Legislature(2005 - 2006)
05/02/2005 02:33 PM House FIN
| Audio | Topic |
|---|---|
| Start | |
| SB141 | |
| SB147 | |
| SB16 | |
| SB139 | |
| SJR11 | |
| SB141 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
May 2, 2005
2:33 p.m.
CALL TO ORDER
Co-Chair Meyer called the House Finance Committee meeting to
order at 2:33:28 PM.
MEMBERS PRESENT
Representative Mike Chenault, Co-Chair
Representative Kevin Meyer, Co-Chair
Representative Bill Stoltze, Vice-Chair
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Jim Holm
Representative Reggie Joule
Representative Mike Kelly
Representative Carl Moses
Representative Bruce Weyhrauch
MEMBERS ABSENT
None
ALSO PRESENT
Senator Ralph Seekins; Brian Hove, Staff, Senator Ralph
Seekins; Kelly Hepler, Director, Division of Sport Fish,
Department of Fish and Game; Devon Mitchell, Executive
Director, Alaska Municipal Bond Bank Authority, Department
of Revenue; Doug Letch, Staff, Senator Gary Stevens; Jeff
Ottensen, Director, Division of Program Development,
Department of Transportation and Public Facilities; Tom
Maher, Staff, Senator Gene Therriault; Pat Davidson,
Legislative Auditor, Legislative Audit Division; Senator
Gene Therriault; Chuck Harlamert, Revenue Audit Supervisor,
Tax Division, Department of Revenue; Rick Urion, Director
Occupational Licensing, Department of Community and Economic
Development; Jim Preston, Juneau; Pat Davidson, Legislative
Auditor, Legislative Audit Division; Dave Stancliff, Staff,
Senator Gene Therriault; Melanie Millhorn, Director,
Division of Retirement and Benefits, Department of
Administration; Speaker John Harris; Representative Paul
Seaton, Representative Jay Ramras; Senator John Coghill;
Representative Beth Kerttula
PRESENT VIA TELECONFERENCE
Gordon Garcia, Project Manager, Division of Sport Fish,
Department of Fish and Game; Ricky Gease, Executive
Director, Kenai River Sportfishing
SUMMARY
CSSB 147(FIN)
"An Act providing for a sport fishing facility
surcharge on sport fishing licenses; providing for
the construction and renovation of state sport
fishing facilities and for other projects
beneficial to the sport fish resources of the
state as a public enterprise; and authorizing the
issuance of revenue bonds to finance those
projects."
HCSSB 147 (FIN) was REPORTED out of Committee with
a "no recommendation" recommendation and with
three fiscal impact notes: #1 REV, #2 DFG, and #3
DFG.
CSSSSB 16(TRA)
"An Act relating to the powers and duties of the
Department of Transportation and Public
Facilities; repealing the requirement for a long-
range program for highway construction and
maintenance; and repealing a requirement that
public facilities comply with energy standards
adopted by the Department of Transportation and
Public Facilities; and providing for an effective
date."
CSSSSB 16 (TRA) was REPORTED out of Committee with
a "do pass" recommendation and with two zero
fiscal impact notes: #1 DOT, #2 DPS.
CSSB 139(L&C)
"An Act relating to termination and oversight of
boards, commissions, and agency programs;
extending the termination date of the Board of
Marital and Family Therapy; and providing for an
effective date."
HCSSB 139 (L&C) was heard and HELD in Committee
for further consideration.
SJR 11 Urging the United States Congress to amend the tax
code to repeal the federal excise tax on
communications.
SJR 11 was REPORTED out of Committee with a "do
pass" recommendation and with a zero fiscal impact
note by the Department of Revenue.
