Legislature(2013 - 2014)HOUSE FINANCE 519

03/21/2014 01:30 PM House FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 306 EVAL. INDIRECT EXPENDITURES; TAX CREDITS TELECONFERENCED
Moved CSHB 306(FIN) Out of Committee
+= HB 140 NOTICE FOR REGULATION ADOPTION TELECONFERENCED
Moved CSHB 140(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 21, 2014                                                                                            
                         1:50 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:50:25 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the House Finance Committee meeting                                                                     
to order at 1:50 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Daniel George,  Staff, Representative Bill  Stoltze; Charles                                                                    
Guinchard,  Staff,  Representative Costello;  Representative                                                                    
Lora  Reinbold;  Crystal   Koeneman,  Staff,  Representative                                                                    
Reinbold.                                                                                                                       
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Matt Fonder, Director, Tax Division, Department of Revenue,                                                                     
Anchorage.                                                                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 140    NOTICE FOR REGULATION ADOPTION                                                                                        
                                                                                                                                
          CSHB 140 (FIN) was  REPORTED out of committee with                                                                    
          a  "do  pass"  recommendation  and  with  one  new                                                                    
          indeterminate fiscal  note from the Office  of the                                                                    
          Governor.                                                                                                             
                                                                                                                                
HB 306    EVAL. INDIRECT EXPENDITURES; TAX CREDITS                                                                              
                                                                                                                                
          CSHB 306 (FIN) was  REPORTED out of committee with                                                                    
          a  "do  pass"  recommendation  and  with  one  new                                                                    
          fiscal note  from the  Department of  Revenue, one                                                                    
          new  fiscal note  from  the  Legislature, one  new                                                                    
          zero fiscal note from the  Department of Labor and                                                                    
          Workforce  Development, one  new zero  fiscal note                                                                    
          from  the Department  of  Commerce, Community  and                                                                    
          Economic  Development, one  new  zero fiscal  note                                                                    
          from the Department of  Natural Resources, one new                                                                    
          zero   fiscal   note   from  the   Department   of                                                                    
          Environmental    Conservation,    and   one    new                                                                    
          indeterminate fiscal  note from the  Department of                                                                    
          Commerce, Community and Economic Development.                                                                         
                                                                                                                                
HOUSE BILL NO. 306                                                                                                            
     "An Act  relating to tax credits  and administration of                                                                    
     tax  credit  programs;   requiring  the  Department  of                                                                    
     Revenue  to report  indirect expenditures;  relating to                                                                    
     the   duties   of   state   agencies;   requiring   the                                                                    
     legislative   finance  division   to  analyze   certain                                                                    
     indirect  expenditures;  relating  to lapse  dates  for                                                                    
     appropriations for capital  projects; repealing certain                                                                    
     statutes   authorizing   indirect   expenditures;   and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
1:50:32 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze continued the fiscal note discussion from                                                                      
earlier in the day. He appreciated the process encouraged                                                                       
by committee members.                                                                                                           
                                                                                                                                
Representative Costello discussed the seven fiscal notes                                                                        
attached to the bill.                                                                                                           
                                                                                                                                
1:54:28 PM                                                                                                                    
                                                                                                                                
MATT FONDER, DIRECTOR, TAX  DIVISION, DEPARTMENT OF REVENUE,                                                                    
ANCHORAGE  (via  teleconference)  commented  on  the  fiscal                                                                    
note. He explained that the  larger numbers on the front end                                                                    
of the  Department of  Revenue fiscal  note allowed  for the                                                                    
staff  to compile  the comprehensive  5-year  look back.  He                                                                    
explained the  legislative intent. Future years  would allow                                                                    
utilization  of the  information obtained  from the  report.                                                                    
The  division required  only one  full-time employee  in the                                                                    
out years.  He mentioned that  the first year  would require                                                                    
two economists, a tax technician, and a college intern.                                                                         
                                                                                                                                
1:56:05 PM                                                                                                                    
                                                                                                                                
Representative  Thompson asked  if the  first year  would be                                                                    
used to establish a methodology for compiling the report.                                                                       
                                                                                                                                
