Legislature(2019 - 2020)ADAMS ROOM 519

05/13/2019 02:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4:10 pm --
+= SB 44 TELEHEALTH: PHYSICIAN ASSISTANTS; DRUGS TELECONFERENCED
Moved HCS CSSB 44(FIN) Out of Committee
+= HB 139 AK PERM. FUND CORP. PROCUREMENT EXEMPTION TELECONFERENCED
Moved HB 139 Out of Committee
+ SB 16 ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                   HOUSE FINANCE COMMITTEE                                                                                      
                        May 13, 2019                                                                                            
                          2:30 p.m.                                                                                             
                                                                                                                                
2:30:05 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Wilson called the House Finance Committee meeting                                                                      
to order at 2:30 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Tammie Wilson, Co-Chair                                                                                          
Representative Jennifer Johnston, Vice-Chair                                                                                    
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Heather Carpenter,  Deputy Director,  Commissioner's Office,                                                                    
Department  of  Health  and  Social  Services;  Linda  Polk,                                                                    
Contracting  Officer, Department  of Administration;  Angela                                                                    
Rodell,   Executive   Director,    Alaska   Permanent   Fund                                                                    
Corporation; Chris Maher, Alaska Travel Adventures, Juneau.                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Robert Brewster, CEO, AK Club, Anchorage.                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 139    AK PERM. FUND CORP. PROCUREMENT EXEMPTION                                                                             
                                                                                                                                
      HB 139 was REPORTED out of committee with four                                                                            
    "do    pass"   recommendations    and   six    "no                                                                          
          recommendation"   recommendations  and   with  one                                                                    
        previously published zero note: FN1 (REV).                                                                              
                                                                                                                                
CSSB 16(FIN)                                                                                                                    
          ALCOHOL LIC:FAIRS,THEATRES,CONCERTS;BONDS                                                                             
                                                                                                                                
          CSSB 16(FIN)  was HEARD and HELD  in committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSSB 44(FIN)                                                                                                                    
          TELEHEALTH: PHYSICIAN ASSISTANTS; DRUGS                                                                               
                                                                                                                                
          HCSCSSB  44(FIN)  was  REPORTED out  of  committee                                                                    
          with five  "do pass" recommendations and  five "no                                                                    
          recommendation" recommendations  and with  one new                                                                    
          fiscal  impact note  by the  Department of  Health                                                                    
          and Social  Services and one  previously published                                                                    
          fiscal impact note: FN1 (CED).                                                                                        
                                                                                                                                
Co-Chair Wilson reviewed the agenda for the meeting.                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 44(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the prescription of drugs by a                                                                         
     physician assistant without physical examination; and                                                                      
     providing for an effective date."                                                                                          
                                                                                                                                
2:30:39 PM                                                                                                                    
                                                                                                                                
Vice-Chair Johnston MOVED to ADOPT proposed committee                                                                           
substitute for CSSB 44(FIN), Work Draft 31-LS0019\O(Fisher                                                                      
5/9/19) (copy on file).                                                                                                         
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
Co-Chair Wilson invited Ms. Carpenter to discuss the                                                                            
changes to the committee substitute.                                                                                            
                                                                                                                                
2:31:21 PM                                                                                                                    
                                                                                                                                
HEATHER CARPENTER,  DEPUTY DIRECTOR,  COMMISSIONER'S OFFICE,                                                                    
DEPARTMENT  OF  HEALTH  AND SOCIAL  SERVICES,  reviewed  the                                                                    
changes  in  the committee  substitute.  She  read from  the                                                                    
Explanation of Changes (copy on file) document:                                                                                 
                                                                                                                                
                                                                                                                                
     Page  1,  lines 2     3:    Expands  the title  of  the                                                                    
     legislation to include  "relating to prescription drugs                                                                    
     under the medical assistance program;"                                                                                     
                                                                                                                                
     Page 3, line 14    Page 5, line 4:   Adds a new section                                                                    
     5  that amends  AS  47.05.012 to  include the  Medicaid                                                                    
     Preferred Drug List  and prior authorization medication                                                                    
     list   to  material   incorporated  by   reference  via                                                                    
     regulation.                                                                                                                
                                                                                                                                
