Legislature(2011 - 2012)HOUSE FINANCE 519
03/22/2011 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB127 | |
| HB175 | |
| HB24 | |
| HB164 | |
| HB147 | |
| HB97 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 8 | TELECONFERENCED | |
| + | HB 10 | TELECONFERENCED | |
| + | HB 24 | TELECONFERENCED | |
| + | HB 64 | TELECONFERENCED | |
| + | HB 97 | TELECONFERENCED | |
| + | HB 105 | TELECONFERENCED | |
| + | HB 127 | TELECONFERENCED | |
| *+ | HB 140 | TELECONFERENCED | |
| + | HB 141 | TELECONFERENCED | |
| + | HB 147 | TELECONFERENCED | |
| + | HB 164 | TELECONFERENCED | |
| + | HB 175 | TELECONFERENCED | |
| + | SB 76 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
March 22, 2011
1:40 p.m.
1:40:01 PM
CALL TO ORDER
Co-Chair Stoltze called the House Finance Committee meeting
to order at 1:40 p.m.
MEMBERS PRESENT
Representative Bill Stoltze, Co-Chair
Representative Bill Thomas Jr., Co-Chair
Representative Anna Fairclough, Vice-Chair
Representative Mia Costello
Representative Mike Doogan
Representative Bryce Edgmon
Representative Les Gara
Representative David Guttenberg
Representative Reggie Joule
Representative Tammie Wilson
MEMBERS ABSENT
Representative Mark Neuman
ALSO PRESENT
John J. Burns, Attorney General, Department of Law; Anne
Carpeneti, Assistant Attorney General, Legal Services
Section, Criminal Division, Department of Law; Konrad
Jackson, Staff, Representative Kurt Olson; Pat Davidson,
Legislative Auditor, Division of Legislative Audit; Linda
Hall, Director, Division of Insurance, Department of
Commerce, Community and Economic Development; Jennifer
Senette, Staff, Representative Kurt Olson; Jeanne Ostnes,
Staff, Representative Craig Johnson.
PRESENT VIA TELECONFERENCE
Bob Pickett, Chairman, Regulatory Commission of Alaska;
Steve Stephan, Director of Government Relations, National
Association Professional Surplus Lines Office; Dale
Fosselman, Senior Vice President, Corporate Development,
Denali Alaskan Federal Credit Union, Wasilla; Don Rulien,
Certified Public Accountant and Member, Legislative
Committee, Alaska Society of Certified Public Accountants,
Anchorage.
SUMMARY
HB 8 FEDERAL REGULATIONS & EXECUTIVE ORDERS
HB 8 was SCHEDULED but not HEARD.
HB 10 NONCOMMERCIAL TRAILER REGISTRATION FEE
HB 10 was SCHEDULED but not HEARD.
HB 24 EXTEND REGULATORY COMM. OF ALASKA SUNSET
CSHB 24(FIN) was REPORTED out of Committee with a
"do pass" recommendation and with attached new
fiscal note by the House Finance Committee for
the Department of Commerce, Community and
Economic Development.
HB 64 PERMANENT MOTOR VEHICLE REGISTRATION
HB 64 was SCHEDULED but not HEARD.
HB 97 EXTEND INVASIVE PLANTS LAW
HB 97 was REPORTED out of Committee with a "do
pass" recommendation and with attached previously
published fiscal note: FN 1 (DNR).
HB 105 SOUTHEAST STATE FOREST
HB 105 was SCHEDULED but not HEARD.
HB 127 CRIMES INVOLVING MINORS/STALKING/INFO
HB 127 was HEARD and HELD in committee for
further consideration.
HB 140 APPROP: COMMUNITY QUOTA ENTITY LOAN FUND
HB 140 was SCHEDULED but not HEARD.
HB 141 LOANS TO COMMUNITY QUOTA ENTITIES/PERMITS
HB 141 was SCHEDULED but not HEARD.
HB 147 BOARD OF PUBLIC ACCOUNTANCY SECRETARY
HB 147 was REPORTED out of Committee with a "do
pass" recommendation and with previously
published fiscal note: FN 1 (CED).
HB 164 INSURANCE: HEALTH CARE & OTHER
HB 164 was HEARD and HELD in Committee for
further consideration.
HB 175 COURT APPEARANCES; ARSON; INFRACTIONS
HB 175 was HEARD and HELD in committee for
further consideration.
SB 76 SUPPLEMENTAL/CAPITAL/OTHER APPROPRIATIONS
SB 76 was SCHEDULED but not HEARD.
Representative Gara noted that some of the committee
members wanted to speak to Commissioner Bryan Butcher and
the Department of Natural Resources about royalty relief
provisions (connected with House Bill 110).
Co-Chair Stoltze responded that the committee would attempt
to fit the requested presenters in.
HOUSE BILL NO. 127
"An Act relating to the crimes of stalking, online
enticement of a minor, unlawful exploitation of a
minor, endangering the welfare of a child, sending an
explicit image of a minor, harassment, distribution of
indecent material to minors, and misconduct involving
confidential information; relating to probation; and
providing for an effective date."
1:42:21 PM
Co-Chair Stoltze noted that his intent was not to report
the crime bills [HB 127 and HB 175] out that day, but to
begin an in-depth discussion about them.
JOHN J. BURNS, ATTORNEY GENERAL, DEPARTMENT OF LAW,
testified in favor of both HB 127 and HB 175. He noted that
HB 175 was a housekeeping bill that would clarify and
correct statutory revisions made the prior year.
Attorney General Burns informed the committee that the
focus of HB 127 (as proposed by the governor) was to expand
the crimes of stalking and misconduct involving the
acquisition and misuse of confidential information; it
would expand the scope of crimes associated with online
enticement and exploitation of minors. He asserted that the
state was firmly focused on ending the epidemic of sexual
assault and domestic violence that had been plaguing
Alaskan communities. He reviewed statistics:
· The incidence of sexual abuse among Alaskan children
was six times the national average.
· Alaskan women were raped two-and-one-half times more
often than the national average.
· 60 percent of Alaskan women had been physically or
sexually assaulted or seriously threatened with
assault.
Attorney General Burns explained that HB 127 had been built
on legislation implemented the prior year, and proposed
important changes that would further protect victims from
exploitation and assault. In addition to amending and
clarifying aspects of existing statutes, HB 127 would
expand the crime of stalking by amending the definition of
"non-consensual contact" and make it a crime to use a
global positioning system (GPS) device to follow or monitor
a victim, or to install or attempt to install devices to
observe, record, or photograph events occurring in the
home, workplace, or vehicle of a victim, or on a victim's
personal telephone or computer.
1:45:53 PM
Attorney General Burns continued that the amended
definition reflected the reality of current technology and
the illicit uses to which it was being applied. House Bill
127 would also make it a crime to distribute an explicit
image of a minor and to knowingly obtain or misuse
confidential information about another person without legal
authority or consent. Finally, in addition to various
amendments and sentencing reclassifications, HB 127 would
improve upon law enacted the prior year to allow the
attorney general (or the attorney general's designee) to
issue administrative subpoenas to law enforcement officials
to obtain limited information from an internet services
provider (ISP) if there was probable cause to believe that
an internet service account was being used in connection
with the crimes of the online enticement of a minor,
unlawful exploitation of a minor, or the distribution or
possession of child pornography.
Attorney General Burns concluded that the objective of HB
127 was consistent with efforts to eradicate sexual assault
and domestic violence in Alaska. He urged support of the
legislation.
Representative Guttenberg queried the administrative
subpoena for an internet service provider. He asked how
providers from outside Alaska would be dealt with.
Attorney General Burns replied that the intent of the
proposal was to allow the service of an administrative
subpoena either as currently lawfully provided or as
acceptable to the internet service provider, in order to
facilitate the process of service. Currently, the law
related to an administrative subpoena provided for
signature only by the attorney general, and the service had
to be either through certified mail or by process server.
House Bill 127 would facilitate the service of
administrative subpoenas through other, additional means.
Representative Guttenberg summarized that the subpoena
would only be serviceable by mutual consent.
Attorney General Burns replied that the subpoena would be
allowed as authorized by law or through mutual consent.
1:48:35 PM
Representative Wilson questioned the fiscal notes, which
she pointed out were indeterminate or zero. She wondered
whether there were statistics about who would fall under
the categories.
ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION, CRIMINAL DIVISION, DEPARTMENT OF LAW, replied that
she assumed the question related to the expansion of the
definition of non-consensual contact, or stalking. She
stated that there were no statistics, because the
activities were not currently against the law. She added
that there was information from other jurisdictions that
the described acts had been done by stalkers. She pointed
out that to convict someone of stalking, it had to be
proven beyond a reasonable doubt that the accused person
committed the acts of non-consensual contact with the
intent to terrorize the victim or to put the victim in fear
of death or physical injury. The legislation contained a
definition of non-consensual contact and what that would
include.
Representative Wilson asked whether there were statistics
from other states with the laws already in place.
Ms. Carpeneti responded that she was not familiar with the
statistics, but offered to look for more information.
Representative Wilson acknowledged that there was a need
for the definition. She thought zero and indeterminate
fiscal notes made it hard to calculate the financial
impact.
Ms. Carpeneti responded that the state did not anticipate a
large number of cases, but wanted the statute to be changed
so that there would be provisions to address the situation
if it came up.
Representative Costello believed that the bill would
prohibit graphic texting, regardless of whether a minor
initiated the action or forwarded something.
Attorney General Burns responded that she was correct.
Representative Costello noted that the bill would clarify
that a child under the age of 16 years of age could not be
left alone with a person who had to register as a child
kidnapper. She asked whether the law already addressed
those who had to register as sex offenders.
1:52:24 PM
Ms. Carpeneti responded that the item was considered a
housekeeping amendment; the statute prohibited a parent
from leaving a child under 16 years of age with a person
who was required to register as a sex offender; for some
reason, it did not include people who had to register as
child kidnappers.
Representative Doogan queried how harassment would be
applied by the bill.
Ms. Carpeneti answered that the amendment to the harassment
statute in HB 127 was only conforming, to make it clear
that the "sexting" provision (created in another section)
was not duplicative in the harassment section.
Co-Chair Stoltze queried the word "sexting."
Ms. Carpeneti replied that the word was not in the bill,
but was in common usage.
Representative Doogan asked how the issue of misconduct
involving confidential information would be applied in the
bill.
Ms. Carpeneti responded that the item would be a new crime.
Representative Doogan queried the issue of probation.
Ms. Carpeneti answered that current statute required that
the Department of Corrections (DOC) provided qualified
probation officers to the superior court. She added that
superior court meant felony crimes. Historically, Alaska
had never had probation officers for supervised probation
for misdemeanants, primarily because it would be enormously
expensive. However, there had been an experimental program
tried by a group of people in the criminal justice system
(the PACE [Probationer Accountability with Certain
Enforcement] program); a discreet group of misdemeanor
defendants were stringently supervised during probation to
ascertain what difference could be made. House Bill 127
would clarify that courts would not be able to appoint
probation officers to every misdemeanant, unless the
commissioner of DOC agreed.
Representative Gara expressed concerns about the
administrative subpoena. He pointed out that historically,
a subpoena could only be issued by a court; the prior year,
legislative authority had been given to allow the attorney
general to issue some subpoenas. He asked what form would
have to be used so that the defendant knew they got the
subpoena and had the time to challenge its validity.
Ms. Carpeneti replied that at the current time, there would
not be a defendant to notify. She referred to testimony by
Sgt. DeGraff the prior year related to investigations based
on probable cause that a particular internet account was
being used to perpetrate child pornography crimes or online
enticement of a minor. The bill would allow law enforcement
to obtain information about the account from an internet
service provider; the administrative subpoenas would only
go to internet service providers, so there would not be a
defendant at that point.
1:57:37 PM
Representative Gara summarized that the person gone after
would not know.
Ms. Carpeneti responded that he was correct. She added that
there would be limited information about an identity; at a
certain point, the defendant would have the right to get
the information, if there were criminal charges.
Representative Gara asked why the state could not simply
rely on the courts to determine whether a subpoena was
valid.
Ms. Carpeneti replied that crimes involving computer and
internet use and involving child and pornography moved
swiftly; the information had to be obtained as quickly as
possible in order to isolate the computer being used. The
alternative was to go to the judge and get a search
warrant, but for a quicker investigation with limited
information. She noted the provision was the same as the
one passed the previous legislative session to find out
where the computer was.
Co-Chair Stoltze observed that the stakes were high for the
children involved.
Vice-chair Fairclough asked whether the bill could be
applied to the activities of the Transportation Security
Agency (TSA). She referred to concerns that the images
taken in airports could be used as inappropriate material.
She believed pat-down procedures were being conducted at an
unnecessary rate and raised questions about inappropriate
touching. She wanted to fight for Alaskans' rights to
privacy.
Mr. Burns responded that issues relative to the TSA were
being evaluated.
2:02:14 PM
Representative Edgmon thanked the governor for his emphasis
on the issue represented in HB 127. He referred to the bill
heard earlier during the session related to synthetic
marijuana. He wondered about rural Alaska and getting ahead
of the technology curve with the legislation.
Mr. Burns responded that the department was trying to keep
up with the technology; he thought the present use of the
internet for the described uses was "appalling." He stated
that HB 127 intended to achieve the ability for law
enforcement to intercept through the administrative
subpoena process; it would not take the place of a warrant,
but would allow law enforcement to hone in on the activity.
Representative Edgmon remarked that GPS units were used
throughout the state. He wondered whether the GPS device
would have state application.
Mr. Burns responded in the affirmative.
Ms. Carpeneti commented that the additions to the
definition of non-consensual contact were part of the
stalking statute, which provided that a person committed
the crime if they recklessly placed another person in fear
of death or physical injury by engaging in a course of
conduct that reasonably frightened them. The proposed new
ways of contacting a person would be in addition to those
already stipulated in statute.
Vice-chair Fairclough remarked that victims of rape,
incest, or child abuse felt the same as those who were
patted down by the agents of the TSA. She expressed
frustration.
Representative Guttenberg asked how an individual ISP could
be focused on in public places that had many computers,
such as internet cafes. He described experience with
wireless routers. He wondered whether there was something
in the bill that would help focus on a perpetrator.
2:08:12 PM
Co-Chair Stoltze pointed out that there would be more
details when the American Civil Liberties Union (ACLU) took
the state to court.
Representative Gara pointed to a provision on page 3, line
24 and wondered whether an amendment would be needed. He
noted that the provision related to "sexting" was aimed at
preventing abuse of people under 16 years of age, and that
certain body parts (which he would not read into the record
as they sounded bad) applied. However, the bill did not say
that the body parts had to be uncovered. He queried the
intent.
Ms. Carpeneti replied that the terms were used in many
places in Title 11; the intent related to unclothed body
parts.
Representative Gara asked whether it was written anywhere
in the statutes that the body parts had to be unclothed in
order to prosecute someone. He asked whether the word
"genitals" was defined in relation with being uncovered.
Ms. Carpeneti answered that the issue had never come up;
she assumed the meaning was unclothed.
Representative Gara expressed discomfort with the language;
he wanted more than intent. He did not want a person to be
prosecuted for texting clothed body parts. He was not
convinced that the language in the bill was clear enough
and questioned the need for an amendment.
2:11:40 PM
Ms. Carpeneti responded that the item was defined as an
explicit image. She thought a court decision addressing the
issue could be found. She added that the intent was not to
prohibit sending pictures of clothed people.
Vice-chair Fairclough opined that people could be clothed
and the image could still be explicit. She thought the
current language had been sufficient in the past. She
pointed out that people could dress children up in sexually
provocative ways before creating inappropriately explicit
images.
Vice-chair Fairclough believed Representative Gara's intent
had been put into the record. She thought it was right to
point out there could still be a violation with the
presence of clothing.
Representative Doogan believed the bill would do two
things: raise the classification in three cases from Class
B to Class C felonies, and insert a few new crimes that
were Class B felonies. He asked why the penalties needed to
be increased in the first cases.
Ms. Carpeneti believed there had been a misunderstanding;
the new crimes added were misdemeanors, not felonies. The
bill would raise the crime of online enticement of a minor
(currently a Class C felony for most first-time offenders
and a Class B felony for sex offenders or child kidnappers)
up one level. The rationale was that the crimes were very
serious and caused enormous harm to children.
Ms. Carpeneti continued that the crime of the unlawful
exploitation of a minor (the creation of child pornography
using children) would be raised to a Class B felony for all
offenders; under current law, the crime was a Class B
felony for the first offense and a Class A felony for a
second conviction of the offense. The rationale for the
increase was the seriousness of the conduct.
