin                     
in section 80.  Sections 80 through 98 were not changed in                     
the committee substitute.                                                      
                                                                               
SECTION 99: AS 39.52.960(2)  DEFINITION OF AGENCY  This                        
section adds the Alaska Railroad Corporation to the                            
definition of 'agency' for the purposes of the Executive                       
Branch Ethics Act.  Audits by the Legislative Budget and                       
Audit Committee recommended this change.                                       
                                                                               
SECTION 100: AS 39.52.960(4)  DEFINITION OF BOARD OR                           
COMMISSION  This section adds the Alaska Railroad                              
Corporation Board of Directors to the definition of board or                   
commission for the purposes of the Executive Branch Ethics                     
Act.                                                                           
                                                                               
SECTION 101: AS 39.52.960(11)  DEFINITION OF IMMEDIATE                         
FAMILY  This section changes the general definition of                         
immediate family member for the purposes of the Executive                      
Branch Ethics Act.                                                             
                                                                               
SECTION 102: 42.40.710  ALASKA RAILROAD EMPLOYEES  This                        
section specifies that the Executive Branch Ethics Act                         
applies to Railroad employees, although the remaining                          
provisions of Title 39 do not.                                                 
                                                                               
(Tape Change, HFC 98 - 155, Side 1)                                            
                                                                               
SECTION 103: AS 42.40.230  ALASKA RAILROAD ETHICS CODE                         
REPEALER  This section repeals 42.40.230, which is no longer                   
needed as the Railroad is brought under the Executive Branch                   
Ethics Act by the bill.                                                        
                                                                               
The remaining sections were not changed by the committee                       
substitute.                                                                    
                                                                               
NEIL SLOTNICK, ASSISTANT ATTORNEY GENERAL, COMMERCIAL                          
SECTION, DEPARTMENT OF LAW stated that he had not discussed                    
the addition of the Alaska Railroad with the Attorney                          
General or the Alaska Railroad Corporation.  He anticipated                    
that a memorandum of agreement would be reached that would                     
allow the Corporation's general counsel to advise them on                      
legal issues.  He anticipated that complaints would be                         
handled through the Attorney General's Office.  He                             
emphasized that the Department of Law would charge attorney                    
time through an RSA from the Alaska Railroad Corporation.                      
                                                                               
Representatives Mulder and Martin spoke in support of the                      
addition.                                                                      
                                                                               
Representative Davies suggested that a contractual                             
relationship be arranged to allow for statutory designated                     
receipts instead of program receipts.                                          
                                                                               
In response to a question by Representative Mulder, Mr.                        
Slotnick stated that the Department is supportive of the                       
amendments made to the Executive Branch Ethics Act.                            
                                                                               
SB 105 was HELD in Committee for further consideration.                        
ADJOURNMENT                                                                    
                                                                               
The meeting adjourned at 5:35 p.m.                                             
House Finance Committee 20                                                     

Document Name Date/Time Subjects