CSSB 141(FIN)
"An Act relating to the teachers' and public
employees' retirement systems and creating defined
contribution and health reimbursement plans for
members of the teachers' retirement system and the
public employees' retirement system who are first
hired after July 1, 2005; relating to university
retirement programs; establishing the Alaska
Retirement Management Board to replace the Alaska
State Pension Investment Board, the Alaska
Teachers' Retirement Board, and the Public
Employees' Retirement Board; adding appeals of the
decisions of the administrator of the teachers'
and public employees' retirement systems to the
jurisdiction of the office of administrative
hearings; providing for nonvested members of the
teachers' retirement system defined benefit plans
to transfer into the teachers' retirement system
defined contribution plan and for nonvested
members of the public employees' retirement system
defined benefit plans to transfer into the public
employees' retirement system defined contribution
plan; providing for political subdivisions and
public organizations to request to participate in
the public employees' defined contribution
retirement plan; and providing for an effective
date."
HCSSB 141 (FIN) was REPORTED out of Committee with
a "no recommendation" with the following fiscal
impact notes: #1 ADM, #3 REV, #4 REV, #5 REV, #6
REV, #7 REV, #9 FIN.
2:35:03 PM
CS FOR SENATE BILL NO. 141(FIN)
"An Act relating to the teachers' and public employees'
retirement systems and creating defined contribution
and health reimbursement plans for members of the
teachers' retirement system and the public employees'
retirement system who are first hired after July 1,
2005; relating to university retirement programs;
establishing the Alaska Retirement Management Board to
replace the Alaska State Pension Investment Board, the
Alaska Teachers' Retirement Board, and the Public
Employees' Retirement Board; adding appeals of the
decisions of the administrator of the teachers' and
public employees' retirement systems to the
jurisdiction of the office of administrative hearings;
providing for nonvested members of the teachers'
retirement system defined benefit plans to transfer
into the teachers' retirement system defined
contribution plan and for nonvested members of the
public employees' retirement system defined benefit
plans to transfer into the public employees' retirement
system defined contribution plan; providing for
political subdivisions and public organizations to
request to participate in the public employees' defined
contribution retirement plan; and providing for an
effective date."
Co-Chair Meyer noted that the Committee would discuss the
fiscal impact of the amendments to SB 141 later in the
meeting.
Representative Croft asked for an analysis of the
Committee's previous action and suggested that the Committee
check to be sure that the pensions are not over or under-
funded.
SB 141 was held till later in the meeting.
2:37:33 PM
^
CONFLICT OF INTEREST
Co-Chair Meyer read a legal analysis regarding declaration
of conflicts of interest (copy on file.)
Representative Weyhrauch summarized that members may chose
to declare a conflict of interest, but are not required to
do so. He stated that he would continue his practice of not
declaring conflicts of interest on issues before the
Committee.
Vice-Chair Meyer requested that members reframe from stating
conflict of interests at the committee level.
2:40:06 PM
CS FOR SENATE BILL NO. 147(FIN)
"An Act providing for a sport fishing facility
surcharge on sport fishing licenses; providing for the
construction and renovation of state sport fishing
facilities and for other projects beneficial to the
sport fish resources of the state as a public
enterprise; and authorizing the issuance of revenue
bonds to finance those projects."
Representative Holm noted that the companion bill to SB 147
is HB 252 [sponsored by Representative Holms]. He spoke in
support of the legislation.
SENATOR RALPH SEEKINS, SPONSOR, explained that the
legislation would provide a sport fishery surcharge to
reconstruct and construct new sport fish hatcheries in the
state and enhance or expand the recreational fishing
opportunities around the state.
Alaska has an ever-growing demand for fish stocks. More
people want to fish. Resident populations are growing.
Tourist demand for recreational opportunity is
increasing. And, at the same time, sport fish
production is decreasing. Alaska's only sport fish
hatcheries are located at Ft. Richardson and Elmendorf
A.F.B. Both are more than 30 years old and nearing the
end of their useful life.
To make matters worse, biomass production will soon
plummet. Hatcheries require warm water to enhance
growth in baby fish. Waste heat from the Ft. Richardson
and Elmendorf power plants has provided that energy for
many years. Both power plants will be shutting down hot
water production in October. As a result, biomass
production will suffer greatly at the same time that
demand is increasing.
We can fix this problem and plan for years to come.
