Legislature(2001 - 2002)

05/03/2001 01:55 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 03, 2001                                                                                            
                         1:55 P.M.                                                                                              
                                                                                                                                
TAPE HFC 01 - 113, Side A                                                                                                       
TAPE HFC 01 - 113, Side B                                                                                                       
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Mulder  called the  House Finance Committee  meeting                                                                   
to order at 1:55 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Carl Moses                                                                                                       
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Rick Halford;  Bruce  Johnson, Deputy  Commissioner,                                                                   
Department of  Education and  Early Development;  Eddy Jeans,                                                                   
Manger, School Finance and Facilities  Section, Department of                                                                   
Education  and Early  Development;  Annette Kreitzer,  Staff,                                                                   
Senator  Loren  Leman;  Paul Roetman,  Staff,  Senator  Loran                                                                   
Leman; Paul  Roetman, Staff, Senator  Loran Leman;  Guy Bell,                                                                   
Director, Division of Retirement  and Benefits, Department of                                                                   
Administration;   Darwin   Peterson,  Staff,   Senator   John                                                                   
Torgerson;  Wilson,   Condon,  Commissioner,   Department  of                                                                   
Revenue; Mike Tibbles, Staff,  Representative Williams; Thyes                                                                   
Shaub,  Lobbyist for  the Associated  General Contractors  of                                                                   
Alaska, Anchorage; Doug Gardner,  Assistant Attorney General,                                                                   
Department of Law.                                                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Major Douglas  Norris, Alaska  State Troopers, Department  of                                                                   
Public  Safety, Anchorage;  Melissa  Hill, Program  Director,                                                                   
Alaska  Teacher   Placement,  Fairbanks;  Debbie   Ossiander,                                                                   
Anchorage  School Board,  Anchorage;  Kevin Brady,  Attorney,                                                                   
Oles Morrison  Rinker & Baker llp., Anchorage;  Josie Styles,                                                                   
Village  Public  Safety  Officer   (VPSO)  Program  Director,                                                                   
Bering Straits Region; Bill Reynold, Attorney, Oles Morrison                                                                    
Rinker & Baker llp., Anchorage.                                                                                                 
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 185    An Act relating to fees for certain uses of state                                                                     
          water  and  the  accounting  and  appropriation  of                                                                   
          those  fees;  relating  to authorizations  for  the                                                                   
          temporary   use  of   state  water;  making   other                                                                   
          amendments  to  the   Alaska  Water  Use  Act;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          HB 185 was POSTPONDED for a hearing at a later                                                                        
          date.                                                                                                                 
                                                                                                                                
CS SB 145(FIN)                                                                                                                  
          An  Act relating  to  regional  and village  public                                                                   
          safety officers;  relating to the expansion  of the                                                                   
          village  public safety  officer program to  include                                                                   
          the provision  of probation and  parole supervision                                                                   
          services;  and relating to retirement  benefits for                                                                   
          village public safety officers.                                                                                       
                                                                                                                                
          CS SB  145 (FIN) was HELD in Committee  for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
CS SS SB 149(HES)                                                                                                               
          An   Act  relating   to  reemployment  of   retired                                                                   
          teachers,   to   eligibility  for   major   medical                                                                   
          insurance   coverage  for   beneficiaries  of   the                                                                   
          teachers'   retirement  system,   and  to   teacher                                                                   
          certificates; and providing  for an effective date.                                                                   
                                                                                                                                
          HCS  CS  SS  SB  149  (FIN)  was  reported  out  of                                                                   
          Committee with a "do  pass" recommendation and with                                                                   
          a  fiscal  note  #1  Department  of  Administration                                                                   
          dated 4/24/01 and a  zero note dated 4/24/01, #2 by                                                                   
          Department of Education & Early Development.                                                                          
                                                                                                                                
SB 152    An Act relating to the handling of and interest on                                                                    
          contract controversies  involving the Department of                                                                   
          Transportation  and   Public  Facilities  or  state                                                                   
          agencies to  whom the Department  of Transportation                                                                   
          and Public Facilities  delegates the responsibility                                                                   
          for handling the controversies.                                                                                       
                                                                                                                                
          HCS SB 152 (FIN) was reported out of Committee                                                                        
          with   a   "do  pass"   recommendation   and   with                                                                   
          indeterminate  fiscal note #1 by the  Department of                                                                   
          Transportation  & Public  Facilities dated  4/25/01                                                                   
          and  #2  by  Department  of  Community  &  Economic                                                                   
          Development dated 4/11/01.                                                                                            
                                                                                                                                
CS SB 158(RES) am                                                                                                               
          An  Act directing  the commissioner  of revenue  to                                                                   
          prepare  a report  to the  legislature relating  to                                                                   
          the state's participation  in owning or financing a                                                                   
          gas   pipeline  project;   and  providing   for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          HCS CS SB 158 (FIN) was reported out of Committee                                                                     
          with a "do pass" recommendation and with a fiscal                                                                     
          note #1 by Department of Revenue dated 3/29/01.                                                                       
                                                                                                                                
