Legislature(2003 - 2004)
03/23/2004 01:45 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
March 23, 2004
1:45 P.M.
TAPE HFC 04 - 64, Side A
TAPE HFC 04 - 64, Side B
TAPE HFC 04 - 65, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:45 P.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Representative Dan Ogg; Senator Gene Therriault; Speaker
Pete Kott; John Main, Staff, Representative Speaker Pete
Kott; Pete Ecklund, Staff, Representative Bill Williams;
Landa Baily, Special Assistant, Department of Revenue; Anne
Carpeneti, Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law; Chuck
Harlamert, Revenue Audit Supervisor, Tax Division,
Department of Revenue; Glenn Haight, Fisheries Development
Specialists, Department of Community & Economic Development;
Barbara Cotting, Staff, Representative Jim Holm; Joe Balash,
Staff, Senator Gene Therriault; Paul Fuhs, Back Bone 2;
Jerry McCune, United Fisherman of Alaska, Juneau; Bob
Thorstenson, President, United Fishermen of Alaska (UFA);
Deborah Behr, Assistant Attorney General, Regulations,
Department of Law; Dave Stancliff, Regulation Review
Committee, Staff, Representative Pete Kott; Speaker
Representative Pete Kott; Pam LaBolle, Alaska State Chamber
of Commerce, Juneau.
PRESENT VIA TELECONFERENCE
John Mallonee, Acting Director, Child Support Enforcement
Division, Department of Revenue, Anchorage; Lt. Allen
Storey, Alaska State Troopers, Department of Public Safety,
Anchorage; Harold C. Heinze, Chief Executive Officer, Alaska
Natural Gas Pipeline Authority (ANGDA), Anchorage; Bob
Favretto, Alaska Natural Gas Development Authority Board,
Anchorage; Steve Porter, Deputy Commissioner, Department of
Revenue, Anchorage; Jerry McCutcheon, Anchorage;
SUMMARY
HB 419 An Act relating to regional seafood development
associations and to regional seafood development
taxes.
CS HB 419 (RES) was reported out of Committee with
a "do pass" recommendation and with zero note #1
by the Department of Community & Economic
Development and indeterminate note #2 by the
Department of Revenue.
HB 424 An Act relating to review of regulations under the
Administrative Procedure Act by the Legislative
Affairs Agency; and providing for an effective
date.
HB 424 was HEARD and HELD in Committee for further
consideration.
HB 514 An Act relating to child support modification and
enforcement, to the establishment of paternity by
the child support enforcement agency, and to the
crimes of criminal nonsupport and aiding the
nonpayment of child support; amending Rule 90.3,
Alaska Rules of Civil Procedure; and providing for
an effective date.
CS HB 514 (FIN) was reported out of Committee with
"individual recommendations" and with a new fiscal
note by the Department of Revenue, a zero note by
the Department of Public Safety, two zero notes by
the Department of Administration, indeterminate
note #2 by the Alaska Court System and
indeterminate note #3 by the Department of Law.
CS SB 241(FIN)
An Act making an appropriation to the Department
of Revenue for work related to bringing North
Slope natural gas to market; and providing for an
effective date.
CS SB 241 (FIN) was reported out of Committee with
a "do pass" recommendation.
CS FOR SENATE BILL NO. 241(FIN)
An Act making an appropriation to the Department of
Revenue for work related to bringing North Slope
natural gas to market; and providing for an effective
date.
SENATOR GENE THERRIAULT explained the intent of SB 241. The
appropriation is proposed to provide funding for the
administrative agencies and Alaska Natural Gas Pipeline
Development Authority (ANGDA) in order to move forward in
the effort to bring natural gas to market. The funding
would be provided through the Department of Revenue, which
would provide the accounting mechanism.
Senator Therriault pointed out that the original bill
provided $2 million dollars. In a Senate Finance Committee
meeting, there was discussion regarding funding for 2005,
and it was agreed that should be contained in next years
budget. Thus, the funding was decreased to $1 million
dollars addressing the items critical at the present time.
He stressed that it is important to provide funding at this
time for contracts associated with the Stranded Gas Act.
STEVE PORTER, (TESTIFIED VIA TELECONFERENCE), DEPUTY
COMMISSIONER, DEPARTMENT OF REVENUE, ANCHORAGE, noted that
the Department of Revenue had requested $1 million dollars
for the purpose of supporting stranded gas development and
the work of ANGDA. He pointed out that the total amount,
which could be spent, obviously would exceed $1 million
dollars, made available through the legislation. The amount
would be spent in FY04 to deal primarily with tariff issues,
fiscal terms, petro-chemical analysis, social impacts and
understanding route assessment.