Senate Bill 147 provides for the renovation and
expansion of the Ft. Richardson and Elmendorf
facilities to meet south central needs. Furthermore, it
will also provide for a new hatchery in Fairbanks to
meet the demands of the interior regions. (Currently
hatchery fish are trucked from Richardson into the
interior for planting.)
It won't be cheap but it is affordable. Federal funds
have been procured to meet increased demand due to
military expansion.
Senator Seekins observed that there are some environmental
problems in the Fairbanks area that can be cured by using
hot water from the Chena V power plant. Some of the BTU's
can be taken out of the water before it is discharged back
into the river. Educational facilities with the University
of Alaska School of fisheries can be enhanced and visitor
facilities created for school aged kids. He anticipated that
Senator Stevens would be able to provide $10 million toward
this effort.
Senator Seekins observed that a new fish hatchery building
with a salmon modular would be built at Ft. Richardson. He
observed that 95 percent of the fish from this would go to
sport fisheries. He emphasized that the legislation would
allow the conversion of fishing into catching. The
facilities would be expandable for up to 20 - 25 years.
Senator Seekins explained that once the bonding mechanism is
paid off the surcharge would end. Every dollar earned would
go to pay down the indebtedness.
Senator Seekins stressed the statewide benefit. The
Wrangell/Petersburg Crystal Lake Hatchery would receive $2.5
million; the Sitka/Haines hatchery would receive $1.5
million; and the Skagway hatchery would receive $1.6.
2:47:17 PM
Co-Chair Chenault asked where the fish are deposited after
they are reared. Senator Seekins explained that the fish go
into the lakes and streams of the interior, Kodiak Island,
the Kenai Peninsula, and through South Central Alaska.
2:48:29 PM
Vice-Chair Stoltze asked if inclusion of game licenses was
discussed. Senator Seekins explained that game licenses were
included in SB 170. He observed that there has been
indication that the public would support an increase in
hunting licenses if there is a greater opportunity to bring
something home.
Vice-Chair Stoltze noted that the Susitna Advisory Board has
shown some support for the legislation and suggested a fee
increase of $5.00. Senator Seekins observed that deposits
into the Fish and Game Fund must be sufficient to pay off
the indebtedness. The initial figure was $7.50. The charge
was increased to $8.50 to cover the additional $5.5 million
that went into Southeast Alaska. He termed it a user-benefit
surcharge.
2:52:18 PM
Vice-Chair Stoltze referred to legislation, which would name
the Fairbanks hatchery after Ruth Burnette.
Representative Weyhrauch explained that the only complaint
he has received is that the $8.50 fee would require vendors
to carry change. He suggested an amendment to round down the
amount to $8.00 in order to eliminate the need for change.
Senator Seekins questioned if the reduction would jeopardize
the bond issues and prevent fully-funding the projects. He
suggested rounding it off to $9.00 if the bonding authority
felt it was necessary.
Representative Kelly WITHDREW Amendment 1, which would have
lowered the amount to $7.50.
2:56:24 PM
JIM PRESTON, JUNEAU, spoke as a charter operator and license
vendor. He testified in support of the proposed amendment by
Representative Weyhrauch, which would eliminate the need to
carry quarters around. He argued for "whole dollar amount"
fees. He spoke in support of SB 147.
3:00:08 PM
RICKY GEASE, EXECUTIVE DIRECTOR, KENAI RIVER SPORTFISHING,
testified in support of SB 147. He stressed the need to
upgrade the hatcheries and note that demand on the fisheries
is growing. He agreed that the surcharge should be
eliminated after the bond is paid.
3:01:28 PM
Vice-Chair Stoltze asked if limiting set nets or the bill
would provide the most benefit. Mr. Gease answered both.
Co-Chair Chenault asked for Mr. Gease's opinion on the
rounding up or down to a whole number. Mr. Gease stated that
he would support, whichever amount supported the proposal.
3:02:48 PM
Representative Weyhrauch MOVED to ADOPT Amendment 2:
Page 3, lines 23, 24, 25
Delete $8.50
Insert $8.00
Page 3, line 29
Delete $8.50
Insert $10.00
Co-Chair Meyer OBJECTED.
