Legislature(2001 - 2002)
04/09/2001 01:39 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 9, 2001
1:39 P.M.
TAPE HFC 01 - 76, Side A
TAPE HFC 01 - 76, Side B
TAPE HFC 01 - 77, Side A
TAPE HFC 01 - 77, Side B
TAPE HFC 01 - 78, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:39 P.M.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Eldon Mulder, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative Carl Moses
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
Representative Richard Foster
ALSO PRESENT
Representative Lisel McGuire; Representative Fred Dyson;
Representative Joe Green; Representative Pete Kott;
Representative Chenault; Kevin Jardell, Staff,
Representative Joe Green; Rod Arno, Alaska Outdoor Council,
Palmer; Pam LaBolle, President, Alaska State Chamber of
Commerce; Greg Persson, Public Safety Employees Association
(PSEA); Tim Navarre, President, Kenai Peninsula Borough
Assembly; David Katzeek, Juneau; Mako Haggerdy, Homer; Al
McKinley, Sr., Alaska Native Brotherhood, Juneau; Vernon
Marshall, Executive Director, NEA - Alaska; Kathryn Kurtz,
Attorney, Legislative Affairs Agency; Craig Persson, Public
Safety Employees Association, Fairbanks; Alfred McKinley,
Sr., Alaska Native Brotherhood, Juneau; Barbara Huff-
Tucknus, Director, Legislative and Governmental Affairs for
the Teamsters, Juneau.
PRESENT VIA TELECONFERENCE
James Jordan, Executive Director, Alaska State Medical
Board, Anchorage; Debbie Ossiander, Chugach High School,
Anchorage School Board, Anchorage; Brooke Miles, Alaska
Public Officers Commission (APOC), Anchorage; Steven Conn,
Executive Director, Alaska Public Interest Research Group,
Anchorage; James Price, Kenai; Richard Van Hattan,
President, Correctional Officers Bargaining Unit, Kenai;
Dwight Nissen, Delta Junction; Roy Gilbertson, Mayor, Delta
Junction.
SUMMARY
HB 99 An Act relating to school discipline and safety
programs; and providing for an effective date.
CS HB 99 (HES) was reported out of Committee with
a "do pass" recommendation and with a new zero
fiscal note by Department of Education & Early
Development.
HB 113 An Act relating to health care insurance payments
for hospital or medical services; and providing
for an effective date.
CS HB 113 (HES) was reported out of Committee with
a "do pass" recommendation and with zero fiscal
notes by Department of Community & Economic
Development dated 3/07/01 and the Department of
Administration.
HB 149 An Act relating to correctional facility space and
to authorizing the Department of Corrections to
enter into an agreement to lease facilities for
the confinement and care of prisoners within the
Kenai Peninsula Borough.
CS HB 149 (FIN) was reported out of Committee with
"individual recommendations" and with fiscal notes
by the Department of Corrections dated 3/22/01 and
the Department of Revenue.
HB 177 An Act placing certain special interest
organizations within the definition of 'group' for
purposes of Alaska's campaign finance statutes;
providing a contingent amendment to take effect in
case subjecting these organizations to all of the
statutory requirements pertaining to groups is
held by a court to be unconstitutional; requiring
certain organizations to disclose contributions
made to them and expenditures made by them;
requiring disclosure of the true source of
campaign contributions; and providing for an
effective date.
CS HB 177 (STA) was reported out of Committee with
"individual recommendations" and with a fiscal
note by the Department of Administration dated
3/22/01.
HB 194 An Act relating to fees for commercial fishing
licenses and permits; and providing for an
effective date.
HB 194 was POSTPONDED for a hearing at a later
date.
HCR 13 Relating to the nonresident fee differential for
commercial fishing permits and licenses.
HCR 13 was POSTPONDED for a hearing at a later
date.
HOUSE BILL NO. 99
An Act relating to school discipline and safety
programs; and providing for an effective date.
REPRESENTATIVE LESIL MCGUIRE commented that violence in
Alaska's schools has recently been brought into the
community spotlight as a result of serious physical
altercations between students. The fights have been violent
resulting in severe bodily harm. Education requires our
children to learn how to live in society through the
acceptance of rules and community values.
Representative McGuire stated that HB 99 would be a tool
available to schools to help confront both violent and non-
violent conflicts. HB 99 would amend Title 14 of the Alaska
Statutes to include policies that would initiate student
conflict-resolution curriculum providing methods of
nonviolent resolution and mediation for student conflict.
HB 99 would seek to recognize and enforce existing behavior
standards by giving students alternatives for solving
problems besides the use of violence. By integrating that
way of learning into the schools core curriculum, policies
would be targeted at helping students resolve problems
before they escalate.
Representative McGuire pointed out the zero fiscal note
submitted by the Department of Education & Early
Development.
Representative Harris asked if the legislation would cause
unfounded mandate expenditures to the local school
districts. Representative McGuire stated that it would not
have that effect. She noted the direct contrast with the
language in the previous bill and pointed out the program
requiring the policies had been removed. Representative
McGuire noted that three of the schools already have
policies in place pertaining to the reporting of school
conflict. That inclusion will waive them out of the
stipulation.
Representative McGuire added that there would be policy
manual updates distributed to the school districts. Schools
would use existing resources to determine if there were
problems in their areas. She noted that the bill would help
individual school districts to obtain grant application
funds.
