Legislature(1999 - 2000)

05/06/1999 01:55 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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HOUSE FINANCE COMMITTEE                                                                                                         
May 6, 1999                                                                                                                     
1:55 P.M.                                                                                                                       
                                                                                                                                
TAPE HFC 99 - 119, Side 1.                                                                                                      
TAPE HFC 99 - 119, Side 2.                                                                                                      
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 1:55 P.M.                                                                                                   
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair Therriault   Representative Foster                                                                                     
Co-Chair Mulder    Representative Grussendorf                                                                                   
Vice Chair Bunde   Representative Kohring                                                                                       
Representative Austerman  Representative Moses                                                                                  
Representative J. Davies  Representative Williams                                                                               
Representative G. Davis                                                                                                         
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
Sheila Peterson, Staff, Senator Gary Wilken; Llewelyn                                                                           
Lutchansky, Staff, Senator John Torgerson; Jerry McCune,                                                                        
Lobbyist, United Fishermen Association, Juneau; Kevin                                                                           
Brooks, Director, Division of Administrative Services,                                                                          
Department of Fish and Game; James Baldwin, Assistant                                                                           
Attorney General, Department of Law; Jay Lively, Deputy                                                                         
Commissioner, Department of Health and Social Services; Rick                                                                    
Solie, (Testified via Teleconference), Fairbanks Memorial                                                                       
Hospital, Fairbanks; Lisa Wolf, (Testified via                                                                                  
Teleconference), Director of Planning, Providence Medical                                                                       
Center, Anchorage.                                                                                                              
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 187 An Act relating to the certificate of need program                                                                       
for nursing care facilities and other facilities;                                                                               
and providing for an effective date.                                                                                            
                                                                                                                                
 CS HB 187 (FIN) was reported out of Committee with                                                                             
"no recommendation" with a fiscal note by the                                                                                   
Department of Health and Social Services dated                                                                                  
4/26/99.                                                                                                                        
                                                                                                                                
SB 146 An Act relating to the amount and disposition of                                                                         
the commercial fishing license fee and to the                                                                                   
fishermen's fund; and providing for an effective                                                                                
date.                                                                                                                           
                                                                                                                                
 HCS CS SB 146 (FIN) was reported out of Committee                                                                              
with "no recommendation" and with a fiscal note by                                                                              
the Department of Labor and the Department of Fish                                                                              
and Game.                                                                                                                       
HOUSE BILL NO. 187                                                                                                              
                                                                                                                                
An Act relating to the certificate of need program for                                                                          
nursing care facilities and other facilities; and                                                                               
providing for an effective date.                                                                                                
                                                                                                                                
Co-Chair Therriault advised that the committee substitute                                                                       
would provide for a "tighter" title.                                                                                            
                                                                                                                                
Representative Bunde MOVED to adopt work draft, 1-LS0708\D,                                                                     
Lauterbach, 5/6/99, as the version before the Committee.                                                                        
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Representative Bunde noted that he had been involved with                                                                       
the Long Term Health Care Task Force which spent much time                                                                      
discussing nursing concerns and costs related to nursing                                                                        
home facilities.  He pointed out that the legislation would                                                                     
address the State's need for a nursing home facility.                                                                           
                                                                                                                                
SHEILA PETERSON, STAFF, SENATOR GARY WILKEN, stated that                                                                        
Alaska has had a Certificate of Need (CON) law since 1976.                                                                      
The purpose of that law is to insure the development of an                                                                      
accessible, cost-effective health care system with quality                                                                      
service.  Currently, the Department of Health and Social                                                                        
Services reviews all nursing home expansion projects with an                                                                    
estimated cost of over $1 million dollars. The review of                                                                        
each request is limited to factors of accessibility and                                                                         
quality in order to determine if the service is available                                                                       
and could be provided in a quality manner.                                                                                      
                                                                                                                                