     (This  means  the  lists  can  be  adopted  after  each                                                                    
     Pharmacy  & Therapeutics  and  Drug Utilization  Review                                                                    
     Committee  meetings  occur  each  September,  November,                                                                    
     January  and April.  Changes will  be publicly  noticed                                                                    
     stating the  new list replaces  the old list.   The new                                                                    
     adoption of changes  will take about 60 days.   This is                                                                    
     a common practice for lists,  codes, manuals or certain                                                                    
     guidelines  that   are  updated  periodically   from  a                                                                    
     previous  version.     Examples  include   the  federal                                                                    
     poverty   guidelines  for   the   state,  the   current                                                                    
     procedural terminology for  physicians published by the                                                                    
     American  Medical Association,  and the  consumer price                                                                    
     index.)                                                                                                                    
                                                                                                                                
     Page  4, lines  5    13:   Adds  a new  Section 6  that                                                                    
     amends  AS  47.07.065  to  require  the  Department  to                                                                    
     capture   cost  savings   and   cost  containment   for                                                                    
     prescribed   drugs  by   adopting   and  updating   the                                                                    
     preferred  drug   list  and  the   prior  authorization                                                                    
     medications  list.   Provides for  a definition  of the                                                                    
     preferred drug  list and lists  specific types  of cost                                                                    
     savings and cost containment  measures for the pharmacy                                                                    
     program that can be utilized.                                                                                              
                                                                                                                                
     Page 5,  Line 20: Applies the  immediate effective date                                                                    
     to Sections 5 7.                                                                                                           
                                                                                                                                
2:33:36 PM                                                                                                                    
                                                                                                                                
Ms.  Carpenter relayed  that the  Department  of Health  and                                                                    
Social Services  (DHSS) submitted  a draft fiscal  note that                                                                    
indicated a savings  of $1 million in FY 2020  and a savings                                                                    
of $2  million each year from  FY 2021 through FY  2025. She                                                                    
reminded the committee that the  FY 20 savings were included                                                                    
in the  governors  proposed budget. The  governor proposed a                                                                    
$225  million general  fund (GF)  reduction in  Medicaid and                                                                    
the  savings would  help meet  the  targeted reduction.  She                                                                    
qualified that the amount was  not included in the Phase One                                                                    
Medicaid  savings  reduction and  was  not  included in  the                                                                    
budget  numbers being  considered  by  the operating  budget                                                                    
Conference Committee.                                                                                                           
                                                                                                                                
2:34:27 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:37:42 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
2:38:28 PM                                                                                                                    
                                                                                                                                
Vice-Chair Johnston  MOVED to report HCSCSSB  44(FIN) out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
[Note:  Neal  Foster  was  not present  when  the  bill  was                                                                    
reported out].                                                                                                                  
                                                                                                                                
HCSCSSB 44(FIN) was REPORTED out  of committee with five "do                                                                    
pass"   recommendations   and   five   "no   recommendation"                                                                    
recommendations and with  one new fiscal impact  note by the                                                                    
Department of Health and Social  Services and one previously                                                                    
published fiscal impact note: FN1 (CED).                                                                                        
                                                                                                                                
HOUSE BILL NO. 139                                                                                                            
                                                                                                                                
     "An  Act   providing  an   exemption  from   the  state                                                                    
     procurement  code for  the  acquisition of  investment-                                                                    
     related  services for  assets managed  by the  Board of                                                                    
    Trustees of the Alaska Permanent Fund Corporation."                                                                         
                                                                                                                                
Co-Chair Wilson  reported that the  committee had  wanted to                                                                    
better understand  the procurement process during  the prior                                                                    
discussion on HB 139.                                                                                                           
                                                                                                                                