HAROLD C. HEINZE, (TESTIFIED VIA TELECONFERENCE), CHIEF
EXECUTIVE OFFICER, ALASKA NATURAL GAS PIPELINE AUTHORITY
(ANGDA), ANCHORAGE, stated that he had faxed a handout,
identifying how ANGDA is doing concerning the taxes, funding
and then identifying current contracts that are underway.
(Copy on File). He added that the handout indicate work
skills performed under the contracts.
The work currently done by ANGDA continues to be positive
and encouraging to the Authority's role as a mechanism to
help the financing improve the marketability of the North
Slope gas as well as providing benefits to Alaskans by
delivering gas to the Cook Inlet region. The Board has
considered SB 241 and has taken a positive view toward that
legislation. Additionally, the operating budget proposed by
the Administration has been amended to provide a total of
$256 thousand dollars in FY05. Mr. Heinze offered to
provide contract details, pointing out several needing
immediate attention through the approval of the proposed
legislation. Mr. Heinze urged that the project move
forward.
Representative Chenault questioned the projected scenario of
delivering gas to the Cook Inlet area at $1 to $1.25 dollars
and asked if that would be the total cost including the
tariffs to Cook Inlet. Mr. Heinze explained that those
amounts are estimates determined for various approaches of
getting gas to Cook Inlet. They are the numbers projected
for getting the North Slope conditioning, pipelining and
delivery into the Cook Inlet natural gas system.
BOB FAVRETTO, (TESTIFIED VIA TELECONFERENCE), ALASKA NATURAL
GAS DEVELOPMENT AUTHORITY BOARD, ANCHORAGE, offered to
address the amendments as they are brought forward.
JERRY MCCUTCHEON, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
noted his concern that the Legislature understand "What they
are dealing with on the North Slope", particularly regarding
Prudhoe Bay. He commented on a suit that occurred in that
area in which "records had been sealed". He claimed that
the current Administration is "blinded". The oil is two-
thirds recoverable if the gas is kept in the reservoir. He
projected that oil prices will increase the first few years
and then they will crash. Mr. McCutcheon recommended that
there be a commitment on record to find out how much really
exists.
Representative Croft MOVED to ADOPT Amendment #1, #23-
LS1279\I.1, Utermohle, 3/22/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Croft noted that the amendment attempts to
change the amount back to $3 million dollars, creating an
equal distribution between ANGDA and the Department of
Revenue. He acknowledged that the Department would need
some funding under the Stranded Gas Act but that money
should be separate from the purpose of funding ANGDA. ANGDA
is an independent body with an independent Board, which
needs and deserves full funding.
Senator Therriault advised the proposed funding passed
through the Department of Revenue and was endorsed by the
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ANGDA Board through a resolution passed at the February 16
meeting. ANGDA has indicated that they are "comfortable"
with the current plan. He pointed out that in the Senate
Finance Committee meeting, both the Majority and the
Minority members agreed that it was more appropriate for
ANGDA to come back to the FY05 budget process for further
allocations. Senator Therriault stated that his preference
would be to stick with the original amount.
Co-Chair Harris asked if Mr. Heinze was aware of the
amendment and the on-going negotiations between both bodies
regarding the amount being made available to ANGDA. Mr.
Heinze replied that he was aware of the proposed amendment
and that he had responded to Representative Croft. The
response included that while the original bill funded both
FY04 and FY05, it was clear during the discussions in the
Senate Finance Committee that the preference was to decide
only about FY04 funding. That Committee proposed that it
would be a better process to address only the FY04 budget
needs at this time. He added that the $1 million dollar
allocation for the two remaining months could be sufficient
and that ANGDA would look forward to additional funding in
the FY05 budget for the stranded gas effort.
Co-Chair Harris asked if ANGDA was satisfied with the $1
million dollar appropriation at this time, knowing that
there would be fair opportunity in the FY05 Capital Budget
for more funding. Mr. Heinze reiterated that they would,
submitting that ANGDA prefers the adoption of the Senate
version of the bill, hoping that it would move to the floor
as quickly as possible.
Mr. Favretto spoke to Amendment #1. He voiced concern with
the funding mechanisms to support ANGDA. He understood and
appreciated Representative Croft's concern with the funding
level for ANGDA but noted his concern with getting the bill
back through the Senate in time for adjournment. He
emphasized that ANGDA could live with the $1 million dollar
allocation to finish the tasks at hand.
Representative Croft elaborated that his interests in ANGDA
rests with the independence of the Board and hope it will
bring the issues to the State. The Administration and the
Legislature have shown over 1.5 years of neglect,
compromising that independence. The Board does not have any
choice left, as they never have had the funding needed to do
the appropriate studies. Their requests have continually
been reduced. Representative Croft doubted that the $1
million appropriation would be sufficient with the funds
passing through the Department of Revenue. He emphasized
that the Amendment would provide enough funding and is "the
right thing to do", by providing ANGDA some financial
security. He noted that he was disappointed that ANGDA was
willing to settle for only the $1 million dollars
allocation.