Mr. Fonder  concurred. He explained  that the  bill language                                                                    
required   analysis   of   indirect  expenditures   by   the                                                                    
Department of  Revenue and every  other department  in state                                                                    
government. A  methodology to  communicate with  each agency                                                                    
to  obtain   the  necessary   information  was   crucial  to                                                                    
compiling the report.                                                                                                           
                                                                                                                                
1:56:56 PM                                                                                                                    
                                                                                                                                
Representative Thompson  MOVED to REPORT CSHB  306 (FIN) out                                                                    
of  committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Representative Gara objected. He  pointed out that the state                                                                    
adopted  a  new  rewritten  film   tax  credit  program.  He                                                                    
disagreed  with  the   sunset  in  2016  as   noted  in  the                                                                    
legislation.  He  discussed  the  veteran's  employment  tax                                                                    
credit that was also eliminated  in 2016. He appreciated the                                                                    
portions  of the  bill requiring  a report.  He agreed  that                                                                    
some tax credits should be eliminated.                                                                                          
                                                                                                                                
1:58:47 PM                                                                                                                    
                                                                                                                                
Representative Thompson replied that  he liked the film tax,                                                                    
but  changes   in  the   last  report   provided  inadequate                                                                    
information. He noted  that the bill would  allow for review                                                                    
of the  changes in the film  tax credit. He argued  that the                                                                    
current extension  was not  funded and  he wished  to review                                                                    
the credit with the analysis provided.                                                                                          
                                                                                                                                
2:02:12 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:03:22 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Wilson, Costello,  Edgmon, Holmes,  Munoz, Neuman,                                                                    
Thompson, Austerman, Stoltze                                                                                                    
OPPOSED: Gara                                                                                                                   
                                                                                                                                
The MOTION PASSED (9/1).                                                                                                        
                                                                                                                                
CSHB  306 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation and  with one new fiscal  note from the                                                                    
Department  of  Revenue,  one  new   fiscal  note  from  the                                                                    
Legislature, one  new zero fiscal  note from  the Department                                                                    
of  Labor and  Workforce  Development, one  new zero  fiscal                                                                    
note  from   the  Department  of  Commerce,   Community  and                                                                    
Economic  Development, one  new  zero fiscal  note from  the                                                                    
Department of  Natural Resources,  one new zero  fiscal note                                                                    
from the  Department of Environmental Conservation,  and one                                                                    
new  indeterminate  fiscal  note   from  the  Department  of                                                                    
Commerce, Community and Economic Development.                                                                                   
                                                                                                                                
HOUSE BILL NO. 140                                                                                                            
                                                                                                                                
     "An  Act  relating  to the  information  that  must  be                                                                    
     included   with  certain   notices  provided   for  the                                                                    
     proposed   adoption,   amendment,   or  repeal   of   a                                                                    
     regulation."                                                                                                               
                                                                                                                                
2:03:31 PM                                                                                                                    
                                                                                                                                
Representative   Costello  MOVED   to  ADOPT   the  proposed                                                                    
committee  substitute for  HB  140,  Work Draft  28-LS0478\I                                                                    
(Bannister,   3/20/14).   Co-Chair  Stoltze   OBJECTED   for                                                                    
discussion.                                                                                                                     
                                                                                                                                