2:39:12 PM                                                                                                                    
                                                                                                                                
LINDA    POLK,    CONTRACTING   OFFICER,    DEPARTMENT    OF                                                                    
ADMINISTRATION,  introduced herself.  She  relayed that  she                                                                    
was prepared to answer questions  from the list of questions                                                                    
she  had  received  from the  committee.  She  answered  the                                                                    
question   regarding   when   the   procurement   code   was                                                                    
established. She  indicated that the  code in AS.  36.30 was                                                                    
effective on January  1, 1988 and was based  on the American                                                                    
Bar Associations   (ABA) model  procurement code.  The ABAs                                                                     
code was  established in 1979  after extensive work.  It was                                                                    
one  of  ABAs  most  successful  projects.  She addressed  a                                                                    
question regarding  code revisions.  She indicated  that the                                                                    
ABA code was  revised between 1997 and 2000  with input from                                                                    
the National  Institute of Government Purchasing  (NIGP) and                                                                    
the  National  Association  of State  Procurement  Officials                                                                    
(NASPO).  She  furthered that  SB  12    Public  Procurement                                                                    
[CHAPTER 59 SLA 13] adopted on  June  26, 2013 modernized AS                                                                    
36.30. She  listed some  of the changes  to the  code; i.e.,                                                                    
allowing  electronic  bids,  raising the  small  procurement                                                                    
threshold,  bidders'   preferences  were   consolidated  and                                                                    
simplified,  and the  Alaska  business license  requirements                                                                    
were  modified. She  elaborated  that  initially, an  Alaska                                                                    
business license  was required  to submit a  proposal, which                                                                    
delayed  vendors submissions  and  reduced competition.  The                                                                    
change  required  an  Alaskan   license  once  the  bid  was                                                                    
awarded. She turned  to why the procurement  process took so                                                                    
long. She  delineated that small procurement  ($100 thousand                                                                    
or less) was completed  in a matter of days and  up to a few                                                                    
weeks. Formal procurement  took 3 to 6  months and sometimes                                                                    
longer. The  procurement requests  were required  posting on                                                                    
the  online public  notices  system for  21  days to  ensure                                                                    
fairness. A  procurement officer  had the ability  to reduce                                                                    
the  public notice  time if  necessary.  She furthered  that                                                                    
bids were evaluated, and  negotiations were conducted during                                                                    
the 3  to 6 month  procurement period. She noted  a question                                                                    
concerning  the   benefits  of   a  procurement   code.  She                                                                    
delineated  that  the   code  increased  consistency  across                                                                    
agencies, informed  the vendor  community about  the states                                                                     
expectations, and  provided equal treatment and  fairness to                                                                    
vendors. She  added that the Alaska  Bidders Preference fell                                                                    
within  the procurement  code and  gave in-state  vendors an                                                                    
advantage.   The  code   offered  transparency,   encouraged                                                                    
competition, and resulted  in the best value  for the state.                                                                    
She  addressed  the  final  question  that  had  been  posed                                                                    
regarding  what  code benefits  would  be  forfeited if  the                                                                    
Alaska  Permanent Fund  Corporation (APFC)  was granted  the                                                                    
exemption.  She remarked  that the  answer  depended on  the                                                                    
type  of  procurement.   However,  in  general  competition,                                                                    
transparency,  justification,   Alaska  preferences,  vendor                                                                    
protests,  and   public  trust  would   be  lost   with  the                                                                    
exemption.                                                                                                                      
                                                                                                                                
2:44:50 PM                                                                                                                    
Representative  Carpenter  asked  if the  whole  procurement                                                                    
process had been evaluated for  improvement purposes or were                                                                    
revisions addressed  piecemeal. Ms. Polk responded  that the                                                                    
code through the ABA was  reviewed regularly. She noted that                                                                    
16  states  had adopted  the  code.  She reported  that  the                                                                    
Department of Administration (DOA)  did not regularly review                                                                    
the  code   but  did  make  regulatory   changes  at  times.                                                                    
Representative  Carpenter  asked  about  the  21-day  review                                                                    
period  waiver.  Ms.  Polk  reported  that  the  waiver  was                                                                    
possible with  any procurement under  certain circumstances.                                                                    
She elucidated  that an immediate  need or very  few vendors                                                                    
able  to  participate were  reasons  to  shorten the  public                                                                    
review  period. Representative  Carpenter  asked  if it  was                                                                    
possible  to   achieve  a  10-day  waiver   for  the  Alaska                                                                    
Permanent Fund  Corporation. Ms.  Polk indicated  that there                                                                    
was   pre-work  that  had to  be done  prior to  posting but                                                                    
stated that a 10- day waiver was possible.                                                                                      
                                                                                                                                