Under the proposed legislation, a new standard of need would                                                                    
be adopted for nursing home CON requests.  The revised                                                                          
standard allows decisions to be made based on additional                                                                        
criteria such as need, financial feasibility and                                                                                
availability of alternatives.  Under the change, a new                                                                          
nursing home project would need to demonstrate cost                                                                             
effectiveness and appropriateness of the service.                                                                               
                                                                                                                                
Ms. Peterson advised that the Department of Health and                                                                          
Social Services estimates that on the average, ten new                                                                          
nursing home beds would increase the Medicaid budget by                                                                         
about $1 million dollars annually.  The decision to expand                                                                      
existing nursing home facilities has long-term implications                                                                     
to both the State treasury, senior citizens and those with                                                                      
disabilities.  The legislation will give the Department of                                                                      
Health and Social Services the tools necessary to make                                                                          
informed decisions.                                                                                                             
                                                                                                                                
Co-Chair Therriault pointed out that a primary concern is                                                                       
that the beds are eligible for Medicaid participation. If a                                                                     
facility over bills and has fixed costs, those costs are                                                                        
passed on to the State through Medicaid billings.  The                                                                          
proposed method allows front-end participation.                                                                                 
Representative Bunde recommended that it is financially                                                                         
advisable to limit the number of nursing home beds.  The                                                                        
legislation would encourage more home and community care.                                                                       
                                                                                                                                
Co-Chair Therriault referenced Page 4, asking if CON would                                                                      
continue to be in place for other medical facilities.                                                                           
Representative G. Davis asked how the proposed legislation                                                                      
would apply to HB 161.  Co-Chair Therriault explained that                                                                      
Medicaid considerations are exempt from HB 161 because they                                                                     
are exempt from statute mechanisms addressing costs and the                                                                     
options list.                                                                                                                   
                                                                                                                                
JAY LIVELY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND                                                                       
SOCIAL SERVICESS pointed out that language had been included                                                                    
to clarify that existing standards would apply to acute care                                                                    
and that new standards will only apply to long term care.                                                                       
Mr. Lively commented that the Department strongly supports                                                                      
the legislation.                                                                                                                
                                                                                                                                
In response to Representative J. Davies, Mr. Lively                                                                             
stipulated that some home care provided for individuals who                                                                     
would have been eligible through the nursing home component,                                                                    
would now be eligible through home and community based                                                                          
services.  Waiver costs are considerably less than nursing                                                                      
home costs.  The legislation provides for alternative use to                                                                    
the most expensive care.                                                                                                        
                                                                                                                                
Representative Bunde pointed out that in order to be                                                                            
Medicaid eligible, a person would need to be impoverished.                                                                      
Representative J. Davies elaborated that it would ultimately                                                                    
be cheaper for those people to stay in their own homes.                                                                         
Representative Bunde noted that group would still require                                                                       
State payment.                                                                                                                  
                                                                                                                                
RICK SOLIE, (TESTIFIED VIA TELECONFERENCE), FAIRBANKS                                                                           
MEMORIAL HOSPITAL, FAIRBANKS, spoke in support of the                                                                           
legislation.  He reiterated that this bill is the product of                                                                    
the Long-Term Care Task Force recommendations and would also                                                                    
represent a good effort on the part of providers and users,                                                                     
to address future problems of a growing elderly population.                                                                     
                                                                                                                                
LISA WOLF, (TESTIFIED VIA TELECONFERENCE), DIRECTOR OF                                                                          
PLANNING, PRIVIDENCE MEDICAL CENTER, ANCHORAGE, voiced                                                                          
support of the proposed legislation.                                                                                            
                                                                                                                                
Representative Kohring asked if a certificate would be                                                                          
required of all nursing care facilities which receive                                                                           
Medicaid funds.  Mr. Lively replied that would be a portion                                                                     
of any nursing home cost.  He added that the nursing homes                                                                      
in Alaska are primarily funded (about 85%-90%) by Medicaid.                                                                     
Care in this State is so expensive that most people can not                                                                     
afford to pay for it privately.                                                                                                 
                                                                                                                                