Vice-Chair Bunde stated that Chugiak High School does have a
mediation program in place. He asked if the information
that district had gathered would be available to the other
districts. Additionally, Vice-Chair Bunde questioned what
the charge assessed to each high school would be if the
program language were to be added back.
Representative McGuire indicated that there was a movement
to create a database and that the materials would be
available. She noted that through her office budget, she
intended to put together a packet addressing the "Peace-able
School Project", which would be sent to every school in the
State. The current costs of the Chugiak program runs about
$30 - $40 thousand dollars per year. The cost to implement
the mediation program would be approximately $8 thousand per
year.
Representative Lancaster asked if there would be any
financial responsibility to the school districts should
problems result. Representative McGuire stated there would
not. The districts would not be punished and there would be
no ramifications. She advised that through the policy
letter and the news channels, the idea has been well
received. She acknowledged that an incentive exists. The
school districts want to start talking about these concerns.
Vice-Chair Bunde asked if mediation was currently happening
in the Alaskan elementary schools. Representative McGuire
responded that most of the elementary schools have some sort
of mediation control happening. However, kids are coming
into the high schools and those trained mediator services
are no longer being used. Representative McGuire stressed
that Chugiak is an exception. Most high schools are not
doing it at this time. She noted that the legislation
primarily targets the high school level.
DEBBIE OSSIANDER, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE
SCHOOL BOARD, CHUGIACH HIGH SCHOOL, ANCHORAGE, noted that
the first priority of every school district is school
safety. Ms. Ossiander commented that her school district
has been working toward improving conflict resolution for a
number of years. Much of the work has been done through
federal grant monies, specifically the Federal Safe and Drug
Free Schools. She indicated that the Anchorage School Board
supports the proposed legislation and pointed out that the
legislation would help districts to access grant funding.
VERNON MARSHALL, EXECUTIVE DIRECTOR, NATIONAL EDUCATION
ASSOCIATION (NEA)-ALASKA, noted that NEA does support the
passage of HB 99. The issue of school safety has been a top
priority for the Union's agenda for many years. He noted
that HB 99 would address the importance of developing
strategies that hopefully would lead to programs designed to
help students cope with aggressive thoughts and feelings.
There is currently staff employed to address school safety
concerns. Mr. Marshal noted that working with children at
an early age addressing these issues of aggression, would be
beneficial to all school age children.
Mr. Marshall distributed a packet of material that is used
by teachers at in-service trainings throughout the State.
[Copy on File].
Vice-Chair Bunde MOVED to report CS HB 99 (HES) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 99 (HES) was reported out of Committee with a "do
pass" recommendation and with a new zero fiscal note by
Department of Education & Early Development.
HOUSE BILL NO. 113
An Act relating to health care insurance payments for
hospital or medical services; and providing for an
effective date.
REPRESENTATIVE JOE GREEN testified that HB 113 would build
upon a national trend to develop fair payment provisions
that would enable health insurance companies to make sound
business decisions while ensuring that patients receive
benefit payments in an appropriate time frame. The concept
of "prompt pay" legislation has been successfully adopted
and implemented by 39 states.
HB 113 requires health insurers to pay benefits within
thirty calendar days of receiving a "clean claim". If a
payment is not made on time, the insurer would be charged
interest on the outstanding claim. HB 113 would also
establish a definition for "clean claim" that recognizes an
insurance company's need to make payment decisions based
upon complete and accurate information.
Vice-Chair Bunde noted that since the legislation indicates
that interest would be paid for delayed payments, that
concept indicates that currently, the insurance companies
are making money on those payments delayed past thirty days.
He asked if it was known what that amount was nationally.
Representative Green explained that there is a presumption
by the insurance companies that if they delay payment, they
then have use of that money.
Representative Croft asked about the definition of clean
claim. He asked if it had been "tested" in other states.
KEVIN JARDELL, STAFF, REPRESENTATIVE JOE GREEN, responded
that the definition of "clean claim" has been addressed by
many states and is difficult to formulate. He noted that
the definition chosen, benefits insurance companies and is
broadly written. Physicians requested that "hard" date
lines be established. Clean claim terminology comes from
the Medicare definition.
Representative Croft asked an alternative definition. Mr.
Jardell replied that the American Medical Association (AMA)
is agreeable with the proposed definition. He stressed that
the intent was not to undermine the viability of insurance
companies in Alaska.
Representative Croft asked where the procedures would be
outlined regarding whether the insurance companies owe the
claim or not. Mr. Jardell replied that the claimant would
go through the Insurance Division by filing a complaint. It
is the intent that the legislation would make insurance
companies develop more efficient methods of paying claims.
Representative Davies referenced Page 4, and asked if the
qualifier that precludes timely payments on the claim, apply
into propriety as well as circumstances. Mr. Jardell
understood that it would not apply to language that resulted
from a technical or grammatical error. If the information
needed had been included on the claim, then that claim would
be a clean claim. Representative Green advised that most of
the larger insurance companies insure more than one state
and that this language was used by a significant number of
states. He stated that it was reasonable.
Representative Hudson asked if the "clean claim" would be
impacted by Medicare's delay response. Representative Green
replied that the legislation would apply between the insured
and the insurance company.