2:16:32 PM
Representative Doogan pointed to Section 9 of the sectional
analysis, which he thought communicated that the bill would
create a new crime that was a Class B felony.
Ms. Carpeneti replied that Section 9 would create
misconduct involving confidential information in the first
and second degree (Class A and Class B misdemeanors).
Representative Doogan referred to the sections in which the
felony level would be raised up and asked whether the
levels had been set the previous session.
Ms. Carpeneti replied that the particular crimes and levels
had not been created recently. She added that unlawful
exploitation of a minor was created when the criminal code
was created in 1978 and had been enacted in 1980; online
enticement of a minor was enacted in the early 2000s.
HB 127 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 175
"An Act relating to an appearance before a judicial
officer after arrest; relating to penalties for
operating a vehicle without possessing proof of motor
vehicle liability insurance or a driver's license;
relating to penalties for certain arson offenses;
amending Rule 5(a)(1), Alaska Rules of Criminal
Procedure, and Rule 43.10, Alaska Rules of
Administration; and providing for an effective date."
2:18:46 PM
JOHN J. BURNS, ATTORNEY GENERAL, DEPARTMENT OF LAW,
explained that HB 175 would provide statutory
clarifications.
ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES
SECTION, CRIMINAL DIVISION, DEPARTMENT OF LAW, provided
details about the legislation. House Bill 175 would solve
four inconsistencies between the court rules and the
statutes. She explained that three of the inconsistencies
had been created over the years with statutes enacted in
one year and later changed; she took personal
responsibility for the fourth one, which resulted from the
comprehensive updating and revision of bail statutes that
was passed the year prior. There was one mistake: the bill
changed the deadline before which a person arrested for a
crime had to be brought before a judicial officer from 24
hours to 48 hours. She added that the law still provided
that a person arrested had to be brought in front of a
judicial officer without unnecessary delay; however, there
were cases in which 48 hours was much more practical, such
as arrests made in the early-morning hours. There were also
cases in which it was not possible to find the victim in
time to provide notification of the arraignment.
Ms. Carpeneti noted that the issue had been discussed
extensively the previous year. The court rules had been
changed (at the department's suggestion), but the statute
had not been brought before the legislature to be changed.
She detailed that HB 175 would change the statute in the
arrest law and in the extradition law.
Ms. Carpeneti reviewed the first of three other
inconsistencies that would be addressed by HB 175. She
detailed that there was an inconsistency regarding the
penalty for failing to carry a driver's license when
operating an automobile; it was currently a Class B
misdemeanor, but under the bail schedules in the court
rules, it was also a $50 correctable offense. The
legislation would make the offense of failing to carry a
driver's license an infraction rather than a Class B
misdemeanor.
Ms. Carpeneti reviewed the second inconsistency in the law,
related to failure to carry proof of automobile insurance
while driving. Under Title 28, the offense was a Class B
misdemeanor; it was also on the bail schedules as a
correctable offense with a mandatory fine of $500 dollars.
House Bill 175 would make the activity an infraction with a
mandatory fine of $500 dollars for failure to carry proof
of insurance, but it would be correctable; a person could
bring proof of insurance to the police department and the
offense would be dismissed.
Ms. Carpeneti reviewed a [third] inconsistency related to
the arson law. In 2006, the legislature created the Knik
River Public Use Area. The Department of Natural Resources
was asked to adopt regulations regarding conduct in the
area, and required the court system to establish a bail
schedule for the offenses. One of the offenses was burning
a vehicle in the public use area, which carried a $50 fine
in the bail schedule. Two years later in 2008, legislation
was adopted making the offense of burning a vehicle on any
public property a Class C felony. Therefore it was
currently a Class C felony to set fire to a vehicle on
property in any place besides the Knik River Public Use
Area, where it would still result only in a $50 fine.
2:24:34 PM
Representative Joule queried the issue of not possessing a
driver's license while driving. He wondered whether it
helped if a person knew the pertinent information (such as
the driver's license number and expiration dates).
Ms. Carpeneti believed the situation could depend on how
well the officer who stopped the person knew them. In any
case, a person could later bring the license into the
police department, and the charge would be dismissed or
voided.
HB 175 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 127
"An Act relating to the crimes of stalking, online
enticement of a minor, unlawful exploitation of a
minor, endangering the welfare of a child, sending an
explicit image of a minor, harassment, distribution of
indecent material to minors, and misconduct involving
confidential information; relating to probation; and
providing for an effective date."
Representative Gara returned to discussion of HB 127. He
questioned the intent of the bill regarding texting images
of body parts. He wanted to know whether the intent was to
refer to body parts that were only uncovered.
Ms. Carpeneti stated that the intent of the legislation
related to unclothed body parts; in sexual assault and
sexual abuse situations, the terms generally meant
unclothed.
Representative Wilson wondered whether dressing a 12-year-
old in lingerie would be allowable. She thought there were
more issues that needed to be discussed.
Ms. Carpeneti responded that the House Judiciary Committee
had reviewed the bill and limited it because of concerns
about the breadth of scope and constitutional issues. The
proposed law was more limited than it had been originally.
She asked whether the committee intended to broaden it.
Representative Wilson thought that the intent needed to be
clear if the state was going to be able to protect
children.
Ms. Carpeneti added that HB 127 had a fairly limited focus.
She pointed out that there were other provisions (related
to "unlawful exploitation of a minor") that would cover
more serious conduct. The provisions prohibited putting
children in certain positions and creating images of them.
Representative Gara did not understand how a bill that
would create new crimes that could result in people going
to jail could have a zero Department of Corrections fiscal
note.
HOUSE BILL NO. 24
"An Act extending the termination date of the
Regulatory Commission of Alaska; and providing for an
effective date."
2:29:02 PM
Co-Chair Stoltze explained that the proposal to extend the
Regulatory Commission of Alaska (RCA) had been previously
included in another bill, and had been separated out into
HB 24 in order to simplify the issue.
KONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, explained
that HB 24 would extend the RCA's sunset date to June 30,
2019. He pointed to the summary and the Legislative Audit
recommendation for an eight-year extension. Legislative
Audit had noted that the RCA had taken steps to address
issues raised in the 2006 audit, even though everything was
not completely resolved.
Co-Chair Stoltze noted that the proposed eight-year
extension was an indication that there were still problems.
He wondered whether it would be fair to say that the state
would continue to have a regulatory commission.
Mr. Jackson responded in the affirmative. He added that the
intent was an eight-year extension. He believed Legislative
Audit was comfortable with the process, since they had
recommended the extension.
Vice-chair Fairclough stated that she held the RCA
responsible for the energy shortage in Southcentral Alaska.
She stated her intent to file an amendment to make the
proposed extension much shorter. She wanted to have an
extensive conversation about the shortfalls and to hear the
challenges faced by those who had to go to the RCA. She
supported having a consumer protection agency, but she was
concerned about brownouts and blackouts in the Anchorage
area.
2:34:12 PM
Co-Chair Stoltze pointed out that there were people absent
from the hearing.
PAT DAVIDSON, LEGISLATIVE AUDITOR, DIVISION OF LEGISLATIVE
AUDIT, explained that during the audit, the agency had made
a recommendation for an eight-year extension; inherent in
the recommendation was the continuing every-two-year audit
requirement in place to review whether the RCA was meeting
its statutory timelines with regard to the cases in
dockets. Additionally, information included in the annual
report was in the missions and measures, and any other
performance objectives that management decided to adopt.
The every-two-year audit was one of the reasons the
recommendation was for an eight-year extension.
Representative Edgmon noted that he had served on the House
Special Committee on Energy and appreciated the work of the
RCA. He recalled seeing the organizational chart listing
the accounting and finance staff; he thought the lineup was
inadequate. He asked whether the number of staff had been
an issue.
Ms. Davidson replied that the audit noted that the RCA was
experiencing staff turnover; however, the audit did not
specifically evaluate the adequacy of the number of staff.
Representative Edgmon questioned whether the staffing issue
was important to focus on, given all that the RCA had to
oversee. He asked whether Legislative Audit had been
directed to consider staffing.
Ms. Davidson replied that the audit looked more at the
outcomes and found that the commission was meeting its
statutory timelines. She added that some of the surveys
done with some of the utilities and customers had been
generally supportive of the statutory timelines, although
some of the timelines were seen to be more generous than
some might have wanted.