2:48:10 PM                                                                                                                    
                                                                                                                                
Representative Knopp asked about  the difference between the                                                                    
small  procurement  process  and   the  formal  process.  He                                                                    
deduced  that the  difference was  the public  notice period                                                                    
and  the dollar  amount  of over  $100  thousand for  formal                                                                    
procurement. Ms.  Polk responded that the  small procurement                                                                    
process had  3 levels: $0  to $10 thousand allowed  a direct                                                                    
purchase,  $10 thousand  to $50  thousand  required 3  price                                                                    
quotes, and above $50 thousand  required written quotes. She                                                                    
added that small procurement was  exempt from any time frame                                                                    
requirements. Representative Knopp  suggested that the state                                                                    
followed similar  guidelines as local governments  for small                                                                    
procurement.  He   asked  whether  the   formal  procurement                                                                    
process was  implemented with purchases over  $100 thousand.                                                                    
Ms. Polk responded in  the affirmative. Representative Knopp                                                                    
asked how  sole source  contracts worked  for the  state and                                                                    
whether  the   contracts  followed  the   small  procurement                                                                    
process. Ms. Polk answered that  the state maintained a sole                                                                    
source  procurement process.  She  conveyed  that for  small                                                                    
procurements it  merely needed the  commissioners  approval.                                                                    
Sole  source formal  procurements required  approval by  the                                                                    
agencys   commissioner and  the  Chief Procurement  Officer.                                                                    
She qualified  that APFC  was asking to  be exempt  from any                                                                    
outside  oversight.   Representative  Knopp  asked   if  the                                                                    
procurement officer's signature would  be required. Ms. Polk                                                                    
responded  in  the negative  and  added  that the  AS  36.30                                                                    
procurement   exception  exempted   APFC  from   every  code                                                                    
requirement.   Representative   Knopp  asked   whether   the                                                                    
procurement  officer could  reject a  sole source  contract.                                                                    
Ms. Polk answered in the affirmative.                                                                                           
                                                                                                                                
2:51:52 PM                                                                                                                    
                                                                                                                                
Representative  Josephson   purported  that  Ms.   Polk  had                                                                    
described the  flexibility in current  law. He asked  her to                                                                    
repeat her  answers regarding the minimum  release time. Ms.                                                                    
Polk replied that the code  required a listing on the Online                                                                    
Public  Notice  system  (OPN)  to be  posted  for  21  days.                                                                    
However, the timeline could be  shortened if the procurement                                                                    
officer  determined it  was necessary.  The  officer had  to                                                                    
place a  written note in the  file stating the need  for the                                                                    
shortened  period. The  officer  could shorten  the time  as                                                                    
needed   as  long   as  decent   proposals  were   received.                                                                    
Representative Josephson  noted that the committee  had been                                                                    
given  a list  of allowable  adjustments to  the procurement                                                                    
code    [APFC      Legislative    Initiative:    Procurement                                                                    
Streamlining  (copy on  file)]. He asked what  else could be                                                                    
adjusted. Ms. Polk  replied that  quite a  few things  could                                                                    
be adjusted  depending on  the scope  of work  required. She                                                                    
reported  that there  was  no  way to  get  around a  10-day                                                                    
protest  period.  She  delineated  that  during  the  10-day                                                                    
protest  period, a  Proposal  Evaluation Committee  reviewed                                                                    
the proposal. If the committee  was quick, an approval could                                                                    
happen  in   a  matter  of  days.   However,  sometimes  the                                                                    
committee was busy, and review could take much longer.                                                                          
                                                                                                                                
2:54:26 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston suggested  that her  question might  be                                                                    
unfair.  She   voiced  that  some  procurements   were  very                                                                    
technical  and noted  that  Ms. Polk  stated  that a  timely                                                                    
review depended on how busy the evaluation committee was.                                                                       
She  asked   if  procurement  backlogs  existed.   Ms.  Polk                                                                    
responded  in  the  negative.  She  alerted  the  evaluation                                                                    
committee  when  to  expect   proposals  and  requested  the                                                                    
committee to dedicate  the proper amount of  time for timely                                                                    
review.  Vice-Chair Johnston  recalled Ms.  Polk's testimony                                                                    
to Representative  Josephson about  the times  the committee                                                                    
was  busy and  not as  able to  be as  responsive. Ms.  Polk                                                                    
indicated she  had provided  an example  of what  could slow                                                                    
the process down. She voiced  that a procurement officer was                                                                    
in control of the procurement  and an officer would disallow                                                                    
a committee  to draw  out a timeline  for a  procurement for                                                                    
one that had to be rushed.                                                                                                      
                                                                                                                                