A roll call vote was taken on the MOTION.
IN FAVOR: Moses, Chenault, Croft
OPPOSED: Hawker, Joule, Meyer, Stoltze, Fate, Foster,
Harris, Williams
The MOTION FAILED (3-8).
Representative Croft MOVED to ADOPT Amendment #2, #23-
LS1279\I.2, Utermohle, 3/22/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Croft explained that if the amount allocated
to the request is $1 million dollars, then it should be
guaranteed that at least half of that amount goes to ANGDA.
The amendment would provide an allocation within the $1
million dollar appropriation.
Senator Therriault advised that on the Senate side, he had
directed that the money pass through the Department of
Revenue, which is the manner in which the Legislative Budget
and Audit (LBA) Committee had routed it. Members of the
ANGDA Board have indicated that their relationship with the
Department has improved. They are comfortable with routing
the money through the Department of Revenue. Acceptance of
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the routing was included in their February 16 resolution
passed by the entire ANGDA Board. If the Legislature sees
that the Department and the Board are not working well
together, then the FY05 budget could be handled differently.
He did not foresee problems.
In response to Co-Chair Harris, Mr. Heinze explained that in
addition to the authority provided by the voters in the
November 2002 election, the State has entered into the
stranded gas process with a number of applicants. There are
a myriad of issues facing the State related to natural gas.
The basic idea of ANGDA working with the Department of
Revenue contributes to the total effort. There have been
"honest hearings regarding the efforts proposed". He
elaborated that he was comfortable at this time working in a
team effort with the Department of Revenue.
Representative Croft commented that he was not sure that the
treasurer handling the "purse strings" for ANGDA would agree
with Mr. Heinze. He thought that at this point, ANGDA was
putting forward a "desperate plea" for anything. Board
members are still not confirmed and ANGDA is not going to
exist in the manner that the voters intended. He suggested
that ANGDA has become a "weird" subdivision of the
Department of Revenue and that it is not independent.
A roll call vote was taken on the motion.
IN FAVOR: Joule, Moses, Stoltze, Croft
OPPOSED: Meyer, Chenalut, Fate, Foster, Hawker,
Williams, Harris
The MOTION FAILED (4-7).
PAUL FUHS, BACK BONE 2, JUNEAU, testified in support for the
proposed legislation. He noted that Back Bone 2 is a
citizen's organization to advocate for the fulfillment of
Proposition #3, which was overwhelmingly adopted by the
citizens of Alaska. He believed that information that would
come forward from studies through the Department of Revenue
and would be thoroughly utilized. He referenced his
handouts. (Copy on File).
Mr. Fuhs stressed that Alaska is in a "race" for the
development market. There are a number of companies that
are interested in Alaskan gas. The three major producers
have noticed the continual delays on the pipeline projects
in Alaska. Mr. Fuhs indicated his concern with the funding
being provided, wanting to accept and believe the word from
the Department of Revenue by Mr. Steve Porter. The
contracts are ready to go and the people of the State will
know immediately if the Department has not followed through
on them. He encouraged member's to check out the Back Bone
2 website for more in-depth information regarding these
concerns.
Vice Chair Meyer inquired if an application had been
received from Mid America. (Mr. Porter was no long on line
to respond). Co-Chair Williams said that he did not know
about that application.
Representative Foster MOVED to report CS SB 241 (FIN) out of
Committee with individual recommendations. There being NO
OBJECTION, it was ordered.
CS SB 241 (FIN) was reported out of Committee with a "do
pass" recommendation.
HOUSE BILL NO. 419
An Act relating to regional seafood development
associations and to regional seafood development taxes.
REPRESENTATIVE DAN OGG testified in support of HB 419. The
bill was recommended by the Joint Legislative Salmon
Industry Task Force and would allow fishermen to form
regional seafood development associations to tax themselves,
providing a stable funding source for their marketing
efforts.
Representative Ogg noted that farmed salmon production has
increased dramatically over the past decade, exceeding the
wild salmon catch and causing prices to plummet. In order
to compete in that market, Alaska's salmon fishermen have
sought creative ways to differentiate wild fish from their
penned counterparts. One method that has proven effective
in distinguishing the two is regional marketing. Copper
River fishermen took the lead in establishing a brand for
their catch, proving the enormous potential for niche
markets. Now several other regional brands have been
established in communities such as Kenai, the Aleutian
Islands, and Kodiak.
Representative Ogg pointed out that most branding
organizations are currently dependent on a mix of State and
federal grants to fund marketing efforts. However, the
grants are often unreliable and one-time revenue sources.