2:39:17 PM
Co-Chair Stoltze queried audit findings related to staff
and operational or continuity issues that the length of the
sunset would have bearing on.
Ms. Davidson responded that no new recommendations had been
made in the audit report. However, it was noted that the
RCA was still working on implementing one of the prior
audit's recommendations related to developing regulations
to establish standards for certain aspects of discovery.
Co-Chair Stoltze recalled past six-month extensions.
Representative Costello pointed to timelines intended to
elicit results in an expedient manner and questioned the
reason for stop-the-clock activities.
BOB PICKETT, CHAIRMAN, REGULATORY COMMISSION OF ALASKA (via
teleconference), was not aware of "stop-the-clock" actions.
He referred to a provision in statute for extensions; a
docket could be extended by agreement of all the parties to
that docket, or the commission could extend up to a period
of 90 days (one time) on its own motion, for good cause.
Vice-chair Fairclough queried the timing of the previous
audit's recommendation for the implementation of
regulations.
Ms. Davidson replied that the recommendations had been made
in the audit that was released at the end of 2006.
Vice-chair Fairclough pointed out that the agency had had
at least four full years to implement the recommendations.
Co-Chair Stoltze invited the RCA chairman to make
statements.
Mr. Pickett reported that the RCA had been supportive of
the Legislative Audit's recommendations for the eight-year
extension primarily identified for stability. He added that
four years prior, there had been a joint executive- and
legislative-branch task force on the RCA; at that time,
clear issues relating to the ability to attract and retain
personnel were identified. He wished he could report that
substantial progress had been made on the issues, but he
could not.
Mr. Picket continued that since a Department of
Administrative (DOA) effort and study made in August of
2010, the RCA had experienced 100 percent turnover in its
tariff department, and decades of experience had left the
agency to take positions at utilities and higher-paid
employment in other sectors. The turnover came at the time
the agency was preparing for the Trans-Alaska Pipeline
(TAPS) rate cases. He noted a "challenging situation" in
the finance department, but added that there had been some
progress in the last 60 days with the new administration at
DOA. He pointed out that starting in the fall of 2011,
there would be eight weeks of hearings with the Federal
Energy Regulatory Commission related to strategic
refiguration cases. He maintained that the activity would
put a burden on the RCA.
2:44:40 PM
Mr. Pickett did not want to lose additional staff because
of uncertainty about the timing of the extension. He said
that he shared frustrations related to the Cook Inlet gas
issues. He noted that he had been on the commission for
three years and was astounded that things had gotten to the
point they were at.
Mr. Pickett acknowledged that the RCA had made decisions in
2006 that he would change, given the chance. He pointed out
that in the past couple of years, the RCA had approved five
natural-gas supply contracts, natural-gas storage through
the new utility, and was confronted with an excess of
approximately $1 billion of capital expenditures on which
the commission would be making decisions in the next few
years. He maintained that all of the activities required
competent staff, commitment, and some level of stability.
Mr. Picket explained that the RCA dealt with contentious
issues and that everybody involved was rarely happy. He
stated that he had worked to ensure that anyone who came
before the commission was treated fairly and evaluated
properly.
Vice-chair Fairclough acknowledged the complexity of the
work. She asked why the 2006 audit recommendations had not
been completed.
Mr. Pickett responded that it had been a matter of
prioritization. The commission had started a process of
soliciting input from the industry and the impacted
parties, and had worked with Legislative Audit when it was
at the commission during the fall of 2010. He maintained
that there was currently a higher level of emphasis on the
issue.
Mr. Pickett stressed that the issue was not easy, as there
were so many different perspectives; expediting the process
from any one party's perspective would impede the rights of
another party. He believed progress could be made in the
near future.
Vice-chair Fairclough asked whether salary issues made it
hard to retain staff, or whether there were other reasons.
2:48:14 PM
Mr. Pickett responded that all possible reasons were
considered. He stated that the working environment was very
stressful. He noted that the tariff division was being
restaffed and that he was comfortable with the people
hired.
Vice-chair Fairclough questioned whether staff reported
directly to him.
Mr. Pickett responded that there was middle management,
including an advisory section chief, a commission section
chief, and a chief administrative law judge.
In response to a question by Vice-chair Fairclough, Mr.
Pickett replied that the tariff department was the most
extreme example.
Representative Costello questioned how many of the
commissioners were assigned to the TAPS rate case.
Mr. Pickett replied that all five commissioners were
assigned to the case.
Representative Costello asked what would happen to the
workload not related to the case. She wondered whether
other work would be put on hold.
Mr. Pickett replied that with statutory deadlines, the RCA
did not have the option to put work on hold. He noted that
past rate cases had required all five commissioners,
especially when the judicial branch came into the process
and there were remands. He believed all the commissioners
were needed for the TAPS case.
Representative Costello clarified that it was not a
statutory requirement to assign all five commissioners, but
a management decision.
Co-Chair Stoltze OPENED and CLOSED public testimony.
2:51:48 PM
AT EASE
2:56:38 PM
RECONVENED
Vice-chair Fairclough MOVED Conceptual Amendment 1:
Line 5, change "2019" to "2015"
Representative Doogan OBJECTED.
Mr. Jackson stated that the sponsor felt that the year 2015
was a step in the right direction. He did not think two
years was sufficient.
Mr. Pickett stated that he had no comment on the amendment.
Co-Chair Stoltze asked whether he thought four years was
better than two, but still worse than eight years.
Mr. Pickett agreed that the assessment was correct.
Representative Gara asked whether a four-year extension
made any difference to the operation of the agency.
Mr. Pickett responded that the situation would depend on
the individual assessments of employees at the RCA and the
commissioners.
Co-Chair Stoltze believed Mr. Pickett was supportive of the
eight-year extension.
Mr. Pickett agreed.
2:59:16 PM
Representative Wilson queried the number of vacancies at
the RCA and how long they had been vacant.
Mr. Pickett responded that there were about eight
vacancies. He offered to get more information.
Vice-chair Fairclough recognized the difficulty of the
RCA's job and commended the work of the chairman and
commissioners. She argued that recommendations had been
made and regulations had not been created in the four years
allowed. She hoped to come back to the legislature to
provide the correct incentives to adequately compensate
staff. She felt recommendations were needed sooner than in
eight years.
Representative Gara requested an explanation of why the RCA
had not adopted the regulations.
Mr. Pickett replied that the rule-making process had never
been instituted; once a rule-making process officially
began at a public meeting, there was a two-year clock that
began as well. Currently, the RCA was at the point of
framing what the draft regulations might look like in order
to begin moving forward. He believed that the process had
not begun in 2006 and 2007 because there had been other
priorities.
3:02:32 PM
Representative Doogan WITHDREW his OBJECTION.
Representative Gara OBJECTED to the amendment. He described
history; when he had first come to the legislature, the RCA
had been embroiled in fights between different companies
and there had been a lot of pressure placed on the RCA. He
thought a shorter extension would put more pressure on the
RCA to cede independence that was already granted to cover
consumer matters. He thought a longer extension would give
the commission the green light to act as an independent
agency.
Vice-chair Fairclough concurred and stated that she would
not have offered a conceptual amendment if previous audit
recommendations from 2006 had been complied with. She felt
the RCA had already been given four years to come into
compliance; she wanted to hold commissions and boards
accountable for audit recommendations. She noted that she
did not choose a two-year extension in the amendment
because she realized that the commission had a difficult
job.
Co-Chair Stoltze spoke to the issue of legislative
involvement, pointing out that there had been no amendments
of substance offered by anyone. He thought the extension
was fairly simple, but believed it was possibly too long.
3:05:27 PM
Representative Doogan spoke in support of the amendment. He
had wanted to support the eight-year proposal, but found
the argument by Vice-chair Fairclough to be compelling. He
referred to agencies that had not complied with audits. He
did not know whether shortening the time would force the
RCA to comply, but he thought there had to be some kind of
consequence for non-compliance.
Representative Wilson spoke in support of the amendment.
She wanted to send a message to the RCA about expectations
of consistency and an effort towards correction in response
to audits. She referred to other, similar legislation.
Representative Guttenberg asked how long the TAPS tariff
rate case would take.
Mr. Pickett responded, "That is an open question." He said
that there were a number of parties involved and the issue
was contentious.