Representative Weyhrauch reiterated his reasoning and
requested comments from Mr. Mitchell.
3:04:15 PM
DEVON MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, DEPARTMENT OF REVENUE, related that the
fiscal note by the department contemplated a 20-year bond.
He felt that the legislation allowed flexibility and zero
impact would be easy to manage.
Representative Croft opined that the numbers are slightly
positive.
3:05:47 PM
Mr. Mitchell had not examined the numbers by the Department
of Fish and Game. He noted that if there is a positive
impact that it is the sponsor's intent return any funds.
3:06:47 PM
Representative Hawker inquired if the extra revenue would be
dedicated to early retirement of the debt. Mr. Mitchell
agreed and clarified that the intent is to accelerate the
debt repayment and shorten the schedule. Representative
Hawker spoke in support of increasing $8.50 to $9.00.
3:08:20 PM
Mr. Mitchell noted that the Department of Fish and Game's
fee collection has been growing. The amounts suggested are
based on current numbers, not projected numbers.
Representative Weyhrauch suggested Representative Holm make
a friendly amendment as such.
3:09:47 PM
Representative Holm offered a friendly amendment to
Amendment 2, changing $8.00 to $9.00 on page 3, lines 23-25.
Representative Weyhrauch restated the friendly amendment to
Amendment 2.
Vice-Chair Stoltze and Co-Chair Chenault OBJECTED.
3:12:56 PM
Mr. Mitchell pointed out that page 4, line 1 and 2 would
also need to be changed if the intent is to go to whole
numbers.
Representative Croft observed that the other cites are for
non-resident military fishing and small game licenses, which
would have a small impact. He suggested sticking to the
lower number of $8.00 for these uses. He also asked about
the implications of the Carlson Case.
3:15:32 PM
KELLY HEPLER, DIRECTOR, DIVISION OF SPORT FISH, DEPARTMENT
OF FISH AND GAME, addressed the Carlson case, which applies
to commercial issues. He did not feel there would be a
problem.
3:16:47 PM
Representative Croft asked for more information regarding
the use of the Fairbanks hatchery stock. Mr. Hepler related
that the two hatcheries, Ft. Richardson and Elmendorf,
provide all of the stock for Homer to the Alaskan range. The
new hatchery is proposed in Fairbanks to take care of the
Interior needs. The Ft. Richardson hatchery would be
refurbished to take care of area south of the Alaskan range
to Kodiak.
Vice-Chair Stoltze inquired how long this surcharge would be
in place. Mr. Mitchell replied that the fiscal note was
based on 20 year leveraging. He estimated that the term
could be shortened to 17 years or less.
In response to a question by Representative Stoltze, Mr.
Hepler explained that the Ft. Richardson hatchery would be
located on a former Air Force Base facility, with no
practical public access. The facility will be for production
only; there would not be anything fancy about the facility.
The Fairbanks facility would be built for production. There
have been discussions of additional money that would make
the facility more "pleasing to the eye", but without
becoming a visitor center. There have been discussions
regarding housing at Ft. Richardson, similar to what is at
Fairbanks.
3:21:05 PM
GORDON GARCIA, PROJECT MANAGER, DIVISION OF SPORT FISH,
DEPARTMENT OF FISH AND GAME, described the facility and the
attempt to reduce costs. He noted that the Fairbanks
facility has been scaled back to reduce costs. The amount
raised through the legislation would fund the building.
3:21:39 PM
Mr. Mitchell noted that there is a dedicated fund that
cannot crossover into other needs.
3:22:11 PM
Vice-Chair Stoltze expressed concern that the angler
surcharges not be used to pay for any "grand ideas".
3:23:28 PM
Mr. Hepler emphasized that the facility would be a
production facility. He stressed that without fish there is
no hatchery.
3:24:24 PM
Representative Kelly summarized that the amendment to the
amendment is to lower the fee to $8.00.