CS FOR SENATE BILL NO. 145(FIN)                                                                                               
                                                                                                                                
     An Act  relating to regional  and village  public safety                                                                   
     officers;  relating  to  the expansion  of  the  village                                                                   
     public safety  officer program to include  the provision                                                                   
     of  probation  and  parole   supervision  services;  and                                                                   
     relating  to  retirement  benefits  for  village  public                                                                   
     safety officers.                                                                                                           
                                                                                                                                
SENATOR RICK HALFORD  explained that the bill would  do a lot                                                                   
of good with  a little bit of  money.  He spoke to  the pilot                                                                   
program  for Village  Public Safety  Officers (VPSO),  noting                                                                   
the success in dealing with the  probation/parole problem and                                                                   
getting people  back to  their own  communities.  He  advised                                                                   
that  the  bill  costs  a little  over  $1  million  dollars,                                                                   
however,  it   would  save  much  more  in   stopping  repeat                                                                   
offenders.                                                                                                                      
                                                                                                                                
Senator Halford outlined four parts of the bill:                                                                                
                                                                                                                                
     ·    Parole/probation supervision for VPSO's;                                                                              
     ·    Pay scale to accompany that responsibility;                                                                           
     ·    Career  path for regional  Public Safety  Officers;                                                                   
          and                                                                                                                   
     ·    Officers  eligible  for  the  State's  bottom  line                                                                   
          retirement system.                                                                                                    
                                                                                                                                
He urged that the bill pass from Committee.                                                                                     
                                                                                                                                
Co-Chair Mulder  requested comments  on Amendment #1  and #2.                                                                   
[Copies  on  File].    Senator  Halford  explained  that  the                                                                   
amendment  dealing with  the Internal  Revenue Service  (IRS)                                                                   
would  address  the  taxability  question in  regard  to  the                                                                   
system.     Current  Village   Public  Safety  Officers   are                                                                   
employees of the  regional non-profit system.   There are tax                                                                   
questions  whether they  are governmental  employees.   There                                                                   
are other exceptions within that  program and because of that                                                                   
language  should be  inserted  to address  any tax  problems.                                                                   
The second amendment stipulates  employee officers within the                                                                   
list  of  police  officers  for  the  State,  clarifying  the                                                                   
category which makes them distinct.                                                                                             
                                                                                                                                
Co-Chair  Mulder agreed  that the pilot  program would  allow                                                                   
VPSO's the  ability to  enhance the State's  probation/parole                                                                   
opportunities.   He  asked  if the  effort  was to  encourage                                                                   
career  opportunities.   Senator Halford  explained that  the                                                                   
turnover rate  is very high and  that the training  costs are                                                                   
high.    Eventually,  there  will   be  a  reduction  to  the                                                                   
Department of  Corrections budget,  as those people  will not                                                                   
be going back to  jail because they failed to  make it out of                                                                   
parole or were jobless.                                                                                                         
                                                                                                                                
Representative Foster voiced appreciation  to the sponsor for                                                                   
the legislation.                                                                                                                
                                                                                                                                
JOSIE STYLES, (TESTIFIED VIA TELECONFERENCE),  VILLAGE PUBLIC                                                                   
SAFETY  OFFICIER  (VPSO), PROGRAM  DIRECTOR,  BERING  STRAITS                                                                   
REGION, voiced  support for the  legislation.   She requested                                                                   
that members move the bill from Committee.                                                                                      
                                                                                                                                
                                                                                                                                
Recess:        2:05 P.M.                                                                                                        
Reconvened:    4:55 P.M.                                                                                                        
                                                                                                                                
                                                                                                                                
MAJOR DOUGLAS NORRIS, (TESTIFIED  VIA TELECONFERENCE), ALASKA                                                                   
STATE  TROOPERS,  DEPARTMENT  OF  PUBLIC  SAFETY,  ANCHORAGE,                                                                   
testified  in support  of SB  145.   He noted  that the  bill                                                                   
addresses  State Troopers  needs  throughout the  State.   He                                                                   
offered to answer questions of the Committee.                                                                                   
                                                                                                                                
CS  SB   145  (FIN)  was   HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 149                                                                                    
                                                                                                                                
     An Act  relating to  employment incentives  for teachers                                                                   
     and health  care providers,  to reemployment  of retired                                                                   
     teachers, to loans to and  loan forgiveness for teachers                                                                   
     and  health care  providers, to awards  to teachers,  to                                                                   
     eligibility  for major  medical  insurance coverage  for                                                                   
     beneficiaries  of the teachers'  retirement system,  and                                                                   
     to teacher certificates;  and providing for an effective                                                                   
     date.                                                                                                                      
                                                                                                                                
PAUL ROETMAN, STAFF,  SENATOR LORAN LEMAN, noted  that SB 149                                                                   
responds  to Alaska's  current  teacher shortage.   It  would                                                                   
establish  a multi-pronged  approach to  increase and  retain                                                                   
personnel in critical staffing  areas.  The bill would create                                                                   
a new  teacher certification  that would  allow the  State to                                                                   
recognize  the  credentials  of  teachers  certified  out-of-                                                                   
state.  The  "preliminary teacher certificate"  would include                                                                   
the same endorsements as those  on a teacher's current, valid                                                                   
certificate issued out-of-state.                                                                                                
                                                                                                                                