HB 419 would allow regional seafood development associations
to assess themselves between one-half and two percent to
provide a steady stream for marketing dollars.
HB 419 creates 12 distinct seafood development regions based
on commercial fishing management areas established by the
Board of Fish. Under the bill, all the fishermen in a
region can vote to participate in an association or it may
be limited to a specific fishery or fisheries. Once a
regional association is formed, other fisheries can vote
themselves into or out of the association, but there can
only be one association per region.
Representative Ogg pointed out that as the amount of
imported and farmed seafood continues to rise, regional
marketing associations would provide a valuable tool for
Alaska's commercial fishermen. Regional associations are
able to focus on the unique areas where the fish are
harvested, building on Alaska's reputation for pristine
waters that yield superior fish.
Representative Stoltze questioned if there would be more
value in allowing areas to opt out of the Alaska Seafood
Marketing Institute (ASMI). Representative Ogg responded
that through his discussions, there was agreement that
people want to keep that separate, and do not want to
negatively impact ASMI, but instead work cooperatively.
Representative Stoltze asked if the "pit falls" of ASMI
could be avoided. Representative Ogg responded that ASMI
does an excellent job marketing all Alaskan seafood's. The
proposed associations would have more freedom in marketing
particular products and with access to specific development.
Representative Stoltze inquired if the amendment he
distributed for a three-year sunset made it into the
member's packets. Representative Ogg commented that the
associations would be done voluntarily. The bill would
establish a vehicle for individual areas of the State to go
through with a set up and that they would either make it or
they would fail. To require coming back to the Legislature
and going through it again would not be productive. He
believed that they would stand on their own. He requested
that a sunset not be tied to the proposed legislation.
Co-Chair Williams recommended that a conceptual amendment
could be brought forward.
Representative Fate noticed the twelve regions and asked how
a situation would be handled when a specific brand was
indicated for a specific area. Representative Ogg replied
that was why there would be twelve regions established. The
bill attempts to acquire flexibility and would not preclude
an association from adopting two products. That flexibility
is already included in the bill.
Representative Fate commented on the different qualities of
each region and that marketing different brands would be
important. Representative Ogg acknowledged that will be
allowable under the bill. The Salmon Task Force noted that
the Yukon River is divided into three regions in recognition
that there are different fisheries taking place over a broad
distance.
Representative Hawker referenced Page 11, stipulating that a
qualified regional seafood association be brought into
existence, and may request State financial assistance from
the Department. He highlighted the use of "may and shall"
and the determinations that could be made using that
language. He inquired the intent, understanding that it
would be a self-assessment.
TAPE HFC 04 - 64, Side B
Representative Ogg explained that section allows for
programs currently in place. The Office of the Governor is
funding some of those regional start-up efforts. There has
been recognition of that status and at a future date, there
could be some sort of development for that fishery with
money flowing from that office. The proposed language
leaves that window open for applying. The intent is that
the associations are self-standing.
Representative Hawker inquired if the bill could be as
effective and accessible without Sections D & E on Page 11.
Representative Ogg responded that removing that language
would not foreclose them, as most of the entities are non-
profits. If non-profits are available to apply for State or
federal grants, it would not make a difference.
Representative Joule referenced Page 10, Lines 27 & 28 and
asked how that language would affect the inclusion of
Kotzebue with the Yukon-Northern region as opposed to Norton
Sound-Port Clarence area. Representative Ogg explained that
when the decision was made, representatives of each area
indicated that they thought that would be the best choice.
He admitted that he did not know exactly how the decision
had been determined.
Co-Chair Williams referenced Page 4, Lines 25-31, and the
two ballots for each eligible interim-use permit and entry
permit holder. Representative Ogg explained that language
was crafted from pre-existing situations.
CHUCK HARLAMERT, REVENUE AUDIT SUPERVISOR, TAX DIVISION,
DEPARTMENT OF REVENUE, offered to answer questions of the
Committee.
JERRY MCCUNE, UNITED FISHERMAN OF ALASKA (UFA), JUNEAU,
voiced strong support for the legislation, as it will help
fishermen to finance their own promotional programs. He
noted that alternate sources of financing are beginning to
dry up.
Co-Chair Harris asked if it would be mandatory that
fisherman join. Mr. McCune explained that in the current
version of the bill, the 1% salmon tax would be dropped. He
added that there would be the option of being taxed and with
that option, the person would then have a vote. He pointed
out the infrastructure of the proposed legislation.
Co-Chair Williams understood that all fishermen would have
to pay the tax in their area. Mr. McCune acknowledged that
was correct and that if a majority of the permit holders
voted, then all permit holders would have to pay that tax.
He noted that a mechanism was included to help remove it.