JAMES JORDAN, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE
DIRECTOR, ALASKA STATE MEDICAL ASSOCIATION, ANCHORAGE,
testified that the Alaska State Medical Association does
support the proposed legislation. He stated that "clean
claim" definition included in the bill is based on
Medicare's definition. Currently, there are regulations
being adopted on the federal level, which deal with the
confidentiality of medical records and information for the
payment of health insurance claims. In enacting that bill,
Mr. Jordan stated that there would be an activation of
regulations. It is anticipated that the State Division of
Insurance will adopt regulations defining what a clean claim
is.
Representative Davies asked how to read Subsection K, Page
4, the qualifier of timely payments. He asked if that would
be in reference to all three clauses, the defect, the
impropriety and the circumstance. Mr. Jordan replied that
it would.
Representative Hudson MOVED to report CS HB 113 (HES) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Harris OBJECTED in
order to ask about all the fiscal notes. Representative
Green stated that they were all zero. Representative Harris
WITHDREW his OBJECTION.
There being NO further OBJECTION, it was so ordered.
CS HB 113 (HES) was reported out of Committee with a "do
pass" recommendations and with zero fiscal notes by
Department of Administration and Department of Community &
Economic Development dated 3/07/01.
HOUSE BILL NO. 177
An Act placing certain special interest organizations
within the definition of 'group' for purposes of
Alaska's campaign finance statutes; providing a
contingent amendment to take effect in case subjecting
these organizations to all of the statutory
requirements pertaining to groups is held by a court to
be unconstitutional; requiring certain organizations to
disclose contributions made to them and expenditures
made by them; requiring disclosure of the true source
of campaign contributions; and providing for an
effective date.
REPRESENTATIVE PETE KOTT pointed out that in 1999, the
Alaska Supreme Court in American Civil Liberties Union
(ACLU) versus State upheld Alaska's ban on political
contributions and independent expenditures by corporations
and labor unions. The Court also held that entities must be
allowed to make independent expenditures if:
· They could not participate in business activities;
· They have no shareholders who have a claim on
corporate earnings; and
· They are independent from the influence of
business corporations.
The Court suggested that entities, which meet those
criteria, must be permitted to make political contributions.
Representative Kott stated that CS HB 177 (STA) clarifies
that non-group entitities that meet that criteria may make
contributions and independent expenditures. The legislation
would subject those groups to the same rules, including
contribution limits and reporting requirements as other
groups that participate in political campaigns.
Representative Whitaker inquired who would be excluded.
Representative Kott replied that it would only exclude non-
group entities that fall into the categories listed in
Subsection 2.
TAPE HFC 01 - 77, Side B
Representative Kott noted that the only group that the
legislation excludes now would be the Alaska Conservation
Voters (ACV).
Representative Whitaker asked the intent of the bill.
Representative Kott replied that it was specifically to
preclude ACV from making the contributions they made in the
past and to preclude any other non-group entities from
"falling into" that category. Representative Whitaker
understood that the bill would create a "level playing
field" and close an existing loophole.
Representative Davies asked if Subsection 5 would be amended
to AS 15.13.400. He asked the operational sentence that
precedes that reference.
KATHRYN KURTZ, ATTORNEY, LEGISLATIVE LEGAL AND RESEARCH
SERVICES, LEGISLATIVE AFFAIRS AGENCY, explained that the
first sentence of paragraph 5 would be the definition that
currently exists for "group". That section provides all the
definitions of that area of the campaign finance law. Every
time "group" is used, it would mean what it used to mean,
plus the language added in the legislation. The language
would add that group entity to met the criteria.
Representative J. Davies understood that language would not
exclude the Alaska Oil and Gas Association (AOGA) as a
special interest organization.
Ms. Kurtz responded that the bill would include those
entities. She noted that the case driving the legislation
is the case of the Massachusetts Citizens for Life.
Entities that fit into that category would be included. The
definition appears elsewhere in interpreting judicial
decisions. She stated that the language was very
restrictive about the types of groups that would fit within
it.
Representative Davies asked how "C" was different than "B".
Representative Kott replied that "C" had been derived from
case law and clearly identifies those groups that can be
included as long as they do not meet the categories.
Outside of that, he did not know the difference.
Representative J. Davies asked the types of groups that
would not be "swept in" by the language of Section C.
BROOKE MILES, (TESTIFIED VIA TELECONFERENCE), ALASKA PUBLIC
OFFICIERS CCOMMISSION (APOC), ANCHORAGE, advised that the
Campaign Disclosure Law prohibits contributions from
corporations and business education partnerships. In the
ACLU case, the Alaska Supreme Court declined to prohibit
non-group entities that met the three-part arrangement.
Last summer, APOC delegated regulations permitting certain
non-profit corporations to qualify for activities in
election campaigns. To date, only one group has qualified,
and that is the Alaska Conservation Voters (ACV).
Ms. Miles continued, the legislation would change and
override APOC's current regulation in a couple of
significant ways. The first way concerns disclosure. The
legislation would require groups that participate to
disclose their contribution activity differently than
current regulations require. They could still transfer to a
political account; it would have to meet all the filters in
Alaska State law. The contributions coming into the non-
group entity would have to be from individuals in the amount
of $500 dollars or less or from another political group
giving $1,000 dollars. She continued that the disclosure
reports would require that they show what money had been
transferred.
Ms. Miles advised that it is APOC's expectation that the
legislation would result in a proliferation of entities.