Representative Foster MOVED to report CS HB 187 (FIN) out of                                                                    
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.  There being NO OBJECTION, it was                                                                     
so ordered.                                                                                                                     
                                                                                                                                
CS HB 187 (FIN) was reported out of Committee with "no                                                                          
recommendation" and with a fiscal note by Department of                                                                         
Health and Social Services dated 4/26/99.                                                                                       
SENATE BILL NO. 146                                                                                                             
                                                                                                                                
An Act relating to the amount and disposition of the                                                                            
commercial fishing license fee and to the fishermen's                                                                           
fund; and providing for an effective date.                                                                                      
                                                                                                                                
LLEWELYN LUTCHANSKY, STAFF, SENATOR JOHN TORGERSON, stated                                                                      
that SB 146 would increase the cost of a crew member's                                                                          
fishing license from $30 dollars per resident and $90 per                                                                       
non-resident to $60 dollars for a resident and $125 dollars                                                                     
for a non-resident.  At present time, 60% of the crewmember                                                                     
license fees goes into the Fisherman's Fund.                                                                                    
                                                                                                                                
SB 146 would reduce the percentage of license fees that goes                                                                    
into the fund from 60% to 39%.  At the 39% level, the                                                                           
Fisherman's Fund will have the same amount of funding it                                                                        
receives now.  The current balance of the fund is over $9                                                                       
million dollars.                                                                                                                
                                                                                                                                
Ms. Lutchansky noted that SB 146 would direct 61% of the                                                                        
crew license fee to the Fish and Game Fund to be made                                                                           
available for appropriation in FY00 for the Commercial                                                                          
Fisheries Management budget.                                                                                                    
                                                                                                                                
In conclusion, Ms. Lutchansky pointed out that the intent of                                                                    
the legislation is to direct crew license fees so to benefit                                                                    
the commercial fisheries industry.                                                                                              
                                                                                                                                
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF                                                                        
LAW, stated that the Administration supports the                                                                                
legislation, however, there is concern with the proposed                                                                        
amendment and asked the Committee to consider possible                                                                          
measures to eliviate a potential legal problem.  The bill                                                                       
changes the rate on dedicated funds that existed before                                                                         
statehood.  Under legal opinion, when that occurs, it could                                                                     
have the potential of destroying the dedication of funds.                                                                       
Mr. Baldwin pointed out that there is an opinion split                                                                          
between the Department of Law and the Legislative Council.                                                                      
He requested Committee members to consider measures as taken                                                                    
in the tobacco tax bill, in which certain contingent                                                                            
provisions were formed.                                                                                                         
                                                                                                                                
Co-Chair Therriault asked if the Department had testified to                                                                    
the issue in previous committee hearings.  Mr. Baldwin                                                                          
replied that he had sent a letter to the Senate Finance                                                                         
Committee explaining the issue.  He added that he had                                                                           
discussed the concern with Senator Torgerson and his staff                                                                      
and had testified regarding the concern in the House Labor                                                                      
and Commerce Committee.  Mr. Baldwin believed that Senator                                                                      
Torgerson understood the problem, however, he believes that                                                                     
the concern is that "lawyers disagree with one another".                                                                        
                                                                                                                                
Representative J. Davies asked if adding a surcharge rather                                                                     
than changing the fees would eliminate the concern.  Mr.                                                                        
Baldwin explained in essence that is what had been done with                                                                    
the tobacco tax until it was increased in 1998.                                                                                 
                                                                                                                                
Representative Austerman voiced support for the concept of                                                                      
the legislation, however, he advised that adjusting the                                                                         
rules of a dedicated fund including the addition of a                                                                           
surcharge could raise questions.                                                                                                
                                                                                                                                
Ms. Lutchansky spoke to the dedicated fund issue.  She noted                                                                    
that the sponsor understands that there is a small risk that                                                                    
this could be challenged, but thinks there would be time to                                                                     
address the concern before it gets to court. Senator                                                                            
Torgerson requests that the bill pass from Committee as is.                                                                     
                                                                                                                                