Mr. Roetman  added that the  bill would ease  recertification                                                                   
requirements  for  teachers previously  certified  in  Alaska                                                                   
through the creation of a transitional  teaching certificate.                                                                   
The certificate would be valid  for one year during which the                                                                   
teacher  would complete  requirements for  the issuance  of a                                                                   
regular teaching certificate.                                                                                                   
                                                                                                                                
SB 149 would  promote employment of retired  teachers through                                                                   
the creation of  a retirement benefit election  option and it                                                                   
would  promote teacher  retention by  improving coverage  and                                                                   
easing  qualifications  to receive  major  medical  benefits.                                                                   
Under  SB  149, a  teacher  could  qualify for  100%  medical                                                                   
coverage by:                                                                                                                    
                                                                                                                                
     ·    Years of service (25 years);                                                                                          
     ·    Age (60 instead of 65); or                                                                                            
     ·    If disabled and appointed to normal retirement.                                                                       
                                                                                                                                
Vice-Chair  Bunde  asked  if   the  teacher  competency  test                                                                   
required  of all out-of-state  teachers  was included  in the                                                                   
legislation.  Mr.  Roetman referenced Page 3,  and noted that                                                                   
the  manner in  which  the bill  was  drafted  would make  it                                                                   
easier for teachers to be certified within one year.                                                                            
                                                                                                                                
Representative  Davies  asked  what an  out-of-state  teacher                                                                   
would have to do  to get a regular certificate.   Mr. Roetman                                                                   
explained  that the  preliminary  teaching certificate  would                                                                   
only  last  for  three  years.   Within  the  first  year,  a                                                                   
practice exam  is required and  in the two successive  years,                                                                   
the teacher would have to meet the course criteria.                                                                             
                                                                                                                                
Representative  Davies asked  if the  requirements placed  in                                                                   
the end  of the  bill were  the same  as the bill  previously                                                                   
adopted.  Mr. Roetman replied that they were identical.                                                                         
                                                                                                                                
Co-Chair  Mulder  pointed  out  that there  was  a  committee                                                                   
substitute, 22-LS0769\W,  Cramer, 5/01/01.   Vice-Chair Bunde                                                                   
MOVED to ADOPT  the committee substitute as the  draft of the                                                                   
bill before the Committee.  There  being NO OBJECTION, it was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Mr. Roetman  explained the differences between  the committee                                                                   
substitute and the House HES version  of the legislation.  He                                                                   
noted that  a sectional  change had been  added in  the House                                                                   
HES  Committee, incorporating  the  recertification  section.                                                                   
He added that there were minor  changes to Page 5, adding the                                                                   
SLA section and on Page 7, the  effective date was changed to                                                                   
indicate "four years".                                                                                                          
                                                                                                                                
Representative   Davies  asked   if  the   sunset  had   been                                                                   
consistent  with  the  current  sunset  date.    Mr.  Roetman                                                                   
explained  that HB 242  was identical  to SB  149.   He added                                                                   
that HB  242 was  currently in  the Senate Finance  Committee                                                                   
(SFC).                                                                                                                          
                                                                                                                                
GUY  BELL, DIRECTOR,  DIVISION  OF RETIREMENT  AND  BENEFITS,                                                                   
DEPARTMENT  OF  ADMINISTRATION,  noted  that  the  Department                                                                   
supports  the  proposed  version  of  the  legislation.    He                                                                   
pointed  out the  small  differences between  the  retirement                                                                   
sections of the two versions.                                                                                                   
                                                                                                                                
Representative Davies asked if  the "declaration of shortage"                                                                   
was contained in Section #3.  Mr. Bell stated it was.                                                                           
                                                                                                                                
Representative  Davies  inquired  how  that  provision  would                                                                   
work.  He  understood that the shortage language  would allow                                                                   
for a short-term  hire.  Mr. Roetman explained  that language                                                                   
was intentionally drafted to be  liberal in application.  The                                                                   
language would  not limit the school district  from declaring                                                                   
a shortage  and would  not be  prohibitive in hiring  retired                                                                   
teachers.  Representative  Davies interjected that  there are                                                                   
two  reasons why  a  school district  would  hire a  teacher;                                                                   
either to teach  or to do other projects.  He  noted that the                                                                   
language stipulates  that there would  have to be  a shortage                                                                   
of teachers in order to hire someone  to do special projects.                                                                   
                                                                                                                                
Vice-Chair  Bunde  believed that  the  effect  would be  that                                                                   
every  school   district  would  anticipate  a   shortage  of                                                                   
teachers.  Representative  Davies stressed that  the district                                                                   
could want to hire someone just  to do a specialized project.                                                                   
Under the  terms of the legislation,  they would not  be able                                                                   
to  do that.    Mr. Roetman  stated  that if  it  was a  non-                                                                   
teaching job, the school district could contract.                                                                               
                                                                                                                                