2:04:08 PM                                                                                                                    
                                                                                                                                
DANIEL   GEORGE,   STAFF,   REPRESENTATIVE   BILL   STOLTZE,                                                                    
discussed the changes to the  CS. Version I replaced version                                                                    
O.  He highlighted  the changes  and their  locations within                                                                    
the  bill. He  began with  page 1  where sponsors  Costello,                                                                    
Wilson, Neuman  and Olson  were added. Section  2 was  a new                                                                    
section   that  removed   the  exemption   for  boards   and                                                                    
commissions in  submitting a copy  of regulations  or orders                                                                    
repeal when  submitted to the governor  for review. Sections                                                                    
were renumbered  throughout. He referred to  page 3, section                                                                    
5, 6, 7,  8, 9, 10 and  11 were new. Section  12 was amended                                                                    
to reflect  the additions.  He pointed  out that  section 5,                                                                    
page 3 included  a change of the word  "assure" to "ensure."                                                                    
A copy  of the  proposed amendments would  be posted  on the                                                                    
online  public  notice  system. He  stated  that  section  6                                                                    
removed  the  Regulatory  Commission of  Alaska  (RCA),  the                                                                    
Board of Fisheries and the  Board of Game from the exemption                                                                    
in statute. Section  7 addressed contact with  the public as                                                                    
previously discussed  in committee.  Section 9  included the                                                                    
distribution list for regulations  adding the members of the                                                                    
administrative regulation  review committee  to the  list in                                                                    
statute that  were required to  receive the  notice. Section                                                                    
10 was  amended to  clarify "chair" rather  than "chairman."                                                                    
If a  regulation was  filed by  the lieutenant  governor and                                                                    
submitted to the  chair, the section specified  that "at the                                                                    
time that the regulation was  submitted for filing under the                                                                    
current statute allowing a seven  day to submit a comment to                                                                    
the lieutenant governor."                                                                                                       
                                                                                                                                
2:07:50 PM                                                                                                                    
                                                                                                                                
CHARLES    GUINCHARD,   STAFF,    REPRESENTATIVE   COSTELLO,                                                                    
testified  on section  7. He  pointed out  paragraph (a)  on                                                                    
page  3, line  25  specifying that  an  "agency may  contact                                                                    
persons  and the  agency may  answer questions  from persons                                                                    
during  the period  of  drafting  proposed legislation."  He                                                                    
pointed  out page  4, line  1, paragraph  (b), referring  to                                                                    
"once  regulations  have  been   proposed."  An  agency  may                                                                    
contact a  person regarding  proposed regulations  and shall                                                                    
answer a question regarding those regulations.                                                                                  
                                                                                                                                
Co-Chair Stoltze commented that  the statement was different                                                                    
from the usual permissive.                                                                                                      
                                                                                                                                
Mr. Guinchard concurred.                                                                                                        
                                                                                                                                
2:09:37 PM                                                                                                                    
                                                                                                                                
Representative Holmes  appreciated the  idea. She  wished to                                                                    
avoid   challenges   or   lawsuits   based   on   ex   parte                                                                    
communication.   She   appreciated   the  ease   of   public                                                                    
accessibility.                                                                                                                  
                                                                                                                                
Mr. Guinchard  pointed out  a change made  in section  8. He                                                                    
referred  to  page 4,  line  10.  Legislative legal  counsel                                                                    
pointed out  that the existing  statute referred  to comment                                                                    
in  writing.  A  change  was included  to  communicate  that                                                                    
agencies  received comments  in writing,  electronically and                                                                    
orally.   He  mentioned   language   stating  "relevant   to                                                                    
regulation  being  drafted."  The  implementation  could  be                                                                    
broad and the departments  would consult with the Department                                                                    
of Law on a case-by-case  basis regarding the best course of                                                                    
action.  He  understood  that   the  section  would  require                                                                    
communication  with  Department of  Law  about  how best  to                                                                    
proceed.                                                                                                                        
                                                                                                                                
2:11:39 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered. The CS was adopted.                                                                               
                                                                                                                                
REPRESENTATIVE LORA REINBOLD appreciated  the efforts of her                                                                    
staff  and of  the committee  members. She  stated that  the                                                                    
legislation  was  brought to  her  by  small businesses  and                                                                    
restaurants in  her area concerned with  overregulation. She                                                                    
advocated for  an open  regulatory process.  The legislation                                                                    
would  increase  transparency   and  allow  the  legislative                                                                    
branch to work well with the executive branch.                                                                                  
                                                                                                                                
2:14:30 PM                                                                                                                    
                                                                                                                                
Representative  Costello MOVED  to  ADOPT  Amendment 1,  28-                                                                    
LS0478\I.1, 3/21/14:                                                                                                            
                                                                                                                                