She stated that they would not be limited to non-profit
corporations.
Representative Davies questioned what other groups would be
affected. Ms. Miles replied that there have been inquiries
from other groups such as "Common Sense Alaska". She stated
that the bill would result in more disclosure to the public.
Vice-Chair Bunde understood that the bill would limit
current participants to the same limitations that other
political people have to abide by and would allow for more
expansion. Ms. Miles replied that was correct.
Vice-Chair Bunde pointed out that his constituents wanted
more campaign exposure, rather than less. He noted his
support of the bill.
Representative Harris voiced concern with the fiscal notes.
Representative Kott believed that only a minimal amount of
applications would be submitted. He suggested that the note
might be a little high.
Ms. Miles explained that the fiscal note provides for the
first year funding for a Regulation Specialist to get on
line. Groups cannot walk in to the office without the
changes in place. She pointed out that current regulations
"go out the door" as soon as the legislation becomes law.
APOC believes that there will be a lot of these groups.
Representative Harris recommended zeroing the fiscal note
out.
Vice-Chair Bunde referenced the travel aspect of the fiscal
note to be used to educate staff. He asked why individual
areas should come to Anchorage to be educated. Ms. Miles
replied that the common practice is for APOC to go to the
communities to educate people regarding the campaign
changes. She predicted that there will be substantial
impact and it would be difficult for APOC to stay on top of
the legislation.
Representative Croft spoke about those groups that fit into
Subsection "B". He asked about "groups, individuals and
special interest organizations". Ms. Kurtz advised that
"person" could be used to describe a labor union or
partnership and that the primary difference between "B" and
"C" is the phrase "principle purpose". In "C", there could
exist an entity whose purpose is educational.
Representative Croft believed that it was appropriate to use
"person" rather than individual. Person is a "broader"
usage of the concept. Previously, groups were asked to
register whose major purpose was to influence an election.
He asked how would those persons, whose major concern was
not to influence elections, register. Ms. Kurtz
acknowledged that was correct if that person was going to be
making expenditures regulated under statute.
Representative Croft asked where "special interest
organization" would be defined. Ms. Kurtz advised that the
bill does not include that definition. All the references
to that are included in "C".
Representative Croft asked how it could be characterized.
Ms. Kurtz noted that the Court did not want to define that
either. A negative definition exists. The prohibition is
concerned that it would exclude some groups that should not
be excluded based on the three criteria. She noted that
there are a few different types of tax-exempt organizations
under federal code. Ms. Kurtz understood that a 501C-4
organization could engage in some sort of political activity
without jeopardizing their tax-exempt status. The Court has
stated that the statutes have to be read to allow entities
that fit the definition.
Representative Croft stated that by definition, it would be
a group of people that are grouped together to do other
things and that end up "grouping" together to engage in
political activity. He asked if that was the source of
ACLU's discretion opinion. Ms. Kurtz agreed that was an
accurate summary of where the ACLU case went.
Vice-Chair Bunde noted that under "B", groups organized for
the principle purpose of influencing the outcome of
elections. He asked what the percentage of their activity
would be and when the principle purpose would be cut off.
Ms. Kurtz explained that the Courts had not precisely
defined percentage. She added that there was a prohibition
elsewhere driving the statutes, which prohibits corporations
and unions from contributing. There could be a corporation
under "C", that met the criteria, which would not be able to
otherwise contribute because it was a corporation. Vice-
Chair Bunde stated that the State needs "C" to address
activity in political campaigning. The public would be
better served by knowing know who is active.
Representative Davies asked for a description of the ACLU
case. Ms. Kurtz advised that the ACLU case was a
comprehensive challenge to the Alaska Campaign Finance
statutes as they were recorded in 1996. The Court upheld
virtually all the activities so that these organizations
could be included. That definition was used in couple of
cases. There are federal cases indicating the federal
election and the direct prohibition of corporations. That
law was challenged.
Ms. Kurtz stated that the statutes have to be read to allow
the particular class of entities to contribute. The
prohibition on corporate giving has been justified in the
positive. There is a concern of corruption that justifies
the restrictions on free speech in campaign financing.
There is a concern about the ability to accumulate large
quantities of funds that go with corporations that the
Courts did not appeal. It applies to groups like those in
the federal challenge.
Representative Whitaker questioned if the bill would "level
the playing field". Representative Kott replied it would.
STEVEN CONN, (TESTIFIED VIA TELECONFERENCE), EXECUTIVE
DIRECTOR, ALASKA PUBLIC INTEREST RESERARCH GROUP, ANCHORAGE,
spoke in opposition to the proposed legislation. He
submitted that to have a level playing field, it would be
important to address campaign finance reform, which would be
to protect the political process from an overwhelming
influence by corporations. He spoke to the potential of
corrupting the process by exacting from politicians,
political debts. The Court sought to protect those entities
that were explicitly not engaged in "business" activity and
with no shareholders. Mr. Conn stated that it would be
those entities whose singular purpose and ideas are not
connected to business. Those entities would deserve a
special exemption if there was a level playing field. He
believed that there would be many groups seeking the
exclusion. He submitted that there is no question that the
Court thought long and hard about the exemption recognizing
the powerful impact of business on that process. The Court
did define it in the negative.