BRUCE JOHNSON,  DEPUTY COMMISSIONER, DEPARTMENT  OF EDUCATION                                                                   
& EARLY DEVELOPMENT, voiced support for the legislation.                                                                        
                                                                                                                                
Representative  Davies  asked   how  about  the  out-of-state                                                                   
teacher  having a  preliminary certificate,  what they  would                                                                   
need to do in order to receive  a State teaching certificate.                                                                   
Dr.  Johnson noted  that  the State  Board  just passed  into                                                                   
regulation, a  provisional certificate that would  be for two                                                                   
years.   SB 149  would change  that from  two years  to three                                                                   
years.     The  bill   grants  hiring   authority  with   the                                                                   
opportunity to  stipulate that  a person from  another state,                                                                   
who holds  a valid  regular teaching  certificate could  come                                                                   
and work in the  State of Alaska for three years.   There are                                                                   
requirements that must  be met.  They would have  to take the                                                                   
competency exam  and may have  to take an Alaska  studies and                                                                   
Alaska  history course.   Those  requirements  would be  time                                                                   
period  specified.     Dr.   Johnson  explained   that  those                                                                   
requirements are established through regulation.                                                                                
                                                                                                                                
Representative Davies asked if  the districts could currently                                                                   
hire a teacher  to do a  special project and still  have that                                                                   
person  receive  their  retirement  benefits.    Dr.  Johnson                                                                   
advised  that districts  are allowed  to  currently do  short                                                                   
term contracts as an independent contractor.                                                                                    
                                                                                                                                
MELISSA   HILL,  (TESTIFIED   VIA  TELECONFERENCE),   PROGRAM                                                                   
DIRECTOR,   ALASKA  TEACHER   PLACEMENT,  FAIRBANKS,   voiced                                                                   
support for the legislation.                                                                                                    
                                                                                                                                
Representative Hudson MOVED to  report HCS CS SS SB 149 (FIN)                                                                   
out  of Committee  with individual  recommendations and  with                                                                   
the accompanying fiscal notes.                                                                                                  
                                                                                                                                
HCS CS SS SB  149 (FIN) was reported out of  Committee with a                                                                   
"do  pass"  recommendation  and   with  fiscal  notes  by  #1                                                                   
Department  of   Administration  dated  4/24/01   and  #2  by                                                                   
Department  of  Education &  Early  Development  a zero  note                                                                   
dated 4/24/01.                                                                                                                  
                                                                                                                                
#SB158                                                                                                                        
CS FOR SENATE BILL NO. 158(RES)                                                                                               
                                                                                                                                
     An Act directing the commissioner  of revenue to prepare                                                                   
     a  report to  the legislature  relating  to the  state's                                                                   
     participation  in  owning or  financing  a gas  pipeline                                                                   
     project; and providing for an effective date.                                                                              
                                                                                                                                
DARWIN PETERSON,  STAFF, SENATOR JOHN TORGERSON,  stated that                                                                   
commercialization of North Slope  natural gas has been one of                                                                   
the  Legislature's  priorities.    SB 158  would  direct  the                                                                   
Commissioner  of  the  Department  of  Revenue  to  retain  a                                                                   
financial  expert   to  examine  whether  the   State  should                                                                   
participate  in either  ownership or financing  of a  natural                                                                   
gas pipeline project.   The expert would examine  any benefit                                                                   
or   detriment   to  a   project   caused  by   the   State's                                                                   
participation.                                                                                                                  
                                                                                                                                
Mr.  Peterson  continued,  the  bill would  ensure  that  the                                                                   
Legislature  participates in  the preparation  of the  report                                                                   
by:                                                                                                                             
                                                                                                                                
     ·    Requiring that the chairs of the Senate and House                                                                     
          Resource  Committees  periodically  meet  with  the                                                                   
          expert to  review data and information  about there                                                                   
          report; and                                                                                                           
     ·    Require that the Commissioner of Department of                                                                        
          Revenue  provide  progress  reports to  the  chairs                                                                   
          every  60  days.     The  bill  would  require  the                                                                   
          Commissioner  to  prepare a  comprehensive  report,                                                                   
          with   recommendations,   addressing  the   State's                                                                   
          options by  January 31, 2002, and submit  it to the                                                                   
          Legislature and the Governor.                                                                                         
                                                                                                                                
Co-Chair  Mulder   asked  the  name  of  the   new  committee                                                                   
established to  address gas and  oil concerns.   Mr. Peterson                                                                   
replied it was the Joint Committee  on Natural Gas Pipelines,                                                                   
                                                            nd                                                                  
which  was   established  for   the  remainder  of   the  22                                                                    
Legislature.   Co-Chair Mulder inquired  if it would  be more                                                                   
appropriate for the  report to be focused on  that Committee.                                                                   
Mr. Peterson  believed that it  would and commented  that the                                                                   
sponsor would support that motion.                                                                                              
                                                                                                                                