Representative J. Davies asked if the sponsor of the bill                                                                       
had considered the surcharge.  Ms. Lutchansky replied that                                                                      
route would be risky.                                                                                                           
                                                                                                                                
Co-Chair Therriault MOVED to adopt Amendment #1.  [Copy on                                                                      
File].  Representative Austerman OBJECTED.                                                                                      
                                                                                                                                
SHEILA PETERSON, STAFF, SENATOR GARY WILKEN, spoke to the                                                                       
amendment.  She pointed out that when SB 146 was before the                                                                     
Senate Finance Committee (SFC), it came to Senator Wilken's                                                                     
attention, that regardless of their age, any individual                                                                         
should  purchase a crew member license if they are on a boat                                                                    
touching fish.                                                                                                                  
                                                                                                                                
Ms. Peterson stated that when the crewmembers license fee                                                                       
was raised from $30 dollars to $60 dollars, the Senator was                                                                     
concerned about young children on boats fishing with their                                                                      
parents in the "mom and pop" operation.  Senator Wilken                                                                         
drafted the amendment with the idea that a youngster 10                                                                         
years or younger would only need to purchase a $5 dollar                                                                        
license.  Last year, there were 325 total residents involved                                                                    
in this category.  She understood that both the Department                                                                      
of Fish and Game and the Department of Labor do not oppose                                                                      
the legislation or the amendment.  This would impact those                                                                      
individuals that need to purchase a commercial fishing                                                                          
license because they are engaged in the business of fishing.                                                                    
                                                                                                                                
Co-Chair Therriault stated it is not legal to hire children                                                                     
to work on a boat because of child labor laws.                                                                                  
Representative J. Davies replied that is an exception to                                                                        
that in the fishing industry.                                                                                                   
                                                                                                                                
JERRY MCCUNE, LOBBYIST, UNITED FISHERMAN ASSOCIATION,                                                                           
JUNEAU, stated that a minor can be taken fishing as long as                                                                     
they do not work on the machinery.  He added that many                                                                          
families work with their children and neighbors.                                                                                
                                                                                                                                
Representative Austerman spoke to his objection.  He pointed                                                                    
out that currently the charge is $30 dollars and questioned                                                                     
why the State should reduce it.  Ms. Peterson stated that it                                                                    
could stay the same, however, Senator Wilken believes that                                                                      
fishermen currently receive minimal assistance and that                                                                         
children should never have had to buy a $30 dollar license.                                                                     
                                                                                                                                
KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES,                                                                    
DEPARTMENT OF FISH AND GAME, commented that the amendment                                                                       
addresses 350 licenses out of 25 thousand, of which vendors                                                                     
sell most of those licenses.                                                                                                    
                                                                                                                                
Representative Grussendorf pointed out that there are many                                                                      
"fishing" families in which the fishing boat is their home.                                                                     
He acknowledged that the amendment would address the concern                                                                    
adequately.                                                                                                                     
                                                                                                                                
Representative Austerman MOVED to AMEND the amendment,                                                                          
deleting "$5" and inserting "$30".  Representative Foster                                                                       
OBJECTED.  Representative Austerman advised that is the                                                                         
amount currently being paid.  Representative Bunde inquired                                                                     
the cost to issue a license.  Mr. Brooks replied that the                                                                       
Department pays 15% commission for issuance of a license and                                                                    
the other costs have not been broken down.  He observed that                                                                    
$5 would be above the Department's cost.                                                                                        
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:  G. Davis, Austerman                                                                                                  
OPPOSED: Bunde, J. Davies, Foster, Grussendorf,                                                                                 
Kohring, Moses, Williams, Therriault.                                                                                           
                                                                                                                                
Co-Chair Mulder was not present for the vote.                                                                                   
                                                                                                                                
The MOTION FAILED (2-8).                                                                                                        
                                                                                                                                
(Tape Change HFC 99 - 119, Side 2).                                                                                             
                                                                                                                                
There being NO further OBJECTION to Amendment #1, it was                                                                        
adopted.                                                                                                                        
                                                                                                                                