Representative Guttenberg spoke in support of the
amendment, but had concerns that the same problems would
come up again in four years, and then the agency would be
in the middle of a contentious issue. He thought big
politics would be involved, and pressure would be put on
the board.
3:09:05 PM
Representative Doogan stated that he would support an
eight-year extension if the RCA could fix what needed to be
fixed by the following year, which would address concerns
about having to get re-authorization in the middle of a
contentious rate case.
Vice-chair Fairclough stated for the record that no one had
spoken to her other than Mr. Pickett about problems with
the RCA. She stated that she was not involved in "phone
wars" and did not want to be. However, she believed that
recommendations made by auditors had to be complied with.
Representative Gara MAINTAINED his OBJECTION to Conceptual
Amendment 1.
A roll call vote was taken on the motion.
IN FAVOR: Gara
OPPOSED: Joule, Wilson, Costello, Doogan, Fairclough,
Guttenberg, Thomas, Stoltze
Representative Neuman was absent from the vote.
The MOTION PASSED (8/1). Conceptual Amendment 1 was
adopted.
3:11:27 PM
Vice-chair Fairclough MOVED to report CSHB 24(FIN) out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CSHB 24(FIN) was REPORTED out of committee with a "do pass"
recommendation and with the attached new fiscal note by the
House Finance Committee for the Department of Commerce,
Community and Economic Development.
3:12:30 PM
AT EASE
3:15:15 PM
RECONVENED
HOUSE BILL NO. 164
"An Act relating to insurance; relating to health care
insurance, exemption of certain insurers, reporting,
notice, and record-keeping requirements for insurers,
biographical affidavits, qualifications of alien
insurers assuming ceded insurance, risk-based capital
for insurers, insurance holding companies, licensing,
federal requirements for nonadmitted insurers, surplus
lines insurance, insurance fraud, life insurance
policies and annuity contracts, rate filings by health
care insurers, long-term care insurance, automobile
service corporations, guaranty fund deposits of a
title insurer, joint title plants, delinquency
proceedings, fraternal benefit societies, multiple
employer welfare arrangements, hospital and medical
service corporations, and health maintenance
organizations; and providing for an effective date."
3:15:37 PM
KONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, explained
that the Department of Commerce, Community, and Economic
Development (DCCED) was the requestor of the bill. He added
that the purpose of the bill was to clean up language and
terminology related to insurance. In addition, the
legislation would deal with issues that would bring the
state into compliance with federal regulations.
LINDA HALL, DIRECTOR, DIVISION OF INSURANCE, DEPARTMENT OF
COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT, explained
that HB 164 was long; some of the items were required, and
some represented streamlining activities that would update
consumer protections. She explained the subject grouping in
the bill and her intent to provide an overview by section.
Ms. Hall began with Section 1, which covered a small change
in statute (also reflected in Section 22) that would allow
insurance companies selling group insurance to be exempt
from the state's licensing statutes if they had less than
$50,000 in premiums. For example, one company (the Texas
Health Insurance Policy) was headquartered in Texas and
covered five employees in Alaska; the division did not
think it necessary for the company to go through the entire
licensing process to get a certificate of authority to be
able to continue to write health insurance for only five
employees.
Ms. Hall informed the committee that the terminology
section was intended to bring various Alaska statutes into
conformity with each other. The term "managed care entity"
would be taken out and replaced with "health care insurer"
throughout the following 21 sections. She detailed that the
term "managed care" was only found in AS 21.07; changing
the terminology would reduce confusion and create
consistency.
3:19:38 PM
Ms. Hall directed attention to pages 15 through 22,
containing a variety of technical changes related to
solvency oversight. She described the primary mission of
the Division of Insurance as solvency oversight of the
insurance companies doing business in the state. The
division's general philosophy was that if there was not
money to pay a claim when a consumer had one, the rest of
it did not matter. Other things (such as measuring capital
and risk) followed solvency.
Ms. Hall referred to sections in which the National
Association of Insurance Commissioners model laws had
changed. The current issue was "risk-based capital";
instead of a formula for determining the amount of capital
and surplus, there was a different type of evaluation that
dealt with the risk taken by companies. She referred to
past investments in sub-prime mortgages; these would be
considered "high-risk," and would not be allowed.
Ms. Hall pointed that there were very different types of
risk. For example, there were insurance companies dealing
with earthquake insurance, and others dealing with brick
dwellings in the middle of the country and not on a fault.
Much of the language in HB 164 dealt with risk-based
capital and changes in the way that was evaluated. In
addition, the bill would increase the level at which
regulators took action from 250 percent to 300 percent.
Ms. Hall noted that some of the sections required the
reporting of electronic mailing addresses. She reminded the
committee about a past discussion about how the division
communicated with those it regulated; it was allowed to
collect electronic mailing address so that it could be more
efficient in its communications. Record maintenance
requirements would also be made more stringent.
Ms. Hall pointed out that the division tried to meet
national standards set by the National Association of
Insurance Commissioners so that financial examinations were
capable of being used by other states.
3:23:13 PM
Ms. Hall turned to the section labeled "Licensing," which
would streamline the way the state licensed agents. There
would no longer be an individual or firm license; the
license would belong to the individual and if the
individual changed employment, the license would go with
them. The need to report to the division would be
eliminated if the individual turned in the license and got
a new one. The process would save work and eliminate
penalties for not doing things in a timely fashion. Both
the way the division licensed and the very complex fee
structure would be changed.
Ms. Hall continued that the statute would require an
employment contract so the individual agent working in a
firm could operate under the appointments by the insurance
companies that the firm was allowed to do business with. In
addition, the fiduciary accounts and records could be used.
Ms. Hall highlighted Section 38, which would remove the
requirement that non-residents be fingerprinted. She noted
that there was a national standard to no longer fingerprint
agents to be in compliance with a federal law (the Gramm-
Leach-Bliley Act). The statute would still require the firm
to be responsible for the individuals working under it, but
the individual agents would have more flexibility. The
streamlining of agent licensing would allow people to
conduct business in a more efficient manner.
Representative Wilson asked for clarification related to
resident and non-resident fingerprinting.
Ms. Hall responded that a non-resident individual would be
fingerprinted in their home state. The issue was
reciprocity; there was a national standard of not
fingerprinting.
Representative Wilson asked whether there was a reason
Alaska required fingerprinting.
Ms. Hall replied that she did not know the reason for
fingerprinting, as it pre-dated her (she had been doing
insurance business in Alaska for over 20 years). She added
that the general idea across the country was that
background checks included questions about convictions of
felonies; one of the standard criteria to become an
insurance agent was trustworthiness.
3:27:12 PM
Representative Wilson expressed concerns about the section.
She did not want people to be fingerprinted in order to
prove trustworthiness. She wanted to know where the section
came from. She did not think it was a national standard,
since only 24 states required fingerprinting.
Representative Guttenberg pointed out that the bill could
easily have said that agents were not required to be
fingerprinted if they were fingerprinted in another state
where their jurisdiction was, since less than half the
states required fingerprinting. He thought there were three
different things going on in the section: meeting the
national standard of the insurance commissioners, some
federal law issues, and the division's recommendations for
changes in statute. He wondered whether three bills
conforming to three different things would have helped.
Representative Guttenberg asked that the three categories
be delineated, if the bill was not held over.
Ms. Hall replied that the fingerprinting was part of a
national standard; all states did background checks,
although they might not go so far as doing them by
fingerprinting. She maintained that the state would not be
in compliance with some of the national standards if the
fingerprinting provision was changed.
Ms. Hall noted that there were different levels in the
bill. There were changes in federal law that had to be
complied with. There were changes in accreditation
standards. There were also things she would like to see,
such as the streamlining of agent licensing. In addition,
there was the section on long-term-care statutes, which
were 20 years old and did not reflect the marketplace.
There were consumer items that were not required by federal
law or accreditation standards; however, her goal as the
director of the division was protections for Alaska
consumers.
Ms. Hall acknowledged that all the various pieces had been
gathered together in one bill. She noted that there had
been significant discussion about whether to separate the
issues into multiple bills. She said that the decision to
have one bill had been made in conjunction with
Representative Olson.
3:31:35 PM
Ms. Hall stated that she could probably make HB 164 into
four bills on different topics.
Representative Wilson clarified that she supported
background checks, but questioned the need for
fingerprinting. She queried the extent of federal
requirements.