     Page 2, line 4:                                                                                                            
          Following "section"                                                                                                   
               Insert "within 30 days"                                                                                          
                                                                                                                                
     Language would read:                                                                                                       
     "The governor may return the  regulations and orders of                                                                    
     repeal  to   the  adopting   agency  before   they  are                                                                    
     submitted to  the lieutenant governor for  filing under                                                                    
     (a)  of this  section within  30  day (1)  if they  are                                                                    
     inconsistent with  the faithful execution of  the laws,                                                                    
     or  (2) to  enable the  adopting agency  to respond  to                                                                    
     specific   issues   raised    by   the   Administrative                                                                    
     Regulation Review Committee."                                                                                              
                                                                                                                                
     Page 2, line 31:                                                                                                           
          Following "inaccuracy"                                                                                                
               Insert "or insufficiency"                                                                                        
                                                                                                                                
          Following "of the"                                                                                                    
     Insert "good faith"                                                                                                        
                                                                                                                                
     Language would read:                                                                                                       
      "(f) Notwithstanding  AS 44.62.300,  a person  may not                                                                    
     bring  action  in  court  to  challenge  the  adoption,                                                                    
     repeal, or amendment of a  regulation by a state agency                                                                    
     for inaccuracy or insufficiency  of the good faith cost                                                                    
     estimates provided under (d)(3) of this section."                                                                          
                                                                                                                                
     Page 4, line 30:                                                                                                           
     Delete "seven"                                                                                                             
     Insert "ten"                                                                                                               
                                                                                                                                
     Language would read:                                                                                                       
     "(c) Within ten days  after receiving a regulation, the                                                                    
     chair   of   the   Administrative   Regulation   Review                                                                    
     Committee  may submit  to the  lieutenant governor,  by                                                                    
     legislative  memorandum or  letter, comments  regarding                                                                    
     the   regulations   provided  to   the   Administrative                                                                    
     Regulation   Review  Committee   under   (b)  of   this                                                                    
     section."                                                                                                                  
                                                                                                                                
     In  addition  to  CS  HB   140  (FIN)  28-LS0478\I  the                                                                    
     following changes are requested by the sponsor:                                                                            
                                                                                                                                
     The  first change  is to  ensure  the governor  reviews                                                                    
     regulation  expeditiously  and does  not  inadvertently                                                                    
     slow down the regulation process.                                                                                          
     The second  change is requested from  the Department of                                                                    
     Law  to clarify  that  actions may  not  be brought  to                                                                    
     challenge the good faith estimates.                                                                                        
                                                                                                                                
     The   last   change   is    requested   to   give   the                                                                    
     Administrative  Regulations Review  Committee ten  days                                                                    
     for review instead  of seven days to  ensure a thorough                                                                    
     review of the regulations.                                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative   Reinbold  explained   the  amendment.   She                                                                    
pointed to  page 2, line  4 inserting "within 30  days." She                                                                    
continued with  page 2, line  31 following  "inaccuracy" the                                                                    
word "inefficiency"  was inserted to decrease  exposure as a                                                                    
state.  Following  "of  the" the  words  "good  faith"  were                                                                    
inserted. She continued with page  4; line 30, which changed                                                                    
the time from seven to ten days.                                                                                                
                                                                                                                                
2:16:27 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered. Amendment 1 was adopted.                                                                          
                                                                                                                                
2:17:21 PM                                                                                                                    
                                                                                                                                
Representative Gara MOVED to ADOPT Amendment 2:                                                                                 
                                                                                                                                
     Page 2, line 28:                                                                                                           
          Insert "(6) An email subject  line, and a title in                                                                    
          a  written   publication,  shall  to   the  extent                                                                    
          possible  give  a  reader  a   fair  idea  of  the                                                                    
          substance of the regulation changed."                                                                                 
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Representative Gara  MOVED to  ADOPT a  conceptual amendment                                                                    
that   Legislative   Legal   Services  renumber   the   bill                                                                    
accordingly. There being NO OBJECTION, it was so ordered.                                                                       
                                                                                                                                