Representative Croft clarified that the amendment to the
amendment would take the fee to $9.00. His objection would
leave it at $8.00.
3:25:39 PM
Co-Chair Chenault observed that $9.00 would provide $2.47
million more that the original proposal.
3:26:37 PM
Representative Holm observed that the concern is that the
amount be whole, but emphasized that $8.00 would not be
sufficient to fully fund the project. He pointed out that
any extra funds would only pay off the debt earlier. He
noted that most projects do not come in at their estimated
price.
3:28:21 PM
A roll call vote was taken on the motion to amend Amendment
2 to "$9.00".
IN FAVOR: Hawker, Holm, Kelly, Moses, Weyhrauch, Meyer
OPPOSED: Foster, Joule, Stoltze, Croft, Chenault
The MONTION PASSED (6-5).
Co-Chair Meyer MOVED to ADOPT Amendment 2, as amended.
A roll call vote was taken on the motion to adopt Amendment
2.
IN FAVOR: Hawker, Holm, Joule, Kelly, Moses, Weyhrauch,
Foster, Chenault, Meyer
OPPOSED: Stoltze, Croft
The MOTION PASSED (9-2).
Representative Hawker spoke in support of the legislation
and noted the need for the new facility.
3:33:59 PM
Representative Holm thanked the Department of Fish and Game.
3:34:19 PM
Representative Holm MOVED to report HCSSB 147 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCSSB 147 (FIN) was REPORTED out of Committee with a "no
recommendation" recommendation and with three fiscal impact
notes: #1 REV, #2 DFG, #3 DFG.
3:35:08 PM
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 16(TRA)
"An Act relating to the powers and duties of the
Department of Transportation and Public Facilities;
repealing the requirement for a long-range program for
highway construction and maintenance; and repealing a
requirement that public facilities comply with energy
standards adopted by the Department of Transportation
and Public Facilities; and providing for an effective
date."
DOUG LETCH, STAFF, SENATOR GARY STEVENS, spoke in support of
SB 16. He noted that the legislation would update obsolete
statutes regarding the powers and duties of the Department
of Transportation and Public Facilities. The key provision
is the removal of the requirement for the department to
conduct a cost benefit analysis for all projects. The
regulation has placed the department at a huge disadvantage
because it makes every project no matter how small subject
to a cost benefit analysis. He maintained that opponents of
Department of Transportation and Public Facilities projects
have used the provision as a basis of litigation.
Representative Croft observed that the legislation would
eliminate a cost benefit study on all projects and asked if
it would be appropriate to require it on medium to large
projects. Vice-Chair Meyer asked that the question be held
till after Mr. Ottensen's presentation.
JEFF OTTENSEN, DIRECTOR, DIVISION OF PROGRAM DEVELOPMENT,
DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES, referred
to a sectional analysis (copy on file.) Section 1 would
grant the department the ability to issue grants, when they
have been authorized by appropriation of the legislature.
The department receives money in at least three different
categories from federal sources that is then granted out to
local governments and non-profits. Section 3 contained the
old cost benefit language. Section 5 adds a new cost
effectiveness requirement for new projects that are not
local. This would eliminate the burden from 80 - 90 percent
of their projects. Significant projects that are beyond a
local town or road would be included. A cost effectiveness
analysis would be required, at a lower cost than the
traditional cost benefit analysis. Section 8 gives the
department one year to implement Section 5 through
regulation. He noted that the statutes are over 30 years old
and felt that the legislation would be good for local
governments and the department.
3:40:46 PM
Representative Croft questioned how the legislation would
benefit the public. In response to further questions by
Representative Croft, Mr. Ottensen referred to section 5,
which requires a new cost effective analysis for new
highways, airports, terminals, ferries, and other major
components. Projects requiring rehabilitation and
maintenance of the existing system, or would primarily serve
local transportation needs are excluded.
Representative Croft asked why there should not be a cost
benefit analysis for these projects. Mr. Ottensen stressed
that the greatest burden is on municipalities and local
government. The state of Alaska is geared up to make these
analyses. The cost benefit analysis occurs at the planning
stage. The quality of data goes up on almost every project
as it goes through the process. Cost studies become more
meaningful later in the process.