Mr. Conn added, that a concern exists that those who chose
to participate in the non-business entity might be subject
to retaliation with sanctions leveled. There are certain
reasons why the Court awarded immunities. He encouraged the
Committee to contemplate those concerns. The Court's
decisions should not be modified. The exclusion is focused
on one specific group.
ROD ARNO, ALASKA OUTDOOR COUNCIL, PALMER, voiced support for
the proposed legislation. He noted that there are groups
who advocate against the Alaska Outdoor Council. One of
those groups is the Alaska Conservation Foundation and its
umbrella groups, the Alaska Conservation Alliance and the
Alaska Conservation Voters. He pointed out that APOC has
indicated that there is no regulations making the ACV
register disclosures. He stated that the Alaska Outdoor
Council would like a "level playing field".
TAPE HFC 01 - 77, Side A
PAM LABOLLE, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
spoke in support of the legislation. She maintained that it
would require certain special interest organizations to
disclose contributions received and expenditures made for
campaigns, and to disclose the true source of the
campaigning contributions.
Ms. LaBolle stated that Alaska voters deserve to know who
the contributors are and in which states those individuals
reside who are trying to persuade Alaskans to support their
cause. She maintained that there is no reason that
promoters should hide behind their funding sources.
Vice-Chair Bunde MOVED to report CSHB 177 (STA) out of
Committee with individual recommendations and with the
accompanying fiscal notes.
There being NO OBJECTION, it was so ordered.
CS HB 177 (STA) was reported out of Committee with
"individual recommendations" and with a fiscal note by
Department of Administration dated 3/22/01.
HOUSE BILL NO. 149
An Act relating to correctional facility space and to
authorizing the Department of Corrections to enter into
an agreement to lease facilities for the confinement
and care of prisoners within the Kenai Peninsula
Borough.
Co-Chair Mulder noted that the Subcommittee had met to
discuss HB 149 and the proposed committee substitute, 22-
LS0436\R, Luckhaupt, 4/03/01, resulted from the
Subcommittee's work.
Representative Hudson MOVED to ADOPT the work draft as the
document before the Committee. There being NO OBJECTION, it
was adopted.
REPRESENTATIVE CHENAULT, the sponsor of the bill, spoke in
support of the proposed committee substitute. He noted that
there had been modifications made to the original bill.
Co-Chair Mulder stated that the bill would provide some
certainty in relationship to the size, scope and costs of
the project. The status quo in Arizona was $65 dollars a
day. In order to provide a comparable facility in Alaska,
the cost would be approximately $135 a day. Recognizing
that this would result in additional costs, the State wanted
to make sure that jobs would be well paying, the care would
be comparable, and that the Borough was satisfied with the
proposal. He stated that it was anticipated that the cost
would be 20% less than the average in all-State facilities,
ranging somewhere around $89 dollars per day. The per diem
cost excludes the contracts outside the State. He pointed
out that it would be 18 - 20 percent below the State rate.
Representative Lancaster referred to the level of care
compared to Arizona. Co-Chair Mulder felt that the level of
care and custody would be comparable.
Representative Lancaster understood that the site had not
yet been selected. Representative Chenault stated that the
site selection would not hinder the project. Co-Chair
Mulder noted that there is a tentative contract signed at
this point. He noted that he was comfortable with the
numbers and emphasized that there was support from the Kenai
Borough.
TIM NAVARRE, PRESIDENT, KENAI PENINSULA BOROUGH ASSEMBLY,
discussed the Boroughs participation in the site selection.
He stressed that the majority of the Kenai Assembly favors
the site at Wildwood.
Representative Hudson questioned if there had been a public
process to discuss concerns. Mr. Navarre noted that a
resolution had been adopted. The landowner brought the
consideration before the public and the Assembly. There
were no objections to the request for qualification (RFQ),
the competitive bid process award. He noted that there have
been three hearings and that the Planning Commission has a
hearing scheduled. The issue will be back before the
Assembly on April 17, 2001.
Co-Chair Mulder noted that there have been some questions
regarding the bid process. Mr. Navarre stated that there
were four bids on the RFQ and an evaluation team to evaluate
the proposals. He stated that the top two proposals tied.
The team recommended a meeting with the Assembly in
Executive Session. The Assembly was unanimous in its
selection. After 30 days, there was no objection to the
process. He reiterated that the process had been fair and
equitable.
Representative Harris asked if Mr. Navarre was comfortable
that $89 dollars a day per bed could be achieved. He asked
if the majority of local residents were comfortable with a
private prison. Mr. Navarre affirmed the price. He added
that some locals would prefer a State institution, however,
felt that the public would be satisfied with a private
facility as long as the mitigation issues had been "flushed
out" to assure adequately trained staff at a comparable
wage. At that point, the citizens would support the prison.
Representative Harris questioned if this would be a pilot
project. He asked if there would be an open bidding process
that would allow unions and local companies to participate.
Mr. Navarre stressed that the Borough supports the use of
local union labor.
Representative Hudson noted that there would be a State
lease amortized over time and questioned if there would be a
tax benefit for the Borough to have a private versus State
facility. Mr. Navarre responded that negotiations are open
for lease acquisition. The Borough would own the building,
but it could be sold to the State of Alaska after 20 years.
There is a Borough ordinance that projects over $10 million
dollars would receive a 50% percent break discount on
property tax. He added that there could be some low
interest loans. He stated that the Borough has agreed to
take less in lieu of taxes.