Vice-Chair  Bunde inquired  if  there was  anything  included                                                                   
within  the bill which  the Commissioner  currently  does not                                                                   
do.   Mr.  Peterson  deferred  that comment  to  Commissioner                                                                   
Condon.                                                                                                                         
                                                                                                                                
Representative  Lancaster referenced  Page 2,  Line 28,  "the                                                                   
State should participate".   Mr. Peterson referenced  Page 2,                                                                   
Line  2, and  inclusion of  the language  "whether the  State                                                                   
should participate".                                                                                                            
                                                                                                                                
Representative Davies  voiced concern with the  separation of                                                                   
powers  in requesting  the Commissioner  to provide a  report                                                                   
for  the  Legislature.    Mr.  Peterson  responded  that  the                                                                   
sponsor envisions that the Commissioner  of Revenue will work                                                                   
directly with the  report.  He noted that there  are a lot of                                                                   
experts in that Department.                                                                                                     
                                                                                                                                
Representative  Whitaker  inquired  the  base line  for  data                                                                   
analysis.   Mr. Peterson  did not  know.   He noted  that the                                                                   
Department   had   done   similar  reports   in   the   past.                                                                   
Representative  Whitaker commented that  it was important  to                                                                   
know what the procedures would be.                                                                                              
                                                                                                                                
WILSON CONDON,  COMMISSIONER, DEPARTMENT OF  REVENUE, offered                                                                   
to answer any questions of the Committee.                                                                                       
                                                                                                                                
Representative  Whitaker  asked  if the  basis  for  analysis                                                                   
could be  contained in the  requested reports.   Commissioner                                                                   
Condon  replied  that  the  report   would  contain  whatever                                                                   
information the  Department could "get  their hands on".   He                                                                   
stated that they did not have  a particular report in mind at                                                                   
this time.   The  data would  be available  for both  a third                                                                   
party and legislative review.                                                                                                   
                                                                                                                                
Representative  Hudson  asked if  the  fiscal  note would  be                                                                   
adequate to achieve  the intended goal.   Commissioner Condon                                                                   
responded  that the Department  would  be able to  accomplish                                                                   
the work with that note.                                                                                                        
                                                                                                                                
Representative  Lancaster asked if  the report would  include                                                                   
tariff rates and  costs.  Commissioner Condon  explained that                                                                   
it would  reference tariff  costs, however,  those costs  are                                                                   
not known until they are set.                                                                                                   
                                                                                                                                
Representative  Davies  referenced  Page  3, Section  2,  and                                                                   
asked if there could be a conflict  of who would be "running"                                                                   
the  contract.    Commissioner  Condon  understood  that  the                                                                   
Commissioner of Revenue would administer the contract.                                                                          
                                                                                                                                
Representative  Davies  reiterated   his  concern  with  that                                                                   
language   and  thought   that  the   legislators  would   be                                                                   
controlling  the  preparation   and  content.    Commissioner                                                                   
Condon did  not read  the language that  way.  Following  the                                                                   
completion of  the report, the contractor would  be available                                                                   
to the Legislature  to address what they used  to prepare the                                                                   
report.  Mr. Peterson  read the language the same  way as the                                                                   
Commissioner.   He stated  that the  experts would  share the                                                                   
data that they used to prepare  the report.  That information                                                                   
could be provided during the preparation of the report.                                                                         
                                                                                                                                
Representative Davies  declared for the record  that he hoped                                                                   
that legislators  would not be  telling the Commissioner  how                                                                   
to prepare the report.  Mr. Peterson  stated that was not the                                                                   
intent of the sponsor.                                                                                                          
                                                                                                                                
Co-Chair Mulder  offered a conceptual  amendment, to  Page 3,                                                                   
Line 9,  inserting language which  clarifies that  the report                                                                   
comes back to  the Joint Committee on Natural  Gas Pipelines.                                                                   
Representative  Davies argued  that another  location in  the                                                                   
bill would be more appropriate.                                                                                                 
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 113, Side B                                                                                                     
                                                                                                                                
                                                                                                                                
Co-Chair Mulder  commented that  the amendment could  be made                                                                   
on  the House  Floor.   Following  Committee discussion,  Co-                                                                   
Chair Mulder suggested  moving the bill out  of Committee "as                                                                   
is".                                                                                                                            
                                                                                                                                
MIKE TIBBLES, STAFF, REPRESENTATIVE  WILLIAMS, commented that                                                                   
he could have  the language drafted as indicated  by Co-Chair                                                                   
Mulder.                                                                                                                         
                                                                                                                                
Co-Chair Mulder  proceeded to MOVE the  conceptual amendment.                                                                   
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Co-Chair Mulder referenced the fiscal note.                                                                                     
                                                                                                                                
Representative Lancaster MOVED  to report HCS CS SB 158 (FIN)                                                                   
out  of Committee.    There being  NO  OBJECTION,  it was  so                                                                   
ordered.                                                                                                                        
                                                                                                                                
HCS CS SB 158 (FIN) was reported  out of Committee with a "do                                                                   
pass" recommendation and with  a fiscal note #1 by Department                                                                   
of Revenue dated 3/29/01.                                                                                                       
                                                                                                                                