Co-Chair Therriault questioned why the 3:1 ratio was not                                                                        
incorporated into the raise of license fees.  Ms. Lutchansky                                                                    
replied that there had historically been a case that                                                                            
challenged the non-resident fees.  Mr. Brooks added that it                                                                     
was a very complex formula used to determine the per capita                                                                     
costs of commercial fishing invested by the State which                                                                         
places a limitation on the differential.                                                                                        
                                                                                                                                
Representative Bunde asked if the same ratio applied to                                                                         
sport fishing.  Mr. Brooks replied that the license fee is                                                                      
closer to a 3:1 ratio, which results from the dollar                                                                            
difference rather than the ratio.  He pointed out that                                                                          
concern had been discussed in previous committee hearings                                                                       
and always came back to the proposed formula.                                                                                   
                                                                                                                                
Representative J. Davies MOVED to ADOPT conceptual Amendment                                                                    
2, which would apply to the constitutional concern from the                                                                     
Department of Law.  He recommended changing language on Page                                                                    
1, Line 10, deleting "10" inserting "15"; Page 2, Line 5,                                                                       
delete "$60" inserting "$30"; Page 2, Line 5 delete "$125"                                                                      
and insert "$90".  He continued, Page 2, Line 6, adding                                                                         
language: "There is a surcharge of $30 for a resident                                                                           
license fee and $35 dollars for the non residence license                                                                       
fee".  Page 2, Line 13, after "fee" add the language "and                                                                       
surcharges"; Page 2, Line 19, deleting "39" and inserting                                                                       
"60".  He stated that the language of the amendment would                                                                       
place the same amount of money into the fisherman's fund and                                                                    
into the fish and game fund and which would separate more                                                                       
cleanly the existing dedication.  Representative Austerman                                                                      
OBJECTED.                                                                                                                       
                                                                                                                                
Representative Grussendorf noted that his intention was to                                                                      
preserve the fisherman's fund and that future legislators do                                                                    
not look to that fund as a revenue source.  If the amendment                                                                    
is adopted, it will clarify the intent of that fund.                                                                            
                                                                                                                                
Ms. Lutchansky voiced concern that 40% would possibly go to                                                                     
the general fund rather than to the fish and game fund.                                                                         
Representative J. Davies noted that his intent was not to                                                                       
change that amount.  Co-Chair Therriault pointed out that                                                                       
the amendment could "trigger" a title change.  Ms.                                                                              
Lutchansky commented that the sponsor would not favor that                                                                      
approach.  Representative J. Davies responded that the                                                                          
approach suggested by the amendment would create less of a                                                                      
court challenge.                                                                                                                
                                                                                                                                
Representative Austerman observed that each year the                                                                            
Legislature seems to indicate that commercial fishing                                                                           
industry is not paying it's way in the State.  He emphasized                                                                    
that fish and game are the renewal resources of this State                                                                      
and recommended that the proposed legislation is one of the                                                                     
"brighter spots" in legislation proposed this session.  It                                                                      
provides a creative way to generate funds for the Department                                                                    
of Fish and Game to continue their work of protecting our                                                                       
natural resources.  His voiced concern that the amendment                                                                       
could possibly destroy the bill.                                                                                                
                                                                                                                                
Representative J. Davies replied that the amendment could                                                                       
protect the intent of the bill from the future risk.                                                                            
Representative Bunde observed that the amendment would                                                                          
change the amount of collected fees resulting in a fiscal                                                                       
impact.  Mr. Brooks understood Representative J. Davies'                                                                        
intent that the 15% commission would apply to the original                                                                      
fee.                                                                                                                            
                                                                                                                                
Representative Bunde noted that he was uncomfortable with a                                                                     
major rewrite of the bill.  Mr. Brooks explained that the                                                                       
amendment was largely the approach recommended by Mr.                                                                           
Baldwin, Department of Law.  Representative Austerman                                                                           
reminded members that Mr. Baldwin stated that there is a                                                                        
split opinion on the possible action of the legislation.                                                                        
Representative G. Davis agreed that the amendment would                                                                         
create a title change.  Representative J. Davies disagreed                                                                      
that there would be a need for a title change and that the                                                                      
surcharge would be part of a consolidated fee.  He stated                                                                       
that the amendment would preserve the intent of the bill,                                                                       
not changing the disposition of the funds.                                                                                      
                                                                                                                                