Representative Hawker questioned if the sections indicating
that the seafood development associations "may," request
State financial assistance, were critical to UFA's support
of the bill. Mr. McCune responded that there are grants
available to non-profits through the Department of Community
& Economic Development. The language attempts to guarantee
if a new non-profit was formed that they be eligible for it.
He indicated that if the sponsor was satisfied with removing
that language, then UFA would also support that action.
Representative Stoltze MOVED to adopt Amendment #1, #23-
LS1418\V.1, Utermohle, 3/9/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Stoltze advised that the amendment would add
a sunset clause, which is a common procedure used for new
programs. He pointed out that ASMI currently has a sunset.
Representative Ogg advised that the amendment also deletes
language on Page 1, Line 8. Representative Stoltze
corrected that was a drafting style for sun setting a bill.
Representative Ogg stated he did not support the three-year
sunset or the amendment. He thought that Amendment #1 would
complicate the issues.
Co-Chair Harris referenced Page 2, Line 4, Section 7, of the
amendment. Representative Stoltze advised those were
repealers.
Co-Chair Williams informed members that he had worked on the
Fish Task Force and that the fishermen have worked very hard
to come to an agreement. The proposed legislation has a lot
of support from fishermen statewide. He stated that he did
not support the amendment and thought that the Alaskan
fishermen should be shown support during these difficult
times. He emphasized that the fishermen support the tax to
themselves.
Representative Stoltze inquired if it currently was a
voluntary tax. Representative Ogg responded that if you
were in a fishery and the fishery decides to participate,
and 51% of those permit holders make that decision, everyone
must pay the tax. He stressed that it is as voluntary as
possible in Alaska and added that there could be a petition
to be removed.
Representative Hawker indicated concern that the sunset will
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take place December 30, 2007. The industry members would
have to make the decision, establish the association and
then move forward. Establishing a non-profit association
becomes durable and perpetual. He thought the operations of
the bill would be inconsistent and would provide only a
brief authority for the durability of the association. He
concurred that the sunset may not be appropriate in the
proposed circumstance.
Co-Chair Harris pointed out that establishing the
associations must be a majority rule. He noted that all the
dissenters would be forced to pay the tax. He asked if that
would create friction among the fishermen. Representative
Ogg referenced the history of the entities, pointing out
that there have been fisheries that have opted for such a
status. The action will provide for a salmon enhancement
organization. It has worked in the past and should work in
the future.
Co-Chair Harris asked if Representative Ogg would be willing
to support a five-year sunset rather than the proposed
three-year. He believed that five years would provide the
program the opportunity to determine satisfaction. He
thought that the next authorization would be a
straightforward process. Co-Chair Williams warned that the
proposed program should not be compared to ASMI. ASMI is a
tax bill, whereas, HB 419 is a self imposed taxation by
vote. Co-Chair Harris pointed out that ASMI too, was put in
place at the recommendation of fishermen. Representative
Ogg acknowledged that ASMI is different as it is a State
imposed tax. He admitted that had been a "tough" vote to
pass.
Co-Chair Harris inquired that if the legislation was passed
and an association was formed, would those fishermen then
also pay the ASMI tax. Representative Ogg replied that if
the law remains as is, then they would pay both.
Representative Stoltze MOVED to AMEND Amendment #1, Page 2,
Line 6, deleting "2007" and inserting "2009".
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Co-Chair Harris requested to change the date to "June 30,
2009". There being NO OBJECTION, the amendment was amended.
Representative Fate asked what the Legislature could do if
something went wrong with the proposal with the extension
and sunset. Representative Stoltze explained that he did
not know the fishery issues and was not comfortable voting
for taxes in a new program. He warned that taxation should
be approached cautiously especially in a group as diverse as
the fisheries. The sunset would provide more comfort to him
personally. Representative Fate interjected that HB 419 is
a tax bill but not an imposition to levy a tax.
Co-Chair Williams advised that he himself has been working
on a fisheries tax bill, pointing out that all the fisheries
support HB 419.
BOB THORSTENSON, PRESIDENT, UNITED FISHERMEN OF ALASKA
(UFA), appreciated Representative Stoltze's concern with the
current number of taxes paid by fishermen. He noted that on
an average year, 68% of his revenue was taken through
taxation. There are many groups who are taking the
opportunity to use the proposed vehicle to implement a
package supported statewide. There has been a thorough
review of the legislation from the UFA with no objections
from any of the 34 member groups. He thought that the
sunset amendment would "cripple" the legislation.
Representative Stoltze asked if the support was 51% of the
actual membership or of those voting. Mr. Thorstenson
responded that it was 51% of the permit holders voting.
Representative Stoltze interjected that the small fishing
people might not be aware of the election. Mr. Thorstenson
stated that was out of the purview of the UFA. Those that
missed the vote would most likely be the non-resident voters
living outside of the State. He noted that there has been
concern voiced in creating a level playing field for the
commercial fishing business. There has been a massive
consolidation in the processing sector that has not been
accompanied by a consolidation in the harvesting center.