#SB152                                                                                                                        
SENATE BILL NO. 152                                                                                                           
                                                                                                                                
     An  Act relating  to  the handling  of  and interest  on                                                                   
     contract  controversies   involving  the  Department  of                                                                   
     Transportation  and Public Facilities or  state agencies                                                                   
     to  whom the  Department  of Transportation  and  Public                                                                   
     Facilities  delegates  the responsibility  for  handling                                                                   
     the controversies.                                                                                                         
                                                                                                                                
Representative  Davies  WITHDREW  Amendment  #2.    [Copy  on                                                                   
File].  There being NO OBJECTION, #2 was WITHDRAWN.                                                                             
                                                                                                                                
KEVIN BRADY,  (TESTIFIED VIA TELECONFERENCE),  ATTORNEY, OLES                                                                   
MORRISON  RINKER  &  BAKER  LLP.,   ANCHORAGE,  testified  in                                                                   
support  of  the  Legislation.   He  offered  to  answer  any                                                                   
questions of the Committee.                                                                                                     
                                                                                                                                
Vice-Chair Bunde  asked Mr. Brady  for a comment on  the time                                                                   
line.   Mr. Brady  explained that document  had not  yet been                                                                   
provided to  his firm.  In  response to comments made  by Co-                                                                   
Chair Mulder,  Mr. Brady advised  that language  was standard                                                                   
specification  from the State  procurement contact  language.                                                                   
He noted,  for a practical  matter, it  is not what  actually                                                                   
takes place.   From those that  intend to claim, in  order to                                                                   
procure  an officers  decision,  there must  be  a period  in                                                                   
excess  of   18-24  months  unless  the   contractor  demands                                                                   
immediate action.   To forestall  that process,  the engineer                                                                   
                                               thth                                                                             
would request additional  information on the 25   or 29  day.                                                                   
And  then the  procurement officer  would request  additional                                                                   
                     thth                                                                                                       
information on the 70 to 89 day.                                                                                                
                                                                                                                                
Mr. Brady claimed  that was the problem in that  would be the                                                                   
incentive to delay  the process.  If interest  were accruing,                                                                   
there would be no incentive to  delay the process.  He added,                                                                   
the engineer's position  would be to say that  the contractor                                                                   
is  entitled  to  nothing.     It  would  not  be  until  the                                                                   
contractor got beyond  those hurdles that he  would receive a                                                                   
fair hearing by a hearing officer.                                                                                              
                                                                                                                                
Representative Whitaker  summarized that the bill  relates to                                                                   
the point  in time in which  interest would begin  to accrue.                                                                   
Mr. Brady understood that interest  begins to accrue from the                                                                   
date the claim  is filed.  Mr. Brady stated  that would occur                                                                   
within  45 days  of the  contractor  filing his  claim.   The                                                                   
process  is such  that  the contractor  files  his intent  to                                                                   
claim, if it cannot  be worked out on site,  then between the                                                                   
contractor  and  the resident  engineer  within  7 days,  the                                                                   
contractor would  have 14 days  to file his formal  notice of                                                                   
Intent to  Claim.  Then the  contractor has an  additional 30                                                                   
days in which to put together  all the information and get it                                                                   
certified.                                                                                                                      
                                                                                                                                
THYES SHAUB, LOBBYIST FOR THE  ASSOCIATED GENERAL CONTRACTORS                                                                   
OF ALASKA,  ANCHORAGE, noted  that she  had assembled  a flow                                                                   
chart of  the Current Department  of Transportation  & Public                                                                   
Facilities  Claims/Resolution  Procedures.   [Copy on  File].                                                                   
She noted  that the 90 days  spoken about in  the Procurement                                                                   
Code is  the 60 days  plus the 30  days separated out  on the                                                                   
chart.   There is  another 90-day period  after the  claim is                                                                   
filed  with  the  contracting   officer  or  the  procurement                                                                   
officer.  The way  in which SB 152 is currently  written, the                                                                   
point in  which interest  would accrue  after filed  with the                                                                   
procurement officer.                                                                                                            
                                                                                                                                
Vice-Chair Bunde  understood that would  take 111 days.   Mr.                                                                   
Brady  clarified   that  some  events  occur   in  which  the                                                                   
contractor must  immediately report  to the engineer.   There                                                                   
is  a 7-day  period,  during  which  the contractor  and  the                                                                   
engineer must work  together to establish a resolution.    If                                                                   
that does not  occur within 7 days, the contractor  must file                                                                   
a notice of intent to claim within  14 days.  Upon filing the                                                                   
notice of  intent to  claim, the  contractor must submit  his                                                                   
actual claim within 60 days.   The total number of days would                                                                   
be 81.                                                                                                                          
                                                                                                                                
Vice-Chair  Bunde  asked at  what  point would  the  interest                                                                   
clock  begin.   Mr.  Brady replied  that  the interest  would                                                                   
begin on  the day  that the contractor  certifies his  claim.                                                                   
The Department  could either  request additional  information                                                                   
or  kick it  back  because it  does  not meet  the  statutory                                                                   
requirement.  That  would be the date that  the Department of                                                                   
Transportation  &  Public  Facilities  would  have  a  formal                                                                   
notice.  The Department has the benefit of 81 days.                                                                             
                                                                                                                                