Co-Chair   Wilson   recalled  that   investment   management                                                                    
contracts were currently exempt.  She understood through Ms.                                                                    
Polks  testimony  that the 10-day  exemption was  not really                                                                    
an  issue. Ms.  Polk  replied in  the affirmative.  Co-Chair                                                                    
Wilson  asked  how often  a  procurement  was protested  and                                                                    
required  a  new  solicitation.  Ms. Polk  answered  that  a                                                                    
solicitation  was   called  a    draft  RFP    (Request  for                                                                    
Proposal).  Often,  vendor  feedback  caused an  RFP  to  be                                                                    
amended  before   the  closing  date.  She   mentioned  that                                                                    
protests  happened  and  caused  the process  to  take  much                                                                    
longer than  planned. Co-Chair Wilson  asked if  the protest                                                                    
happened  immediately after  closing or  at the  end of  the                                                                    
protest  period.  Ms. Polk  responded  that  a vendor  could                                                                    
protest  a solicitation  10 days  prior to  the solicitation                                                                    
closing. The  solicitation could be  fixed prior to  the end                                                                    
of  the  solicitation  period.  Co-Chair  Wilson  asked  for                                                                    
clarification regarding protesting a  sole source award. Ms.                                                                    
Polk indicated  that any sole  source award could  be posted                                                                    
within 10 days.                                                                                                                 
                                                                                                                                
2:59:37 PM                                                                                                                    
                                                                                                                                
Representative Carpenter asked  for clarification concerning                                                                    
the 10-day  period. Ms.  Polk responded  that a  sole source                                                                    
contract  was   subject  to  the  10   day  protest  period.                                                                    
Representative  Carpenter asked  how  long  the sole  source                                                                    
process  took. Ms.  Polk answered  that it  depended on  how                                                                    
long the  sole source  justification documentation  took and                                                                    
the required  approvals by either  the commissioner  or both                                                                    
the   commissioner  and   chief  procurement   officer.  She                                                                    
maintained that small procurements  could be approved within                                                                    
a day.                                                                                                                          
                                                                                                                                
Co-Chair Wilson  provided a  hypothetical scenario  in which                                                                    
there   was  a   small   window  of   opportunity  for   the                                                                    
procurement. She  deduced through Ms. Polk's  testimony that                                                                    
the procurement  process could  meet a  10 day  deadline and                                                                    
asked whether  she was correct.  Ms. Polk asked  whether she                                                                    
was referring to an RFP  or a sole source contract. Co-Chair                                                                    
Wilson answered  that her question  related to the  bill and                                                                    
whether the  process could be  shortened from 54 days  to 10                                                                    
days. She recounted that APFC had  to hire a third party and                                                                    
pay 20  percent of the  investment profits to the  entity in                                                                    
order to  avoid a  lengthy procurement process.  She offered                                                                    
that  none  of  the  committee members  wanted  to  lose  20                                                                    
percent  of  the profits.  Ms.  Polk  explained that  merely                                                                    
shortening  the public  notice process  did not  shorten the                                                                    
entire process to  10 days due to the 10  day protest period                                                                    
subsequent  to the  state choosing  the vendor.  She replied                                                                    
that a formal solicitation could  not be completed within 10                                                                    
days. Co-Chair  Wilson ascertained  that the  protest period                                                                    
was the essence  of the bill exemption.  She determined that                                                                    
pre-work  prior   to  solicitation   had  to   be  completed                                                                    
regardless  of the  process and  that  exempting the  appeal                                                                    
period was the  crux of the legislation.  Ms. Polk responded                                                                    
that she was correct.                                                                                                           
                                                                                                                                
Co-Chair Wilson asked Vice-Chair Johnston to comment.                                                                           
                                                                                                                                
Vice-Chair Johnston  replied that she generally  agreed with                                                                    
Co-Chair  Wilson. She  added that  a  highly technical  sole                                                                    
source contract process could cause a delay.                                                                                    
                                                                                                                                
Co-Chair  Wilson  returned to  the  subject  of sole  source                                                                    
contracts which she thought mainly  applied to the APFC. She                                                                    
asked how sole sourcing  worked compared to procurement. Ms.                                                                    
Polk  explained  that APFC  had  to  supply a  justification                                                                    
regarding  a   sole  source  procurement.   The  procurement                                                                    
officer  would examine  the justification  to ensure  it met                                                                    
the sole source requirements.  Her office typically approved                                                                    
them in  the same day  and the  contract would be  ready for                                                                    
the commissioner's signature.                                                                                                   
                                                                                                                                