Ms. Hall replied that federal law did not call for
fingerprinting, but the national standards had been adopted
as the goal for how all states should do the background
check. House Bill 164 would not add fingerprinting; Alaska
had been fingerprinting for at least 24 years. She did not
know why the requirement had started, but it was very old.
Representative Wilson did not think "we've always done it"
was a good enough reason. She thought the requirement for
fingerprinting needed to be taken out of the bill unless
there was a good justification for it.
Representative Doogan queried the state's reason for
fingerprinting. He wanted to check his assumption that
people's identities were checked because they handled money
and Alaska wanted to know whether they had been in trouble
in some other state.
Ms. Hall responded that the reason for fingerprinting was
indeed related to handling money, but that was not the only
reason for it. She referred to the example of a licensee
who had issued false insurance certificates to people
without collecting money (although that had happened as
well); there were various types of crimes of fiduciary lack
of responsibility. She noted that there was a federal law
requiring any felon working in any aspect of the insurance
business (even in the mailroom) to apply to the division.
3:35:19 PM
Ms. Hall stated that fingerprinting seemed to help people
remember that they had a felony in their background,
although that was not common in Alaska. She added that
there was a national database with the information about
felons. The state checked license actions in the same way.
Vice-chair Fairclough pointed to page 25 and asked for
information about the new section allowing employment
contracts.
Ms. Hall answered that the state would require an
employment contract. When the state changed the way it
licensed (no longer had individuals in a firm license), it
would require that a firm had a contract with the employees
who would work under the firm license and under the
appointment with the insurance company. Many of the
agencies that did business in Alaska were called
"independent agencies" with appointments with multiple
insurance companies. She referred to Alaska National, the
largest insurance company headquartered in Alaska. She
described a possible situation involving an insurance
agency with an appointment with insurance company A (such
as Alaska National). The individuals working in the firm
would use the appointment to transact business; they were
enabled to write business under the appointment held by the
firm. She added that the insurance companies did not
normally appoint individuals in such cases. For example,
Marsh (a large brokerage in Anchorage) probably had
appointments with 45 companies and 50 to 70 employees;
those employees could transact business with the 45
companies because of the single appointment. The division
wanted there to be a connection so that the individual
agent could work under the appointment, the records could
be considered theirs, and the accounting of monies could be
shared.
3:38:45 PM
Vice-chair Fairclough summarized that the appointment was
the contract between an insurance agency and someone being
insured.
Ms. Hall corrected her; the appointment was between the
insurance company and the agency that would sell their
product. The employment contract was between the agency
selling the product and the individual agent working for
the firm.
Vice-chair Fairclough had questions related to payroll and
accounting, but she said she was totally confused.
Ms. Hall explained that the appointment was between those
offering a product and the agency selling the product. The
consumer would buy the product from the agency selling the
product; the consumer did not buy the product directly from
the insurance company offering the product.
Vice-chair Fairclough questioned how the employment
contracts were handled related to payroll. She wondered
whether an employment contract could shelter an agency from
a wrongdoing by the employee, whether they were handled as
employees or contracts.
Ms. Hall replied they were handled as an employee; the
contract was not intended to make them an independent
contractor.
Vice-chair Fairclough asked whether the contract would
provide protection from liability because of an independent
employment contract with the person selling the product to
the consumer.
Ms. Hall replied in the negative. She pointed to page 25
(d), which stated that a firm would be responsible for the
actions and the individual transacting insurance under the
firm's employment; the intent was that the firm would
continue to be responsible for the actions of the agent
working under the contract. She emphasized that the
contract was not a shelter from liability or
responsibility.
Ms. Hall continued her review of the legislation with what
she felt was the most important section of the bill. She
relayed that in June 2010, a federal law was passed called
the Non-admitted and Reinsurance Reform Act. The law dealt
with the premium tax of non-admitted or surplus-lines
insurance. She detailed that there were two ways that
insurance companies wrote business. The first, traditional
way (pertaining to 90 percent of Alaskan insurance) was
selling as an admitted insurer with a certificate of
authority to operate in the state; premium tax was paid.
3:42:50 PM
Ms. Hall continued that the state collected about $50
million in premium tax and about $47 million of that tax
was from the admitted insurance market. The second way was
called non-admitted or surplus-lines insurance; this
pertained to insurers who decided they did not do enough
business in Alaska to go through the rigors of becoming
licensed and having forms and rates approved. The second
group of insurers did business through a brokerage
arrangement; the brokerage paid the premium tax for $3.5
million worth of business. The federal law referred to the
second type of business, surplus lines. The second type of
business was regulated differently, was not covered by the
guarantee fund disclaimers, and was sold differently.
Ms. Hall detailed that the federal law passed in June of
2010 pre-empted the states to the extent of changing the
way the state could collect the premium tax. Instead of
being collected only for the portion of the (multi-state)
risk in Alaska, each state needed to pass legislation to
collect 100 percent of the premium tax for a company whose
home state was Alaska.
Ms. Hall gave the example of a cruise-ship business that
was headquartered in California but had risk in the form of
lodges and docks in Alaska. A portion of the company's
insurance risk was in Alaska. Alaska would collect premium
tax on the pieces of property or liability risk that were
in Alaska. Under the new federal law, California would
collect 100 percent of the premium tax. Therefore, the
federal law encouraged the states to either join a compact
or to find some other procedure of collecting the taxes and
re-allocating them back to the states. The taxing rate was
not changed and a company would pay the same amount of tax
if its home state was Alaska, but would pay all of the
taxes to Alaska.
Ms. Hall emphasized that the federal law intended each
state to adopt uniform forms and procedures for reporting
the collection and allocation of the premium tax.
3:46:20 PM
Ms. Hall informed the committee that the section of the
bill from pages 27 to 37 would change how the state would
collect tax and would authorize the director to join a
clearinghouse. She referred to significant national debate
on the best way to implement the federal law. Regulators
formed an implementation taskforce and studied various ways
to implement the law, including asking legislatures for
authority to join a compact, keeping whatever the state was
entitled to keep, or asking for authority to join a
clearinghouse.
Ms. Hall pointed out that there were perimeters in the bill
that would protect the revenue stream, which was fairly
small for Alaska; of the roughly $50 million of premium tax
collected in the state, the number was probably $0.5
million.
Ms. Hall noted that the section on surplus lines needed to
be changed to achieve compliance with the federal law; it
also needed an adoption of the definition of "home state"
so that Alaska could collect 100 percent of the tax of any
company that happened to be a multi-state company domiciled
in Alaska. The bill would then allow the allocation of
taxes and authorize the division to join a clearinghouse
operation (a streamlined way of collecting and disbursing
the taxes).
Ms. Hall added that the division already had taxing
authority and collected premium tax; it was not done
through the Department of Revenue. Therefore, the taxation
issue was not new authority. She noted that the perimeters
of the clearinghouse were very small.
3:49:10 PM
AT EASE
3:51:58 PM
RECONVENED
Vice-chair Fairclough OPENED public testimony.
STEVE STEPHAN, DIRECTOR OF GOVERNMENT RELATIONS, NATIONAL
ASSOCIATION PROFESSIONAL SURPLUS LINES OFFICE (via
teleconference), testified both in support of and in
opposition to HB 164. He explained that the National
Association Professional Surplus Lines Office (NAPSLO)
supported the proposed provision to tax 100 percent of the
in-state risk. The association opposed the part of the bill
that would delegate authority to the commissioner to enter
into an interstate compact or agreement. He felt that the
agreement that had been drafted was too burdensome a method
of collecting taxes and would require numerous data
elements and the construction of a bureaucracy to collect
the taxes. He emphasized that there would be 30 data
elements for each policy, which would need to be entered
before inputting data to allocate taxes.
Mr. Stephan continued that NAPSLO was not opposed to the
states trying to share taxes with each other, but he felt
the burden would fall on the broker. He stated that the
association would support a method of sharing taxes that
did not burden the broker.
Mr. Stephan reported that part of the concern was that the
computation of casualty risks would be required for the
first time, which added a whole new burden on the broker.
Currently, brokers did not typically divide things like
director officer's insurance, umbrella, and excess; those
types of risks were usually considered home-state risks.
The agreement known as the non-admitted, multi-state
agreement would require the broker to input all the data
for the first time for the purpose of trying to pay taxes.
Mr. Stephan added that there was a concern about
legislative transparency; NAPSLO believed the agreement
would change the tax laws of the state. An Alaska
corporation with sales in Florida would be taxed at the
higher Florida rate (in excess of 10 percent); a tax
increase would have to be levied on some policy holders.