The processing sector has the opportunity to do a tremendous
amount of marketing through new legislation and programs.
The proposed legislation dovetails nicely with the U.S. ASMI
legislation brought forward by Senator Stevens. The
opportunity for fishermen to do their own thing and market
by region would be vastly facilitated through the
legislation.
Co-Chair Williams asked if there was a vote, who could start
it. Mr. Thorstenson replied that would be the Commissioner
of Department of Community & Economic Development.
A roll call vote was taken on the motion to adopt the
amended Amendment #1.
IN FAVOR: Meyer, Stoltze, Harris
OPPOSED: Moses, Chenault, Croft, Fate, Foster, Hawker,
Joule, Williams
The MOTION FAILED (3-8).
Representative Foster MOVED to report CS HB 419 (RES) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 419 (RES) was reported out of Committee with a "do
pass" recommendation and with a zero note #1 by the
Department of Community & Economic Development and in
determent note #2 by the Department of Revenue.
HOUSE BILL NO. 514
An Act relating to child support modification and
enforcement, to the establishment of paternity by the
child support enforcement agency, and to the crimes of
criminal nonsupport and aiding the nonpayment of child
support; amending Rule 90.3, Alaska Rules of Civil
Procedure; and providing for an effective date.
Co-Chair Harris MOVED to ADOPT work draft committee
substitute #23-LS1639\W, Mischel, 3/23/04, as the version of
the legislation before the Committee. There being NO
OBJECTION, it was adopted.
PETE ECKLUND, STAFF, REPRESENTATIVE BILL WILLIAMS, discussed
the committee substitute, noting the changes. It will
remove the peace officer classification for the Child
Support Enforcement Division (CSED) investigators. The
committee statute deletes language "and unreasonable", Page
3, Line 20 of the House Judiciary version.
In response to a question by Representative Croft, Mr.
Ecklund explained that the changes were made to the House
Judiciary version, inclusion of the pilot project located in
Section 12. Mr. Ecklund advised that it was different from
the previous, unadopted work draft.
Representative Croft MOVED to ADOPT Amendment #1, which
would add "and unreasonably" on Page 3, Line 21. (Copy on
File). Co-Chair Williams OBJECTED for the purpose of
discussion.
ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION, CRIMINAL DIVISION, DEPARTMENT OF LAW, provided
information on Amendment #1. She noted that the amendment
could cause concern, as it would provide an element of
defense that would have to be proven. The Department of Law
receives information under Paragraph A from employers
regarding other statutory relationships, and the language
could make it unreasonably modified. She observed that the
Department could draft an amendment addressing the statutory
duty to report.
Representative Croft felt that it should not be a criminal
act for a person to refuse to talk to a CSED officer. He
stressed that in no other area, would it be a criminal act
to refuse to talk about a subject. He added if the
Department of Law does not approve of Amendment #1, then he
would MOVE to strike Section #A.
Ms. Carpeneti agreed with Representative Croft that people
should have the right to say that they do not want to talk.
However, Paragraph B only applies to employers regarding the
information about health benefits. It would not be an
"across the board duty" of the employers to report to the
Department of Labor & Workforce Development when there is a
new hire. She recommended that it be adjusted.
Representative Croft WITHDREW Amendment #1.
TAPE HFC 04 - 65, Side A
Representative Croft MOVED to ADOPT Amendment #2. (Copy on
File). Co-Chair Williams OBJECTED for the purpose of
discussion.
Representative Croft stated that the amendment would delete
all material on Page 4, Lines 16-28 and add a new section to
read: "AS 12.55.139 is repealed". He explained that
federal law requires the taking of the hunting and fishing
license as a sanction. Amendment #2 would remove it as a
sanction for the misdemeanor and keeps it as a sanction only
for a felony.
JOHN MAIN, STAFF, REPESENTATIVE SPEAKER PETT KOTT, noted
that when the license issue was mandated for the states,
Alaska choose the proposed way to address hunting and
fishing licenses. There is no vehicle in which they can
deny a hunting or fishing license. Federal government was
not pleased that it was placed in those two statutes. Mr.
Main feared that if it was removed from a misdemeanor area,
the federal government might state that Alaska is not in
compliance with the plan and the State could face penalties.
In response to a question by Representative Stoltze, Mr.
Main stated that he did not know if any states had failed to
comply with the federal requirements to take recreational
licenses for failure in providing child support.
Representative Stoltze commented on the similarities between
this and the federal helmet laws. He stressed that hunting
and fishing licenses are more than recreational pleasures in
Alaska. He voiced his support for the amendment.
In response to a query by Representative Chenault, Mr. Main
pointed out that only 2-5 people have been convicted in the
past two years and that he did not know how many had their
recreational licenses removed.