In response to a question by Representative Lancaster, Mr.
Navarre discussed liability. He noted that liability has
two issues:
· The building and revenue bonds; and
· Prisoner escape.
If the State defaulted, the lenders would be responsible.
Then the investors could end up with the facility and
prisoner security would then be negotiated. The final
contract would require insurance to indemnify.
CRAIG PERSSON, PUBLIC SAFETY EMPLOYEES ASSOCIATION,
FAIRBANKS, testified in opposition to HB 149. He spoke in
support of minimal hiring and training standards equal to
the Department of Corrections.
JAMES PRICE, (TESTIFIED VIA TELECONFERENCE), KENAI,
testified in opposition to the legislation. He stressed
that the Borough would be responsible for financial support.
He stated that it was premature to say that the public
supported the concept, as there have not been any public
hearings to date. He recommended that there is a need for a
feasibility study and that the project should not move
forward without that study, as it would not be in the best
interest of the public or the State.
Vice-Chair Bunde asked if Mr. Price would oppose a public
financed prison in that area. Mr. Price commented that
there would be better "safe guards" with a public State
prison. He noted that he would not be opposed to a public
prison.
Representative Harris suggested that Page 3, Section 3,
addressed Mr. Price's concern.
RICHARD VAN HATTAN, (TESTIFIED VIA TELECONFERENCE),
PRESIDENT, CORRECTIONAL OFFICERS BARGAINING UNIT, KENAI,
testified in opposition to the legislation. He pointed out
that the intent was to save the State money. He stressed
that the legislation limits the contract to a third party in
the Kenai Peninsula. He believed that there would be more
support if it was not limited to a third party.
Mr. Van Hatten did not think it was fair to compare the cost
of running a prison in Kenai to one in Nome. He pointed out
that the Department of Corrections is currently having
difficulty obtaining qualified personnel. He did not think
it would be possible to hire qualified people with the
lowered standards. Mr. Van Hatten thought that issues such
as the sewage treatment and the water service were
questionable.
DWIGHT NISSEN, (TESTIFIED VIA TELECONFERENCE), DELTA
JUNCTION, identified his concern with the $19 dollars a day
difference, the $5.5 million dollars with no guarantee that
the rate would stay. He added that the whole State should
be consulted if the citizens of Alaska want prisons to
become private industry.
ROY GILBERTSON, (TESTIFIED VIA TELECONFERENCE), MAYOR, DELTA
JUNCTION, voiced concern that the State of Alaska currently
has an obligation to the City of Delta Junction. He pointed
out that the State needs to help Delta Junction get out from
under the lawsuit currently pending because of HB 53.
Representative Hudson asked what was pending. Mr.
Gilbertson explained that there was a lawsuit filed against
the City of Delta Junction. The property has never been
available at Fort Greeley and they were not able to go
offsite. The City is suing for funds in the amount of $2.4
million dollars. He requested that these costs be taken
care of.
Representative Davies asked if the City of Delta Junction
could build an 800-bed facility under the $89 dollar terms
proposed in HB 149. He asked if they would be interested in
doing that and would it eliminate the lawsuit. Mr.
Gilbertson responded that it could be built, however, was
not sure of the support.
Co-Chair Mulder noted that testimony had been taken from
Delta Junction. He observed that there had not been any
consensus for a facility to be built there. He noted that
the lawsuit is the greatest concern. Co-Chair Mulder noted
that financial relief could not be provided within the
confines of the legislation. Co-Chair Mulder advised that
he would speak with Senator Stevens about the debt concern
for the City of Delta Junction. Mr. Gilbertson interjected
that Cornell is a participant in the lawsuit against the
City of Delta Junction because of Allvest, Inc., and noted
that they would appreciate any help they could get.
DAVID KATZEEK, JUNEAU, spoke in support of the legislation.
He pointed out that rehabilitation reduces recidivism. He
addressed the amount that the State of Alaska currently
spends on sending their prisoners to Arizona.
TAPE HFC 01 - 77, Side B
Mr. Katzeek stressed the hardship of sending Alaska Natives
to Arizona where they cannot benefit from the support of
their families for rehabilitation. He felt that the State
of Alaska would benefit from the legislation. He emphasized
that money flows to other states.
Representative Davies shared the speaker's concern in
regards to moving prisoners out of State, but stressed that
the legislation would replace the smaller State operated
prisons with one large private facility in Kenai. He
inquired if the legislation would result in additional
rehabilitation treatment.
Mr. Katzeek believed that the bill would be the first step.
He acknowledged that a community effort was needed to
address the issues of concern. He stressed that if the
facility is located in Alaska, it will require a community
effort in getting involved.
MAKO HAGGERDY, HOMER, stated that he disagreed with Mr.
Navarre. He stated that only 40 percent of the local
residents want a private prison and that 60 percent feel
that it is the State's responsibility to house and care for
prisoners. He acknowledged the need to return prisoners to
the State of Alaska and recommended the removal of the third
party debate. He believed that the third party contractors
have complicated the issue.
ALFRED MCKINLEY, SR., ALASKA NATIVE BROTHERHOOD, JUNEAU,
spoke in support of bringing the prisoners back to the State
of Alaska. He observed that building the facility would
provide jobs and infrastructure for the State. He asked if
the State of Alaska could be reimbursed for medical
expenses.