A roll call vote was taken on the motion to adopt Amendment                                                                     
                                                                                                                                
IN FAVOR:  J. Davies, Grussendorf                                                                                               
OPPOSED: G. Davis, Foster, Kohring, Moses, Williams,                                                                            
Austerman, Bunde, Therriault                                                                                                    
                                                                                                                                
Co-Chair Mulder was not present for the vote.                                                                                   
                                                                                                                                
The MOTION FAILED (2-8).                                                                                                        
                                                                                                                                
Mr. Brooks advised that the bill will generated enhanced                                                                        
revenue.  He addressed the Department of Fish and Game's                                                                        
fiscal note.  The commission will be changed from 15% to 10%                                                                    
in the assumption that the expenditure will remain where it                                                                     
currently is.  The Department's budget is built on this                                                                         
legislation moving as there is a $100 thousand dollar impact                                                                    
where the general fund has been cut.  Co-Chair Therriault                                                                       
questioned if a new fiscal note would be necessary from                                                                         
Committee action taken.  Mr. Brooks responded that there                                                                        
should be a change to the note, not to the expenditure but                                                                      
rather a revenue estimate.                                                                                                      
                                                                                                                                
Representative Foster MOVED to report HCS CS SB 146 (FIN)                                                                       
out of Committee with individual recommendations and with                                                                       
the accompanying fiscal notes.  Representative Williams                                                                         
OBJECTED.                                                                                                                       
                                                                                                                                
Representative Williams commented that with the fishing                                                                         
disaster, fishermen can not pay more than they already are                                                                      
paying.  Many fishermen do not take money "out of State" as                                                                     
strongly believed.  He pointed out that the fishing industry                                                                    
is the largest employer in the State of Alaska and adds a                                                                       
lot of money to our economy.                                                                                                    
                                                                                                                                
Representative Grussendorf agreed with the comments of                                                                          
Representative Williams, however, pointed out that the                                                                          
Department is relying on this funding source to balance                                                                         
their budget.                                                                                                                   
                                                                                                                                
Representative Austerman echoed the comments of                                                                                 
Representative Williams, however, reflected that it is                                                                          
essential to have the legislation then not have it.                                                                             
Representative Kohring associated his remarks with those                                                                        
made by Representative Williams.                                                                                                
                                                                                                                                
Representative Bunde commented that he was pleased that the                                                                     
commercial fishing industry was breaking even, which has not                                                                    
always been the case.  He emphasized that commercial fishing                                                                    
is not a "State religion" and that industry must pay its                                                                        
way.                                                                                                                            
                                                                                                                                
Representative Austerman disagreed with Representative                                                                          
Bunde's statement that commercial fishing has not paid it's                                                                     
own way.  The issue is that the taxes collected from                                                                            
fishermen and then how those funds are disbursed is a                                                                           
decision made by the Legislature, and that those funds often                                                                    
do not make it back into the general fund.  .                                                                                   
                                                                                                                                
A roll call vote was taken on the motion to move the bill                                                                       
from Committee.                                                                                                                 
                                                                                                                                
IN FAVOR: G. Davis, Foster, Grussendorf, Austerman,                                                                             
Bunde, J. Davis, Therriault, Mulder                                                                                             
OPPOSED:  Kohring, Moses, Williams                                                                                              
                                                                                                                                
The MOTION PASSED (8-3).                                                                                                        
                                                                                                                                
HCS CS SB 146 (FIN) was reported out of Committee with "no                                                                      
recommendation" and with fiscal notes by the Department of                                                                      
Labor and the Department of Fish and Game.                                                                                      
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 3:05 P.M.                                                                                              
H.F.C. 10 5/06/99                                                                                                               

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