JOHN MALLONEE, (TESTIFIED VIA TELECONFERENCE), ACTING
DIRECTOR, CHILD SUPPORT ENFORCEMENT DIVISION, DEPARTMENT OF
REVENUE, ANCHORAGE, provided information on the legislation.
He did not recall any cases being revoked in the past two
years, noting that only twenty cases had been prosecuted in
the past four years. Mr. Main pointed out that the language
uses "may", which is more permissive.
Representative Croft testified in support of Amendment #2.
He stressed that the connection with subsistence hunting and
fishing, maintaining that licenses should only be revoked
for serious felony cases. He did not feel that the federal
government would withhold funds, but argued that the
decision should be made to flow through the correct course,
regardless.
Co-Chair Harris noted that the amendment would repeal AS
12.55.139. Representative Croft explained that the deletion
of the statute would only remove the ability to take
recreational licenses in a misdemeanor case. Co-Chair
Williams interjected that nonpayment of child support is
close to being a felony.
Representative Stoltze reminded members that there are
"cashless economies" in rural Alaska. He did not want the
federal government to deter the adoption of a rational State
policy.
Representative Hawker stated that any refusal to pay child
support is an egregious act. He noted that recreational
licenses are of value as a non-monetary item and valuable to
the perpetrator; whereas, great monetary fines would further
restrict their ability to pay.
In response to Vice Chair Meyer, Mr. Main observed that
discussions had occurred in the House Judiciary Committee,
and that the felony level had been increased.
A roll call vote was taken on the motion.
IN FAVOR: Stoltze, Croft, Fate, Foster, Joule
OPPOSED: Chenault, Hawker, Meyer, Williams, Harris
Representative Moses was not present for the vote.
The MOTION FAILED (5-5).
SPEAKER PETE KOTT distributed a handout in response to the
testimony provided by Landa Baily, Special Assistant,
th
Department of Revenue, March 8, 2004 letter. (Copy on
File). [It was not discussed].
Co-Chair Harris MOVED to report CS HB 514 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CS HB 514 (FIN) was reported out of Committee with
"individual recommendations" and with a new fiscal note by
the Department of Revenue, a zero note by the Department of
Public Safety, two zero notes by the Department of
Administration, indeterminate note #2 by the Alaska Court
System and indeterminate note #3 by the Department of Law.
HOUSE BILL NO. 424
An Act relating to review of regulations under the
Administrative Procedure Act by the Legislative Affairs
Agency; and providing for an effective date.
BARBARA COTTING, STAFF, REPRESENTATIVE JIM HOLM, testified
that HB 424 requires legislative legal review of regulations
before they are finalized. Under current statute, only the
Attorney General formally reviews proposed regulations and
the review comes late in the process, when public comment
has already been closed. After the Attorney General
approves proposed regulations, they are transmitted to the
Lt. Governor's office, where they are seldom changed and the
public then becomes justifiably frustrated when they see
regulations adopted that are different from the ones in
which they commented.
Ms. Cotting stated that under HB 424, legislative attorneys
who actually draft the bills would review regulations being
promulgated from those bills. By working cooperatively with
the Attorney General's office, differences of opinion could
be worked out before the regulations were finalized. In the
event that differences could not be worked out, the
Legislature would have the opportunity for input. She added
that the overall impact to the State's economy would be
positive. Adding legislative review to the regulation
process would:
· Help eliminate conflicts,
· Create a more stable business environment, and
· Increase the public's trust in government.
Co-Chair Harris questioned the comment made by Ms. Cotting
that the Legislature does not have the constitutional legal
authority to abolish regulations. Ms. Cotting responded
that they do not by statute. Co-Chair Harris stated that
the Legislature has the authority to place regulations in
statute. He understood that the legislation would have
another group write regulations for the bills passed. Ms.
Cotting corrected, indicating that the bill would provide
for an attorney in Legislative Legal and Research Service
Division, who would review regulations by the agencies. She
pointed out that Tam Cook, the director from Legislative
Legal, had submitted a fiscal note for the scope of that
work in the amount of $98 thousand dollars, covering the
cost for one attorney position.
Ms. Cotting acknowledged that the action would be a policy
call. The legislative intent causes much to litigate. Co-
Chair Harris asked the legal ramifications of the
Legislature writing its own regulations without the input of
the Administration. He asked what would happen if the
Legislature took over that entire function.
DEBORAH BEHR, ASSISTANT ATTORNEY GENERAL, REGULATIONS
ATTORNEY, DEPARTMENT OF LAW, commented the problem with
having the Legislature providing the "nuts and bolts" of the
regulations is that the Legislature is not around for so
many months of the year. She understood why the Legislature
did not want to delegate the work to the Executive Branch,
which attempts to fill in the blanks in statute. If the
Legislature wants to write their own regulations, it is
legal and constitutional but it would mean that the
Legislature would have to do much more substantial and
detailed work for the individual statutes.