Co-Chair Wilson asked  Ms. Rodell to testify.  She wanted to                                                                    
understand whether the bill  primarily addressed sole source                                                                    
contracts. She  thought that there  were two  issues; formal                                                                    
solicitations and sole source contracts.                                                                                        
                                                                                                                                
3:06:55 PM                                                                                                                    
                                                                                                                                
ANGELA  RODELL, EXECUTIVE  DIRECTOR,  ALASKA PERMANENT  FUND                                                                    
CORPORATION, explained that the  bill only pertained to sole                                                                    
source investment related services  and would no longer need                                                                    
the approval  of the commissioner or  general services prior                                                                    
to making an award.                                                                                                             
                                                                                                                                
3:07:41 PM                                                                                                                    
                                                                                                                                
Representative Josephson asked  for clarification around the                                                                    
term "sole source." He wondered  if it meant the contracting                                                                    
party  needed to  argue that  the  vendor was  the only  one                                                                    
available  to perform  the service.  Ms. Rodell  answered in                                                                    
the affirmative  and furthered that  when the  APFC prepared                                                                    
the justification they had to  explain why the vendor should                                                                    
be  given the  contract  without having  to  go through  the                                                                    
formal procurement  process. If  either the  commissioner or                                                                    
chief procurement officer disagreed,  APFC had to go through                                                                    
the  formal  procurement process.  Representative  Josephson                                                                    
asked if the exemption granted  APFC cart blanch. Ms. Rodell                                                                    
responded   that   APFC   would  internally   document   the                                                                    
justifications   for   its   selections  and   hiring.   The                                                                    
corporation was  subject to Legislative  Audits and  its own                                                                    
annual audits.  She pointed out  that the  exemption applied                                                                    
to  a  limited  set  of  procurements and  was  not  a  full                                                                    
procurement exemption.  The corporation still  preserved its                                                                    
justification process. The procurement  would no longer need                                                                    
the  approval  of  the   commissioner  and  the  procurement                                                                    
officer.                                                                                                                        
                                                                                                                                
Co-Chair Wilson asked  why Ms. Polk stated  that the process                                                                    
would  be less  transparent  under the  exemption. Ms.  Polk                                                                    
responded  that  the  solicitation was  exempt  from  public                                                                    
notification.                                                                                                                   
                                                                                                                                
Vice-Chair  Johnston   asked  if   the  ARM  Board   or  the                                                                    
investment  arm  of  the Department  of  Revenue  (DOR)  was                                                                    
required  to go  through the  procurement process.  Ms. Polk                                                                    
did not know the answer to the question.                                                                                        
                                                                                                                                
3:10:37 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston asked  if Ms.  Rodell knew  whether the                                                                    
ARM Board  had to  go through  the procurement  process. Ms.                                                                    
Rodell  responded   that  the  ARM  Board   had  a  complete                                                                    
exemption.                                                                                                                      
                                                                                                                                
Representative Carpenter  asked if the public  notice period                                                                    
would impact  APFCs  solicitations. Ms. Rodell  replied that                                                                    
it could prove  problematic to enter into  the investment if                                                                    
the investors  discovered that APFC was  seeking third-party                                                                    
advice. Sometimes  the investments were  highly confidential                                                                    
in  cases  of  mergers,   acquisitions,  or  initial  public                                                                    
offerings.  She  indicated  that   if  the  corporation  was                                                                    
 telegraphing   via  a public  notice  that  it was  seeking                                                                    
investment  advice,  it   could  jeopardize  the  investment                                                                    
opportunity.                                                                                                                    
                                                                                                                                
Vice-Chair   Ortiz   wondered   what   percentage   of   the                                                                    
corporations   total investments  the exemption  applied to.                                                                    
Ms. Rodell replied  that the amount was  roughly 12 percent.                                                                    
Vice-Chair Ortiz  recalled her  testimony that  the earnings                                                                    
from the 12  percent of investments totaled  30 percent. She                                                                    
responded in  the affirmative.  Vice-Chair Ortiz  asked what                                                                    
the  benefit of  the procurement  exemption was.  Ms. Rodell                                                                    
responded that part of  the corporation's responsibility was                                                                    
to make the  best investments possible by  lowering the cost                                                                    
of  investments  and ensuring  that  the  largest number  of                                                                    
investment  opportunities were  available to  the fund.  The                                                                    
highest need was to ensure the fund performed optimally.                                                                        
                                                                                                                                