The details of the agreement would also have to do with the
amount of Alaska tax revenue that would be sent to other
states. The association believed those things should be in
a statute so that brokers, policy holders, and the
brokerage insurance community could see and understand what
the arrangement was.
3:56:19 PM
Mr. Stephan continued that the admitted side (where 89
percent of the business was written) generally did not
attempt to allocate things like health care; the allocation
effort was focused on the small segment of the insurance
community.
Mr. Stephan pointed out that in general, the vast majority
of policies in a normal state were single-state policies;
most of the policies would be taxed by Alaska currently and
would be taxed by Alaska following the introduction of the
legislation. In a normal state, the amount might be 90 to
95 percent; Alaska would be different because it did not
border other states. Multi-state risks would be difficult
because contractors and others could not easily move from
state to state. He guessed that the amount of multi-state
risk written in Alaska would be very small.
Mr. Stephan concluded with concerns about the long-term
viability of an agreement between the states to share tax
revenue, because a state would normally object to putting
more money into a system than it got back out, and would
drop back out. The concern was that the difficult and
burdensome system for the broker would be built and then
fall apart shortly afterwards because any state that put
more money in than it got back out would drop back out of
the system.
Vice-chair Fairclough asked Mr. Stephan for a written copy
of his comments.
Mr. Stephan agreed to supply written testimony the
following day.
Ms. Hall commented that the goal of the national group of
insurance regulators was not to create an additional burden
on the brokers. She referred to the National Interstate
Fuel Tax Agreement (NIFTA), which the Non-admitted
Insurance Multi-State Agreement (NIMA) was modeled after;
it was a simplified way of allocating collected tax. She
stated that there would be no change in the tax rate.
Ms. Hall added that she strongly disagreed with Mr.
Stephan's statement that Alaskans would be taxed at the
Florida tax rate. She said that everyone would be taxed at
the individual state tax rate that they currently had. An
Alaskan company headquartered in Alaska with a $5 million
building in Tampa (Florida) would currently be taxed at
Florida rates on the building and taxed at Alaska rates on
the rest of the account; that would not change with HB 164.
She emphasized that the legislation clearly spelled out
that the tax rates of each state would be applied to the
portion of the risk in that state. She disagreed that
Alaska did not allocate casualty; she had checked with
commercial brokers, who told her that they allocated their
casualty account when doing multi-state accounts.
Vice-chair Fairclough requested that the written testimony
submitted by Mr. Stephan include specific page and section
numbers in the legislation so that Ms. Hall could respond.
4:00:21 PM
Representative Gara asked how many other states were
dealing with the provision in the manner Mrs. Hall had
recommended it be dealt with.
Ms. Hall responded that at last count, there were 17 states
that had introduced the type of legislation represented in
HB 164; another 14 were contemplating the same
clearinghouse arrangement. There were about 10 states that
had introduced a compact-type of legislation, 5 states that
had both, and 11 states were still thinking about the
issue. She emphasized that a far greater number of states
were considering the simplified structure represented in HB
164.
Representative Gara did not think many legislators
understood the bill.
4:02:14 PM
DALE FOSSELMAN, SENIOR VICE PRESIDENT, CORPORATE
DEVELOPMENT, DENALI ALASKAN FEDERAL CREDIT UNION, WASILLA
(via teleconference), testified in opposition to Section 79
of the legislation. He detailed that the credit union had
55,000 members and over 500 sponsor employers, the vast
majority of whom employed less than 50 workers. He spoke to
Section 79 of HB 164, which would address individual health
care insurance policies in the group market. The credit
union felt that the language in the section would severely
limit both employer and employee choice of health care
insurance, and would leave employees without insurance
options for extended periods of times.
Mr. Fosselman provided the example of a hypothetical
employer forced to drop group health insurance coverage due
to declining profitability, the increasing cost of
insurance, or a combination of both factors. According to
the proposed language in HB 164, no insurer could issue a
policy to those employees for six months after the group-
plan coverage ended. He believed the restriction was "quite
onerous" and was poor public policy on several levels.
Mr. Fosselman believed employers and employees should have
more options to obtain health insurance in the described
circumstances, instead of facing restricted access to
health insurance. He thought the language of Section 79 was
so broad as to seemingly prohibit even the discussion of
individual health insurance policies with employers.
Mr. Fosselman proposed enacting legislation that would
expressly permit the use of federal tax-favored programs
such as health reimbursement accounts (HRAs) when employers
eliminated group health insurance benefits. From an
employer perspective, he felt HRAs were easy to administer
and allowed flexibility in determining contribution levels.
From an employee perspective, he thought HRAs allowed the
ultimate flexibility in how the dollars were spent, because
they could be used for either a specific list of medical
expenses (known as 213(d) expenses) or for those that had
health insurance, they could be used for co-insurance, co-
pays, or deductibles, in conjunction with that insurance.
For those without insurance, HRAs could be used to fund
health insurance premiums. Unlike flexible spending
accounts, there would be no "use-it-or-lose-it" provision.
Mr. Fosselman opined that individual policies were better
than group policies. For one, individual policies were
portable, and not tied to employment, which benefitted
seasonal, part-time, and temporary workers. Individual
policies typically had more stable pricing, because the
risk-rating group was much larger than a smaller employer-
based group. Individuals could currently chose from more
than 40 plan designs available, in order to optimize
coverage and cost at the individual level. The option
remained for individuals to apply to the Alaska
Comprehensive Health Association if pre-existing conditions
prevented an insurer from issuing coverage; in addition,
the employer would be able to increase the contribution for
the individual employee.
Mr. Fosselman concluded that Section 79 created more
problems than it solved for working Alaskans and stated
that establishing additional alternatives for employees and
employers would constitute better public policy.
Specifically, he believed that a statute that would
absolutely confirm that employers of any size could
establish HRAs that could fund individual health insurance
expenses without triggering small group health insurance
regulation would ably and better serve both employees and
employers.
4:06:01 PM
Vice-chair Fairclough asked for a written copy of the
testimony given. She CLOSED public testimony.
Ms. Hall acknowledged the complexity of the bill. She
pointed out that there were several sections that she had
not had an opportunity to speak to and welcomed individual
questions if additional information was needed.
HB 164 was HEARD and HELD in Committee for further
consideration.
HOUSE BILL NO. 147
"An Act setting a monthly salary for the executive
secretary of the Board of Public Accountancy."
4:07:14 PM
JENNIFER SENETTE, STAFF, REPRESENTATIVE KURT OLSON,
SPONSOR, described the legislation as straightforward. She
referred to an accounting bill passed unanimously by the
legislature the prior session, which had created the
position of the executive secretary of the Board of Public
Accountancy. The creation of the position was widely
supported in the legislature and throughout the state
because of the recognition that the all-volunteer Board of
Public Accountancy was understaffed and struggling to
fulfill its mission. There was broad support for the
board's mission of protecting the public interest; the
board had jurisdiction over all certified public
accountants (CPAs) practicing in the state and could
address any violation of its standards.
Ms. Senette continued that after the position was created
by the legislation, the Department of Administration (DOA)
came out as usual with its draft salary determination; the
position was placed at a Range 19. The sponsor did not feel
that a Range 19 would attract a qualified candidate to the
position, and would leave the board in the position of
lacking an administrator with the desired expertise to
fulfill the board's mission.
Ms. Senette added that the fiscal note in the previous bill
had called for the position to be at a Range 23; CPAs
around the state, along with the state Board of Public
Accountancy and the Alaska Society of CPAs, had supported
the position at Range 23. She stressed that it was
particularly important that the Alaska Society of CPAs
supported the range level, because that organization
represented Alaska CPAs, and the salary would come out of
their licensing fees. She underlined that the state would
not pay for the position's salary.
Ms. Senette detailed that Range 19 paid approximately
$58,000 per year. She noted that a recent graduate in the
field without experience could easily make $60,000. On the
other hand, a Range 23 began at $77,000. She described the
current bill as a legislative fix for the discrepancy
between pay ranges. She stressed that there was no
opposition and that DOA had signaled its willingness to
implement the salary range that the legislature deemed
appropriate.
4:11:16 PM
Representative Wilson verified that the cost to the state
was nothing and that the money would come out of CPA fees.
Ms. Senette replied in the affirmative.