Co-Chair Harris complained that one of the issues is that
the Legislature writes legislation and then the
Administration writes regulations that affect their point of
view, which happens too often. He emphasized that was
frustrating. Then the Legislature has to pass new
legislation to make the original intent clear. Ms. Behr
pointed out that one of the goals of the proposed bill,
itemized on Page 3, Lines 8-12, was to have the assigned
attorney notify various bodies in the Legislature to review
and provide additional legislative oversight. The framework
in the bill is designed to facilitate the oversight.
Co-Chair Williams asked if she was referencing the
Legislative Regulation Review Committee. Ms. Behr responded
that the Legislative Review Committee has an active role in
the HB 424.
DAVE STANCLIFF, REGULATION REVIEW COMMITTEE, STAFF,
REPRESENTATIVE PETE KOTT, informed members that Minnesota
co-writes regulation with their Administration. That state
has fewer conflicts than experienced by Alaska. Colorado
has a Regulation Review Committee and the drafters, track
legislation and watch for when the regulations are put forth
and then highlight specific problems for the Regulation
Review Committee. That check and balance provides a
screening process to let the legislators know if there is
anything wrong. Because of the threat of the screening
process, the regulation writers are more precise in writing
regulations. The Courts have found that the legislature has
limited ability to change regulations once they are in
place. The bill provides an outline on how to build a
cooperative partnership and helps to determine if the number
of regulation concerns could be reduced.
In response to Co-Chair Harris query, Mr. Stancliff
indicated that he has been involved in the Regulatory Review
Committee, consisting of a staff of one. Co-Chair Harris
asked if it would be prudent to have the Committee consist
of an attorney as the staff person. Mr. Stancliff
acknowledged that was a possibility. Each legal realm
within the process has to develop it's own "flavor" and that
would be the choice of the Legislature whether to hire the
attorney. He pointed out that Legislative Legal Agency is a
non-partisan and credible process. In good government
reform, it is important to look at something that serves any
philosophy well over time.
Representative Foster referenced the $98 thousand dollar
fiscal note. He requested to add his name as a co-sponsor
of the bill.
Ms. Behr pointed out that hiring a professional editor costs
a lot more than the services associated with Legal Services.
Representative Stoltze stated that no matter who is in
office, there must be a 2/3 majority to repeal a resolution.
He did not know what the solution should be to address the
concerns of the proposed legislation. It is difficult to
micromanage each issue.
Representative Hawker shared Representative Stoltze's
concern with the legislation. He was troubled with the
Department of Health & Social Services fiscal note,
indicating significant costs to that Department. They are
working diligently on regulations to improve their cost
efficiencies and unnecessary delays could result in
continued expenditures.
Ms. Cotting pointed out that two of the fiscal notes are out
dated and address earlier versions of the bill. The only
note that is current is the one from the Legislative Affairs
Agency. She believed that the narrative would be changed
for the other two notes. There would be no mandated delay
with passage of the bill.
Mr. Stancliff pointed out that there are two provisions in
the bill that explicitly state that nothing that Legislative
Legal does will hold up the process in any way. It would be
a constitutional separation of powers. The bill and the
principal of it are based to tie into two other measures
that will come before the House Finance Committee. HB 242
addresses the "front-end" into the regulatory process, HB
203 deals with the center of the adjudication process and HB
424 creates the safety valve at the end of the process.
PAM LABOLLE, ALASKA STATE CHAMBER OF COMMERCE, JUNEAU,
voiced strong support for the proposed bill. With 40,000
regulations in Alaska and 93% of all regulations proposed
becoming law, it is important for business to watch exactly
how regulations are formed, enforced and reviewed to ensure
we are able to navigate the system. Senator Therriault has
introduced a three-tier package on regulatory reform to
render the system more efficient and flexible.
The three bills are:
· SB 203, Fair Hearing Bill
· SB 287, Legislative Legal Review of Proposed
Regulations, and
· SB 333, Judicial Extraction from Administrative
Review.
Currently, State agencies that write and enforce
administrative law also hear complaints against those laws.
HB 424 provides a fix for the system by separating the
administrative adjudication process from the agencies. The
bill creates a central hearing panel that gives hearing
officers a more independent and protected station from which
to deliver timely due process through fair and objective
hearings, thereby, creating an efficient and more
professional administrative hearing process. Initial start-
up costs would be recouped and significant savings would
accrue through the efficiencies. The reductions in time due
to the efficiencies would reduce costs to businesses.
Co-Chair Williams stated that HB 424 would be HELD in
Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 4:28 P.M.
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