Representative Croft questioned why not require the cost
studies later and asked if they are being done twice.
3:44:38 PM
Mr. Ottensen agreed and reiterated that the statute affects
planning. Cost effective studies exempted during the
planning stage could be required at the building stage.
3:45:37 PM
Representative Holm asked if the legislation would solve
problems with cost benefit analysis that have no merit. Mr.
Ottensen felt that the legislation would fix the problem. He
maintained that delay of the legislation resulted in the
death of three individuals due to the department's inability
to go forward on a bridge.
3:47:09 PM
Mr. Ottensen noted that projects in the GARVEE legislation
have not gone through a cost benefit analysis. The
department will need to do a cost benefit analysis on each
of these projects as soon as the [GARVEE] legislation is
passed.
3:47:21 PM
Representative Hawker MOVED to report CSSSSB 16 (TRA) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSSSSB 16 (TRA) was REPORTED out of Committee with a "do
pass" recommendation and with two zero fiscal impact notes:
#1 DOT, #2 DPS.
3:48:23 PM
CS FOR SENATE BILL NO. 139(L&C)
"An Act relating to termination and oversight of
boards, commissions, and agency programs; extending the
termination date of the Board of Marital and Family
Therapy; and providing for an effective date."
TOM MAHER, STAFF, SENATOR GENE THERRIAULT, spoke in support
of the legislation.
This Legislation stems from recommendations contained
in two reports by the Division of Legislative Audit.
First, this legislation extends the sunset date of the
Board of Marital and Family Therapy from June 30, 2005
to June 30, 2010 per the audit recommendation contained
in that report (page 9).
Second, HCS CSSB 139 (L&C) also incorporates
recommendations contained in the audit of the Alaska
Sunset Process and Selected Investigative Issues.
This legislation changes the standard sunset period for
occupational boards in AS 0803.020 (c) and non
occupational boards in AS 44.66.010 (c) from "not to
exceed four years" to not to exceed eight years".
Increasing the standard sunset period allows for better
use of audit staff, committee time, and makes the
sunset process less consuming for board regulatory
agencies. As Alaska's sunset process has matured, most
of the sunset reviews are less about eliminating board
and commissions, and more about operational
performance. Twelve states have either repealed or
suspended their sunset process. The most common
standard extension is ten years, while Alaska along
with three other states have maintained a standard
four-year extension. Of course, the Legislature will
still he able to set whatever time extensions it deems
appropriate, regardless of this statutory change.
TICS CSSB 139 (L&C) also adds two criteria to statute
that must be considered in the course of a sunset
review by the auditors:
• The extent to which the board, commission, or
agency has effectively attained its objectives and
the efficiency with which it has operated.
• The extent to which the board, commission, or
agency duplicates the activities of another
governmental agency or the private sector.
Expanding the criteria will assure that auditors will
measure the efficiency and effectiveness of boards,
commissions or agencies under review
3:54:10 PM
Representative Hawker asked about criteria adding to sunset
regulations. He referenced subsection (10), regarding
effectiveness and efficiency.
3:54:46 PM
PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT
DIVISION, explained that under the provisions of the
legislation, the agency, board or commission being audited,
would know how they would be evaluated. She stressed that it
is important that information regarding missions and
measures are brought to the entities being examined. There
are ways to measure efficiency and effectiveness. The
legislation would also address non-occupational agencies,
such as the Council on Domestic Violence and Sexual Assault
(CDVSA).
Representative Hawker questioned who would set the mission
and measure standards and whether there would be legislative
guidance. Ms. Davidson responded that they would look for
best practices. Many are not Alaska only organizations. They
would build on any existing measures or missions. Efficiency
is determined through observation. She noted the division's
support.
3:58:32 PM
RICK URION, DIRECTOR, OCCUPATIONAL LICENSING, DEPARTMENT OF
COMMUNITY AND ECONOMIC DEVELOPMENT, spoke in support of an
amendment that would restore provisions removed from the
previous committee of referral. The provisions in question
related to what happens after a board sunsets. He observed
that the licensing law is not removed after a board sunsets.