Co-Chair  Mulder  understood  that interest  would  not  take                                                                   
effect until the  formal claim, but rather when  the claim is                                                                   
filed  with the  contracting officer.    Mr. Brady  responded                                                                   
that   there   is   a   disconnect   between   the   standard                                                                   
specification for dispute and the actual statutory regime.                                                                      
                                                                                                                                
Discussion  followed among  Committee  members regarding  the                                                                   
accruing of  interest.   Vice-Chair Bunde  hoped to  create a                                                                   
balancing  act between  the State  and the  contractors.   He                                                                   
asked  if  there was  an  advantage  of establishing  a  time                                                                   
limit.   Mr.  Brady replied  that  there is  no advantage  to                                                                   
delaying the certification of a claim.                                                                                          
                                                                                                                                
Vice-Chair Bunde  asked Mr. Brady's reaction  to changing the                                                                   
interest clock ticking 80 days  after the initial claim.  Mr.                                                                   
Brady  replied that  the fundamental  problem  would be  that                                                                   
delaying would  act as a  disincentive for the  Department to                                                                   
process the information  in the contractors claim.   Interest                                                                   
does not  begin to accrue on  the contractors claim  until he                                                                   
submits it after that 7-day period,  14-day period or the 60-                                                                   
day period.   Vice-Chair Bunde  emphasized that would  be the                                                                   
maximum.  Mr. Brady agreed.                                                                                                     
                                                                                                                                
Vice-Chair  Bunde  saw no  incentive  for the  contractor  to                                                                   
provide information if the interest  clock started ticking on                                                                   
day #1.  Mr. Brady disagreed.   He stated that there are jobs                                                                   
in which  the contractor takes  losses.  The last  thing that                                                                   
the  contractor wants  to  do is  call a  lawyer.   He  would                                                                   
rather negotiate  a claim  than to get  involved in  a costly                                                                   
battle.   He emphasized  that there is  no incentive  for the                                                                   
contractor to delay his claim.                                                                                                  
                                                                                                                                
Vice-Chair   Bunde  interjected   that   the  Committee   was                                                                   
attempting  to  reach a  compromise.    He noted  that  there                                                                   
should always be a contingency.                                                                                                 
                                                                                                                                
BILL REYNOLD, (TESTIFIED VIA TELECONFERENCE),  ATTORNEY, OLES                                                                   
MORRISON  RINKER &  BAKER LLP.,  ANCHORAGE, interjected  that                                                                   
the  filing  concern  would  not provide  a  benefit  to  the                                                                   
contractor.   The interest would  not start to run  until the                                                                   
contractor  had   certified  it.    The  motivation   of  the                                                                   
contractor would be to file as soon as possible.                                                                                
                                                                                                                                
Representative  Croft  referenced  Amendment  #3.   [Copy  on                                                                   
File].    The  amendment  would  insert  "filed"  and  delete                                                                   
"under" and insert  "that meets the requirements  of" on Page                                                                   
1,  Line 13.    He believed  that  could provide  a  complete                                                                   
standard.  Mr. Reynold agreed  and suggested that language be                                                                   
included.   Mr. Brady noted  that language would  clarify and                                                                   
make it concrete that the contractor  files a complete claim.                                                                   
                                                                                                                                
Representative    Whitaker   asked    the   definition    and                                                                   
determination  of what  "complete"  is and  how  it would  be                                                                   
interpreted.   Co-Chair Mulder advised that a  definition for                                                                   
completed claim does exist.                                                                                                     
                                                                                                                                
Representative  Hudson  pointed out  that  Page  1, Line  12,                                                                   
calls  for time  lines for  the controversy  asserted by  the                                                                   
contractor  and provides  for the required  flexibility.   He                                                                   
noted that in the  context of the bill, it was  well defined.                                                                   
The final  decision of  the procurement  officer is  the date                                                                   
that the interest begins to accrue.                                                                                             
                                                                                                                                
Representative   Croft  ascertained   that   there  was   not                                                                   
sufficient  language to  protect  the contractor's  interest.                                                                   
The claim language should be complete.                                                                                          
                                                                                                                                
Representative Croft  MOVED to ADOPT Amendment  #3.  Co-Chair                                                                   
Mulder OBJECTED for the purpose of discussion.                                                                                  
                                                                                                                                
DOUG GARDNER, ASSISTANT ATTORNEY  GENERAL, DEPARTMENT OF LAW,                                                                   
offered    to   answer    questions    of   the    Committee.                                                                   
Representative Croft  asked if on  Page 1, Line  13, deleting                                                                   
the language  "the claim  was filed  under" and inserting  "a                                                                   
complete  claim  was filed  and  meets the  requirements  of"                                                                   
would work.  Representative Croft  MOVED that language as the                                                                   
new Amendment #3.   Co-Chair Mulder OBJECTED  for the purpose                                                                   
of discussion.                                                                                                                  
                                                                                                                                