Representative Croft questioned if the federal government
would be paying for the Native inmate medical costs. Mr.
McKinley thought that the federal government would reimburse
the State for Native medical expenses. Co-Chair Mulder
pointed out that the State currently does not receive
reimbursement.
BARBARA HUFF-TUCKNUS, DIRECTOR, LEGISLATIVE AND GOVERNMENTAL
AFFAIRS FOR THE TEAMSTERS UNION, JUNEAU, pointed out that
this is a philosophical issue and one that needs to be
debated. She stressed that the legislation would address
issues regarding bringing the prisoners back to the State of
Alaska. Ms. Tucknus noted for the record that the
construction issue should be addressed and asked for
assurance that the construction of the building would be a
union project and that jobs would be brought back to the
State of Alaska.
Representative Whitaker referred to the Department of
Corrections "Cost of Care" sheet. He commented that the
numbers indicate that the State is spending an additional
$12 million dollars per year. The legislation indicates
that the State is spending an additional $7.7 million
dollars per year. Co-Chair Mulder advised that the number
was $7 million dollars.
Representative Whitaker asked if it was in the State's best
interest to spend an additional $7.7 million dollars per
year for the next 20 years. Co-Chair Mulder stated that the
issue was whether it was better to bring the prisoners home
or not.
Representative Croft MOVED to ADOPT Amendment #1. [Copy on
File]. Co-Chair Mulder OBJECTED.
Representative Croft commented that the amendment would
provide for a competitive process between anyone that would
like to be a part of that bidding process. He acknowledged
that it was complicated. He noted that he had rewritten
Section 2. The amendment would "holdout" for each area the
price of $89 million dollars. Representative Croft admitted
that there is a thread of concern regarding the way the bill
is approaching the project. He agreed that it is
appropriate that the prisoners come home. He stated that
Amendment #1 would open up a competitive bidding process.
Co-Chair Mulder reiterated his objection. He stated that if
it works in Alaska, there is greater potential down the
road. He stated that the first focus would be further
marketing. He added that the project would be a venture
opportunity for Kenai. There is concern in providing
culturally relative activities. He pointed out the letter
of support from the Alaska Federation of Natives (AFN).
Co-Chair Mulder commented that it would be less than the
State alternative. He asked at what price is it worthwhile
to bring our inmates home. The Kenai Borough is satisfied
that they will be able to track those people.
Representative Davies spoke to the issue of culturally
appropriate care. The State system has not been either in
the way of or prohibiting the culturally active care for the
inmates. He stressed that the fundamental problem is with
alcohol treatment.
Representative J. Davies asked, "What does it mean to bring
the prisoners home". The legislation will bring the
prisoners from out of state to Alaska, but what about the
prisoners that are spread throughout the State and not near
their support structures. He noted his support for the idea
that other areas throughout the State bid. He voiced his
concern that the proposal had been subjected to the
competitive pressures of the market place.
Co-Chair Williams commented that the legislation would be
good for the State. He acknowledged that it would be good
to get the prisoners closer to their family areas; however,
local areas are often hesitant to discuss building prisons.
He projected that the State is going to need more prisons.
Representative Hudson voiced his support for the Kenai
Prison project. He pointed out that one facility already is
located in that area. He suggested that it would be
"special" to have a pre-sentencing facility and a prison
facility with "special" programs for the inmates. He
reiterated that that legislation is the "right way to go".
He noted that he opposed Amendment #1.
Representative Whitaker asked the process that lead to the
proposal. Co-Chair Mulder replied that the Kenai Assembly
was contacted by KNA with the idea and asked for a sole
source. The Borough said no and went out for an RFQ. They
received four responses back. The full assembly made the
single selection. The process has been ongoing for one
month.
Representative Whitaker stated that it is clear that the
Borough followed a procedure, which was appropriate. He
questioned, however, the procedure that the State has
followed in the process. He noted that this is a matter of
public trust and that the State should be cautious.
Representative Croft expressed that the Kenai Peninsula
Borough did a great job for what they had been asked to do
as a borough. They were not representing the State's
interest; they represented Kenai's interests. Page 11 lists
what the points were awarded for and that none of those
points encompass any aspect of costs. He did not question
Kenai's choice of a partner; however, that differs from the
State determining who is the best and the cheapest. Kenai
will contract with the State for beds. The Legislature must
make sure that the process is competitive.
Representative Croft stressed that this is "sole sourcing".
He spoke to the advantages to competition. He emphasized
that this is "government defining what might be the right
price". He did not know if the partnerships could happen in
other areas.
TAPE HFC 01 - 78, Side A
Representative Croft stated that the fundamental problem
with the legislation assumes that South Central is "home".
The amendment would allow all other areas to bid. The
amendment would bring competition to State government.
Vice-Chair Bunde noted that people throughout the State do
not want to have prisons in their area. There will be
opportunities to have more prisons located in other places
of the State in the future if this one works.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Moses, Croft, Whittaker
OPPOSED: Harris, Hudson, Lancaster, Bunde, Williams,
Mulder
Representative Foster was not present for the vote.
The MOTION FAILED (4-6).
Representative Croft MOVED to ADOPT Amendment #2. [Copy on
File]. Representative Croft explained that the amendment
would add the language:
"This applicability section does not affect the
authority of the commissioner of Corrections to
designate the correctional facility to which a prisoner
is assigned" to Page 3, Line 16."