The proposed amendment would put the duty on the division.
th
He noted that a board is being sunset June 30 this year.
Co-Chair Chenault requested that the amendment be provided
for a future Finance Committee meeting.
HCSSB 139 (L&C) was HELD in Committee for further
consideration.
4:00:38 PM
At ease.
4:01:37 PM
SENATE JOINT RESOLUTION NO. 11
Urging the United States Congress to amend the tax code
to repeal the federal excise tax on communications.
DAVE STANCLIFF, STAFF, SENATOR GENE THERRIAULT, spoke in
support of the legislation
This resolution encourages Congress to once again
pass a provision to repeal the "tax on talking",
formally known as the federal excise tax oil
communications. This tax was originally put into
place in 1898 to help fund the Spanish American War
under the guise of a temporary luxury tax.
Since that time, it has been repealed twice,
reenacted in 1941, adjusted from 10% in 1965
downward to be phased out at 1% per year, reached a
low of
1% in 1981 and then began to rise and climbed back
to 3%. It has remained at that level since the
Revenue Reconciliation Act of 1990. In 2000 Congress
moved to repeal the tax once and for all; however
President Bill Clinton vetoed the measure.
Currently more than 94 million households pay the 3%
phone tax. It disproportionately hurts seniors and
others on low or fixed incomes. It affects 96% of
the households using the phone lines for Internet
service. At a time when we are trying to increase
commerce this is a harmful tax.
4:04:28 PM
Co-Chair Chenault pointed out the zero fiscal note and that
Alaskan taxpayers pay $17 million to the tax.
4:05:11 PM
Representative Holm asked if the state of Alaska pays a
federal excise tax. Mr. Stancliff explained that the state
of Alaska is exempted from the tax.
Representative Hawker asked the consequence of the
legislation. Mr. Stancliff responded that there would be
cuts to offset the revenue or new sources of revenue
discovered. Alaska does not benefit directly from the tax.
4:07:11 PM
Representative Weyhrauch referred to lines 11 - 13. He noted
that the legislation maintains that the tax discourages
expansion. Mr. Stancliff observed that the money does not go
back into the expansion of the facilities.
4:09:53 PM
Representative Foster MOVED to report SJR 11 out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
SJR 11 was REPORTED out of Committee with a "do pass"
recommendation and with a zero fiscal impact note by the
Department of Revenue.
4:10:37 PM
At ease.
5:15:29 PM
CS FOR SENATE BILL NO. 141(FIN)
"An Act relating to the teachers' and public employees'
retirement systems and creating defined contribution
and health reimbursement plans for members of the
teachers' retirement system and the public employees'
retirement system who are first hired after July 1,
2005; relating to university retirement programs;
establishing the Alaska Retirement Management Board to
replace the Alaska State Pension Investment Board, the
Alaska Teachers' Retirement Board, and the Public
Employees' Retirement Board; adding appeals of the
decisions of the administrator of the teachers' and
public employees' retirement systems to the
jurisdiction of the office of administrative hearings;
providing for nonvested members of the teachers'
retirement system defined benefit plans to transfer
into the teachers' retirement system defined
contribution plan and for nonvested members of the
public employees' retirement system defined benefit
plans to transfer into the public employees' retirement
system defined contribution plan; providing for
political subdivisions and public organizations to
request to participate in the public employees' defined
contribution retirement plan; and providing for an
effective date."
CO-CHAIR CHENAULT MOVED to ADOPT revised fiscal note #10.
Representative Joule OBJECTED for discussion purposes.
5:16:27 PM
MELANIE MILLHORN, DIRECTOR, DIVISION OF RETIREMENT AND
BENEFITS, DEPARTMENT OF ADMINISTRATION, explained that the
fiscal note represents the fiscal costs that the division
anticipates will accompany the new defined contribution
plan. The state of Alaska's tax attorney indicated that all
costs associated with the defined contribution plan must be
separated and accounted for in various funds, according to
their components. Assets and accounting must be separated.