Mr. Gardner  commented that  he was not  sure how  that would                                                                   
change anything.   He stated that would continue  to keep the                                                                   
legislation  in a  gray area.   If  that were  the case,  the                                                                   
Committee should consider an amendment to AS 36.36.25.                                                                          
                                                                                                                                
Co-Chair Mulder explained that  that was not the case at this                                                                   
time.  Mr. Gardner stated that  it is not unusual to get to a                                                                   
commissioner hearing officer stage  and find that a party has                                                                   
a new case, a new set of legal  theories for recovery and new                                                                   
facts.  If you want to tackle  a problem of a completed claim                                                                   
and do it through the proposed  Amendment #3, adding language                                                                   
specifying  that  is  the claim,  then  the  amendment  could                                                                   
address  that;  however,  without that  language  added,  the                                                                   
amendment will keep the State in a gray area.                                                                                   
                                                                                                                                
Co-Chair Mulder  acknowledged that was reasonable.   He asked                                                                   
if the rules  of engagement were tightened, would  it then be                                                                   
an  appropriate compromise.    Mr. Brady  noted  that he  had                                                                   
reviewed the language of Amendment  #4.  [Copy on File].  Co-                                                                   
Chair Mulder corrected Mr. Brady's  comment to the amendment.                                                                   
Mr.  Brady responded  that  the problem  exists  with how  it                                                                   
would relate to the claims process.                                                                                             
                                                                                                                                
Mr.  Brady explained  the process.    The contractor  already                                                                   
knows that  he will not  get relief from  the engineer.   The                                                                   
only real adequate relief that  he has the opportunity to get                                                                   
would be through  the hearing officer.  The  contractor would                                                                   
document his  plan and  provide all  the information  that he                                                                   
has, but  to have a fully  developed case takes a  great deal                                                                   
of time and  effort.  Adding the amendment  would simply give                                                                   
the  Department  of Transportation  &  Public  Facilities  an                                                                   
excuse to state that the information  had not been previously                                                                   
presented.                                                                                                                      
                                                                                                                                
Mr. Gardner referenced  the letter from Mr.  Brady's law firm                                                                   
            st                                                                                                                  
dated May  1,  suggesting that  all the information  would be                                                                   
provided in that period.  He stated  that the clients are not                                                                   
having  a difficult  time meeting  that  time line.   In  the                                                                   
language,  the appeal  may not  raise new  factual issues  or                                                                   
theories of  recovery.  The  contractors could be  working on                                                                   
two jobs at the same time.  And  standards should not be less                                                                   
in  the  State  system.   He  knew  that  the  Committee  was                                                                   
struggling  to  determine  a  "level  playing  field".    Mr.                                                                   
Gardner referenced  a fair  spot.  If  the Department  gets a                                                                   
fair chance  to hear everything,  and the Department  makes a                                                                   
mistake, the Committee owes it  to the Department to let them                                                                   
have a full and complete claim.                                                                                                 
                                                                                                                                
Vice-Chair Bunde  commented on  information contained  in the                                                                   
handout from the Department of  Law, clarifying that it would                                                                   
apply to  most construction  projects  run by State  agencies                                                                   
including and  not limited  to Alaska Industrial  Development                                                                   
Export  Authority  (AIDEA),  Alaska   Energy,  Department  of                                                                   
Administration,  Department   of  Fish  and  Game,   and  the                                                                   
Department of Health  and Social Services.  He  asked if that                                                                   
was accurate.                                                                                                                   
                                                                                                                                
Mr. Gardner replied that there  are some agencies that do not                                                                   
fall  under  AS  36.36.30.   Mr.  Gardner  added  that  those                                                                   
agencies   received  their  delegation   of  authority   from                                                                   
Department of Transportation & Public Facilities.                                                                               
                                                                                                                                
Vice-Chair  Bunde advised  that if  it is  important for  the                                                                   
Department  of Transportation  &  Public  Facilities that  it                                                                   
should be  important for  all major  projects that  the State                                                                   
contracts for.                                                                                                                  
                                                                                                                                
Co-Chair  Mulder  WITHDREW  his OBJECTION  to  Amendment  #3.                                                                   
There being NO further OBJECTION, Amendment #3 was adopted.                                                                     
                                                                                                                                
Representative Davies MOVED to  ADOPT Amendment #4.  [Copy on                                                                   
File].  There being NO OBJECTION, it was adopted.                                                                               
                                                                                                                                
Representative  Lancaster MOVED  to report  HCS SB 152  (FIN)                                                                   
out  of Committee  with individual  recommendations and  with                                                                   
the attached fiscal notes.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS SB  152 (FIN) was  reported out of  Committee with  a "do                                                                   
pass" recommendation  and with indeterminate fiscal  notes by                                                                   
#1 Department  of  Transportation &  Public Facilities  dated                                                                   
4/25/01  and  #2  by  Department   of  Community  &  Economic                                                                   
Development dated 4/11/01.                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at  6:20 p.m.                                                                                         
                                                                                                                                
                                                                                                                                

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