Representative Gara explained that  the notice of regulation                                                                    
change typically  stated "notice  of regulation  change." He                                                                    
proposed  that  emails  list  clearly  the  subject  of  the                                                                    
regulation change in the subject line of the email.                                                                             
                                                                                                                                
Representative Gara MOVED to AMEND  Amendment 2 changing the                                                                    
word "possible" to "feasible". There  being NO OBJECTION, it                                                                    
was so ordered. The amendment to the amendment was ADOPTED.                                                                     
                                                                                                                                
2:20:04 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered. Amendment 2 was adopted.                                                                          
                                                                                                                                
Co-Chair Stoltze stated  that the changes in  the bill would                                                                    
not have a fiscal impact the departments.                                                                                       
                                                                                                                                
Representative Costello  discussed the  indeterminate fiscal                                                                    
note for CSHB 140 (FIN).                                                                                                        
                                                                                                                                
2:21:20 PM                                                                                                                    
                                                                                                                                
Representative Gara  stated that  he was confused  about the                                                                    
indeterminate nature of the fiscal  note. He opined that the                                                                    
bill should have no fiscal impact.                                                                                              
                                                                                                                                
Representative  Reinbold  pointed out  administrative  order                                                                    
number 266  by the governor  to minimize the cost,  time and                                                                    
burden  to  encourage  state  agencies   to  work  with  all                                                                    
stakeholders  to meet  the objective  of Alaska  statutes to                                                                    
ensure that  the state regulations were  consistent with the                                                                    
statutes and limited to carrying  out the statutory purpose.                                                                    
She believed that  the agencies were absorbing  costs of the                                                                    
legislation.                                                                                                                    
                                                                                                                                
2:22:54 PM                                                                                                                    
                                                                                                                                
Representative Wilson  disagreed. The fiscal note  was based                                                                    
on state  impacts. The bill  addressed the effects  on local                                                                    
districts. The  indeterminate nature of the  fiscal note was                                                                    
due to  the fact that the  reports were not provided  by the                                                                    
agencies.                                                                                                                       
                                                                                                                                
2:23:51 PM                                                                                                                    
                                                                                                                                
Vice-Chair Neuman  asked about page  3, section 6.  He asked                                                                    
why  the Board  of  Fisheries  and the  Board  of Game  were                                                                    
removed from the bill.                                                                                                          
                                                                                                                                
CRYSTAL  KOENEMAN, STAFF,  REPRESENTATIVE REINBOLD,  replied                                                                    
that the RCA,  the Board of Fisheries and the  Board of Game                                                                    
were  exempted  from  providing  a  brief  description  with                                                                    
public  notices. Per  the legislation,  the boards  would be                                                                    
required to provide a brief description in their notice.                                                                        
                                                                                                                                
2:25:57 PM                                                                                                                    
                                                                                                                                
Representative  Gara MOVED  to change  the fiscal  note from                                                                    
indeterminate to zero.                                                                                                          
                                                                                                                                
Co-Chair Stoltze OBJECTED.                                                                                                      
                                                                                                                                
2:26:59 PM                                                                                                                    
                                                                                                                                
Representative  Edgmon   stated  that  the   agencies  might                                                                    
require additional funds.                                                                                                       
                                                                                                                                
Representative Gara  WITHDREW his  suggestion to  change the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
Representative  Costello  appreciated  the sponsor  and  the                                                                    
members of the committee.                                                                                                       
                                                                                                                                
Vice-Chair  Neuman MOVED  to REPORT  CSHB 140  (FIN) out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 140 (FIN) was REPORTED out of committee with a "do                                                                         
pass" recommendation and with one new indeterminate fiscal                                                                      
note from the Office of the Governor.                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:31:04 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:31 p.m.                                                                                          

Document Name Date/Time Subjects
CS(FIN) HB 140 - Version I - 3.20.2014.pdf HFIN 3/21/2014 1:30:00 PM
HB 140
HB 140 Amendments 1-2 CS-I version.pdf HFIN 3/21/2014 1:30:00 PM
HB 140