She explained that the fiscal note separates the start-up
costs.
5:18:03 PM
Representative Croft asked if the statutory required backup
for SB 141 was being compiled. Co-Chair Meyer confirmed.
5:18:42 PM
Representative Croft asked if the 5 percent being set aside
for the defined contribution plan would be sufficient for
individuals to retire on. Ms. Millhorn referred to modeling
in the plan contained in slide 74. Slide 74 shows the
accrual of non-medical benefits. The modeling is based on an
individual that comes into the system at age 40. The design
looked at a defined benefit component with an employer
contribution of 3.5 percent. The current version is at 5
percent. An individual, who enters the system at age 40
under alternative 2, which was based on was a DB component
of 3.5 percent, would have a higher benefit the the current
Tier 2 TRS component until age 55 compared. Graphing for a 5
percent contribution was not available. Mercer would have to
run the caluculations. The average years of service for TRS
is 10 years. She maintained that for 80 percent of the
population the benefit would be a higher under TRS.
5:23:06 PM
Representative Croft asked how the wages are broken down for
low paid employees vs. high. Ms. Millhorn replied that the 5
percent is based on their salaries. She explained that the
graph is based on one individual at age 40 based on a salary
of $35,000, which is lower than the average salary for PERS.
5:25:31 PM
Representative Croft asked the cost and funding source for
the disability benefit allowance. Ms. Millhorn noted that
the benefit is currently unfunded. The contribution would be
placed in the medical component, with an employer
contribution of between 2.5 and 3.75 percent. The added
death and disability benefit would be included on top of the
medical costs. Ms. Millhorn had not had a chance to get the
cost estimates from Mercer.
5:28:29 PM
Representative Croft asked about the death and disability
benefit. He gave an example of firefighters and asked who
would pay the benefit, the state or the city. Ms. Millhorn
noted that the proposal by Representative Kelly would have
been a fixed amount paid by the employer. Representative
Croft noted that the proposed amendment in the House Finance
Committee version would also be paid by the employer. Ms.
Millhorn agreed and added that the funding source and costs
were unknown.
5:31:30 PM
Representative Joule WITHDREW his objection to ADOPT the
fiscal note. There being NO further OBJECTION, it was so
ordered.
Co-Chair Chenault MOVED to report HCSSB 141 out of Committee
with individual recommendations and with the accompanying
fiscal notes.
Representative Croft OBJECTED. He argued that the Committee
cannot estimate within a million dollars the obligation to
the state or the funding mechanism.
5:34:27 PM
Representative Holm pointed out that the Committee deals
daily with issues that are unknown.
5:35:17 PM
Co-Chair Meyer noted that bills are often passed out with
indeterminate fiscal notes.
5:35:35 PM
Representative Kelly explained that the current version
maintains the status quo [in relation to death and
disability benefits for certain employees]. He argued that
the Mercer letter clarifies that under the DC plan the
action is positive and it puts the amendment in context.
5:36:40 PM
Representative Croft emphasized that no one would be paying
into the DB system for the death and disability benefit. He
questioned how it would be funded. He opined that there
would be an additional fiscal impact. He suggested that the
law is being violated.
5:38:28 PM
Representative Hawker expressed concern that the Committee's
action was out of compliance with AS 24.08.036. He spoke
against the legislation.
5:39:40 PM
Representative Kelly related that the dying rate and the
costs are known and can be managed. He felt that the
Committee responded to the actuarial request.
Representative Croft MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Holm, Kelly, Moses, Stoltze, Foster, Hawker,
Meyer, Chenault
OPPOSED: Joule, Croft
The MOTION PASSED (8-2).
HCSSB 141 (FIN) was REPORTED out of Committee with a "no
recommendation" with the following fiscal impact notes: #1
ADM, #3 REV, #4 REV, #5 REV, #6 REV, #7 REV, #9 FIN.
ADJOURNMENT
The meeting was adjourned at 5:44 PM
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