DON RULIEN, CERTIFIED PUBLIC ACCOUNTANT and MEMBER,
LEGISLATIVE COMMITTEE, ALASKA SOCIETY OF CERTIFIED PUBLIC
ACCOUNTANTS, ANCHORAGE (via teleconference), spoke in
support of the legislation. He informed the committee that
he had been on the board of directors for many years; the
committee believed it was essential that the pay scale for
the position be at Range 23 so that the board could hire a
person with the appropriate experience and expertise.
Mr. Rulien noted that the board had struggled with past
executive administrators due to their lack of expertise in
general accounting matters as well as in more technical
matters. Past executive directors were shared with other
boards, which put the Board of Public Accountancy at risk
for missing important issues. He pointed out that the bill
had a zero fiscal note and that the CPAs would fully fund
the position out of licensing fees they paid to the state.
4:14:22 PM
Vice-chair Fairclough CLOSED public testimony.
Representative Gara commented that referring to a Range 19
position as "entry level" had been upsetting to some
legislative staffers, whom he believed felt the same way.
Representative Wilson MOVED to report HB 147 out of
committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 147 was REPORTED out of Committee with a "do pass"
recommendation and with previously published fiscal note:
FN 1 (CED).
4:16:23 PM
AT EASE
4:18:02 PM
RECONVENED
HOUSE BILL NO. 97
"An Act extending a provision relating to noxious
weeds, invasive plants, and agricultural pest
management and education; providing for an effective
date by repealing the effective date of sec. 2, ch.
102, SLA 2008; and providing for an effective date."
4:18:06 PM
JEANNE OSTNES, STAFF, REPRESENTATIVE CRAIG JOHNSON,
SPONSOR, explained that the legislation would delete a
sunset for a position in the Division of Agriculture in the
Department of Natural Resources. The position had been
created two years prior with a $80,000 fiscal note that
provided the employee salary but no travel funds, desk, or
computer. She pointed to a packet with an overview of the
employee's accomplishments. She noted that the position had
been widely used throughout the state by many of the Soil
and Water Conservation Districts, the public, the
Cooperative Extension Service, as well as other agencies.
She highlighted the third page of the overview, which
detailed that the employee had brought over twice his
salary to the state through writing grants, and would have
brought in another $80,000 had there been matching funds
available.
Vice-chair Fairclough OPENED and CLOSED public testimony.
Representative Wilson MOVED to report HB 97 out of
Committee with individual recommendations and the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
HB 97 was REPORTED out of Committee with a "do pass"
recommendation and with attached previously published
fiscal note: FN 1 (DNR).
HOUSE BILL NO. 8
"An Act relating to certain federal regulations and
presidential executive orders; relating to the duties
of the attorney general; and providing for an
effective date."
HB 8 was SCHEDULED but not HEARD.
HOUSE BILL NO. 10
"An Act relating to the registration fee for
noncommercial trailers and to the motor vehicle tax
for trailers."
HB 10 was SCHEDULED but not HEARD.
HOUSE BILL NO. 64
"An Act relating to permanent motor vehicle
registration; and providing for an effective date."
HB 64 was SCHEDULED but not HEARD.
HOUSE BILL NO. 105
"An Act relating to the Southeast State Forest; and
providing for an effective date."
HB 105 was SCHEDULED but not HEARD.
HOUSE BILL NO. 140
"An Act making a special appropriation to the
community quota entity revolving loan fund; and
providing for an effective date."
HB 140 was SCHEDULED but not HEARD.
HOUSE BILL NO. 141
"An Act relating to loans for the purchase of fishing
quota shares by certain community quota entities; and
providing for an effective date."
HB 141 was SCHEDULED but not HEARD.
SENATE BILL NO. 76
"An Act making supplemental appropriations, capital
appropriations, and other appropriations; amending
appropriations; repealing appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
SB 76 was SCHEDULED but not HEARD.
4:23:46 PM
ADJOURNMENT
The meeting was adjourned at 4:23 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB8-NEWFNLAW-CIV-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM SSTA 4/11/2012 9:00:00 AM |
HB 8 |
| CSHB 8 Executive Orders Info.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 CFR Costs.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 -HR0009A.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 Null & Void article.pdf |
HFIN 3/22/2011 1:30:00 PM SSTA 4/11/2012 9:00:00 AM |
HB 8 |
| CSHB 8 NYC v FCC Syllabus.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 Sectional.pdf |
HFIN 3/22/2011 1:30:00 PM SSTA 4/11/2012 9:00:00 AM |
HB 8 |
| CSHB 8 stroke of pen.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 sponsor.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB 8 Supremacy-10th Amend.pdf |
HFIN 3/22/2011 1:30:00 PM SSTA 4/11/2012 9:00:00 AM |
HB 8 |
| CSHB 8 Utah Em. Dom. Article.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| HB8-NEWFNLAW-CIV-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 8 |
| CSHB10-NEWFNDOA-DMV-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 10 |
| HB 10 Explanation of Changes.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 10 |
| HB 10 Sponsor Statement.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 10 |
| HB24 Supporting Documents - Email Mike O'Meara 3-15-2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24 Supporting Documents - Fax AARP 3-14-2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24 Supporting Documents - Leg Audit #08-20067-11 Summary.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24 Sponsor Statement ver M.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24 Supporting Documents - Leg Audit #08-20067-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24-NEWFNCCED-RCA-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| HB24 Supporting Documents - Letter GCI 3-15-2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 24 |
| CSHB64-NEWFNDOA-DMV-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| HB 64 CS Section Changes.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| HB 64 Sponsor Statement.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| HB64_Vehicle CountsDMV.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| HB64 NEWFN-DEC-AQ-03-18-11.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| 02 HB 097 Sponsor Statement.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 04 HB 097 Invasive Weeds and Agriculture Pest Coordinator Accomplishments.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 06 HB 097 LOS AK Comte for Noxious and Inv Plants Mgment.PDF |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 06 HB097 Report on the Alaska Weed Project.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 06 HB 097 LOS AK Sealife Center.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 06 HB097 Testify Zaumzeil.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| 06 HB097_Perception_of_an_Invasive_Species.PDF |
HFIN 3/22/2011 1:30:00 PM SFIN 4/16/2011 10:00:00 AM |
HB 97 |
| HB 105 AFA Letter of Support 1.12.2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB 105 Parcel Maps 12.20.2010.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB 105 Public Briefing 1.24.2011.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/14/2011 9:00:00 AM |
HB 105 |
| HB 105 Land Ownership and Mill Status.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB 105 SE Land Summary 2.22.2011.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/13/2011 9:00:00 AM |
HB 105 |
| HB 105 Transmittal.pdf |
HFIN 3/22/2011 1:30:00 PM SFIN 4/14/2011 9:00:00 AM |
HB 105 |
| HB 105 Trends Populations Projections 2010-2034.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB 105 Value Added 3.8.2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB 105 Vicinity Map 12-20-2010.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 105 |
| HB_141_Sponsor_Statement.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Sectional_Analysis.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_ GOAC3.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_DuncanFeilds.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_Ivanof Bay Tribe.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_SWAMC.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_ BVI.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB141_Support_Letter_Yakutat.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB147 Sponsor Statement.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 147 |
| HB147 Supporting Documents-Letter Chair of State Board 1-25-2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 147 |
| HB147 Supporting Documents-Letter Alaska Socity of CPAs 2-1-2011.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 147 |
| CSHB164(L&C) Sectional Analysis.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 164 |
| CSHB164(L&C) Sponsor Statement.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 164 |
| HB 175 Explanation of Changes CD JUD.doc |
HFIN 3/22/2011 1:30:00 PM HFIN 4/1/2011 1:30:00 PM |
HB 175 |
| HB 175 Sponsor statement CS JUD.doc |
HFIN 3/22/2011 1:30:00 PM HFIN 4/1/2011 1:30:00 PM |
HB 175 |
| HB175 Sectional CS JUD.doc |
HFIN 3/22/2011 1:30:00 PM HFIN 4/1/2011 1:30:00 PM |
HB 175 |
| HB 141 NOAA Alaska Fisheries report 4pgs..pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 141 |
| HB 10 AML Letter.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 10 |
| HB97 Letter.doc |
HFIN 3/22/2011 1:30:00 PM |
HB 97 |
| HB 64 AML Letter.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 64 |
| HB164 Fosselman Testimony.pdf |
HFIN 3/22/2011 1:30:00 PM |
HB 164 |