There being NO OBJECTION, the amendment was adopted.
Representative Croft MOVED to ADOPT Amendment #3. [Copy on
File]. Co-Chair Mulder OBJECTED for the sponsor's
explanation.
Representative Croft explained that the amendment would
insert the language:
"But including the capital costs for construction of
the facility, including debt service" to Page 2, Line
3."
Co-Chair Mulder WITHDREW his OBJECTION.
Representative Davies MOVED to ADOPT Amendment #4. [Copy on
File]. Co-Chair Mulder OBJECTED.
Representative Davies commented that he was concerned about
the standards contained in the committee substitute,
specifically the capitalization and the per diem costs. He
assumed that the State would be 10% above for construction.
He referenced Page 2 of the Amendment, which indicates the
per diem rate if 18% was saved over the State's costs.
Representative J. Davies noted that until the capitalization
costs are known, the State does not know how much money
would be left on the table. He requested that the Committee
determine the numbers before awarding the contract.
Co-Chair Mulder stated that the amendment addresses the work
and deliberations of the Subcommittee. He commented that
the State's interest is to "get the best deal possible",
while at the same time providing for a comparable level of
care and the culturally relevant programs. Understanding
that fact, if the State achieves a 10% savings, then that is
considered a "good deal". He argued that the spreadsheet
provided by Department of Corrections numbers could be
questioned into eternity.
Co-Chair Mulder advised that the Subcommittee determined the
closed comparison with the Anchorage facility, which costs
about $135 dollars per day. He suggested that it would
amount to approximately a 30% savings. He believed that was
sufficient to base bringing the inmates home. He reminded
members that there is a desire for economic activity on the
Kenai Peninsula and the concept would provide good paying
jobs.
Representative Croft advised that Amendment #4 was the "flip
side" to Amendment #1. He voiced concern with the process
that is being established. He believed that there should be
a process of determining what the price should be
competitively. He stated that there needs to be a market
place comparison including the ethics of business.
Otherwise, those numbers should be "rigorous".
Representative Croft stated that there has been a
superficial discussion regarding the issue and he believed
that the Committee had not chosen the "best" number.
Co-Chair Williams advised that two numbers are known. He
reiterated that people in Alaska are concerned with the
costs; however, they want to get the prisoners back to
Alaska and the facility built. Co-Chair Williams surmised
that where ever the facility is built, it will be full as
soon as it is completed. He believed that other facilities
would need to be built in the near future.
Representative Davies emphasized that most of these
prisoners belong in treatment programs and not in prisons.
He reiterated that the process has not been a competitive
one. He questioned why there has not been greater House
Finance Committee scrutiny for the State of Alaska.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Moses, Croft, Hudson
OPPOSED: Harris, Lancaster, Whitaker, Bunde, Williams,
Mulder
Representative Foster was not present for the vote.
The MOTION FAILED (4-6).
Representative Davies WITHDREW Amendment #5. [Copy on
File].
Representative Croft MOVED to ADOPT Amendment #6. [Copy on
File]. Co-Chair Mulder OBJECTED.
Representative Croft stated that the amendment would add
language to Page 2, Line 7, after "index,":
"It is also the intent of the Legislature that the
Department of Corrections not sign any agreement for a
private prison until the litigation regarding the Delta
prison has been finally resolved".
Representative Croft believed that the language of the
amendment would provide the State with a "clean slate"
before moving forward.
Co-Chair Mulder suggested that the amendment would confuse
two separate issues. He maintained that Cornell, Inc., has
no interest in Allvest, Inc. and has no interest in the
lawsuit. It is purely Allvest, Inc. that has the lawsuit
with Delta Junction. The issue is not tied to Kenai.
Representative Harris agreed that the issues are separate
and did not think that the legislation should be tied
together. He spoke in support of resolving the litigation
and believed that the amendment could "kill" the proposed
bill.
Representative Lancaster asked if the State was named in any
of the lawsuits. Co-Chair Mulder replied it was not.
Representative Whitaker asked if Section 4 repealed the
agreement with Delta Junction, would the State be held
harmless. Co-Chair Mulder stated the State would be held
harmless. He understood the relationship that Cornell,
Inc., and Allvest, Inc., had in Delta Junction, was that the
contact between Delta and Allvest, Inc., existed. Cornell,
Inc., had an option to operate the facility. They were not
a signer on that contract.
Representative Whitaker questioned if all parties including
Delta would hold the State harmless. Co-Chair Mulder
replied it would because the State was not a signer on that
contract.
Representative Croft discussed that there is a relationship
with that entity. He stated that whether Cornell was
involved or not was not important, as it was only intent
language. Before the new operations are started, there must
be clarification.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Moses, Croft, Whittier
OPPOSED: Harris, Hudson, Lancaster, Bunde, Williams,
Mulder
Representative Foster was not present for the vote.
The MOTION FAILED (4-6).
Co-Chair Mulder noted the fiscal notes by Department of
Revenue and Department of Corrections.
Co-Chair Mulder MOVED to report CS HB 149 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it
was so ordered.
CS HB 149 (FIN) was reported out of Committee with
"individual recommendations" and with a fiscal note by the
Department of Revenue and a note dated 3/22/01 by Department
of Corrections.
ADJOURNMENT
The meeting was adjourned at 5:25 P.M.
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