3:14:15 PM                                                                                                                    
                                                                                                                                
Representative  LeBon  asked  whether  APFC  had  lost  some                                                                    
investment   opportunities   because  of   the   procurement                                                                    
timeline.  Ms. Rodell  explained that  when the  corporation                                                                    
felt  strongly  about  an investment,  they  had  chosen  an                                                                    
alternative route  to secure  the investment.  However, when                                                                    
the corporation  proceeded with  the procurement  process it                                                                    
was not  as fervent  about the  investment to  warrant going                                                                    
through  an alternative  process.  Representative LeBon  did                                                                    
not think  many other  states had  something similar  to the                                                                    
Alaska Permanent Fund. Ms. Rodell  responded that there were                                                                    
about  10 states  that had  something similar  and over  the                                                                    
past 10 years the amount  of countries with sovereign wealth                                                                    
funds rose  from 30 to  60. She observed that  awareness was                                                                    
growing  regarding creating  a financial  asset from  a non-                                                                    
renewable asset,  which offered a tremendous  benefit to the                                                                    
population.                                                                                                                     
                                                                                                                                
3:16:14 PM                                                                                                                    
                                                                                                                                
Representative LeBon  asked if  she had  a feel  for whether                                                                    
Alaska had an advantage  or disadvantage when competing with                                                                    
the other  states for investments. Ms.  Rodell retorted that                                                                    
Alaska had more of an advantage  because of the age and size                                                                    
of the  fund. She  noted that  North Dakota  established its                                                                    
fund 6  years ago  and that  the fund  was worth  $6 billion                                                                    
dollars. The fund was run  similarly to the Alaska Permanent                                                                    
Fund. Representative LeBon suggested  the state needed to be                                                                    
competitive  with the  national  and global  market for  the                                                                    
types of investments.  He did not think  the corporation was                                                                    
asking for  the exemption  if it did  not believe  that some                                                                    
investment opportunities  could be lost. Ms.  Rodell replied                                                                    
in the affirmative.                                                                                                             
                                                                                                                                
Co-Chair  Wilson  RECESSED the  meeting  to  a Call  of  the                                                                    
Chair.                                                                                                                          
                                                                                                                                
3:18:23 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
4:12:25 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Wilson  discussed the process for  the remainder of                                                                    
the hearing.                                                                                                                    
                                                                                                                                
4:14:10 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston MOVED  to report  CSHB 139(FIN)  out of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
HB 139  was REPORTED  out of committee  with four  "do pass"                                                                    
recommendations and six  "no recommendation" recommendations                                                                    
and with one previously published zero note: FN1 (REV).                                                                         
                                                                                                                                
CS FOR SENATE BILL NO. 16(FIN)                                                                                                
                                                                                                                                
     "An   Act  relating   to  certain   alcoholic  beverage                                                                    
     licenses and permits; relating  to the bond requirement                                                                    
     for  certain alcoholic  beverage  license holders;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
4:14:37 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Johnston  MOVED   to  ADOPT  proposed  committee                                                                    
substitute  for  CSSB  16  (FIN),  Work  Draft  31-LSS0283\C                                                                    
(Bruce, 5/13/19) (copy on file).                                                                                                
                                                                                                                                
Representative Josephson OBJECTED for discussion.                                                                               
                                                                                                                                
Co-Chair   Wilson  reviewed   the  sectional   changes.  She                                                                    
reported that  Section 1 amended  AS 04.11.210  that related                                                                    
to the  types of licenses  and permits. The section  added a                                                                    
fair  license  and  performing arts  license  to  the  list.                                                                    
Section 2 added a new  section to AS 04.11.205 pertaining to                                                                    
a  performing  arts  theatre license.  She  noted  that  the                                                                    
section defined  the license. The license  currently existed                                                                    
in regulation  and the  section moved  it into  statute. She                                                                    
indicated  that  Section 3  added  a  new subsection  to  AS                                                                    
04.11.210  (d)  that  grandfathered in  previously  licensed                                                                    
entities  under the  recreation  site license  if they  were                                                                    
valid on December 31, 2018,  were operating in accordance to                                                                    
the terms  of their  license, and  were disqualified  by the                                                                    
Alcoholic  Beverage  Control  Board   (ABC).  She  moved  to                                                                    
Section 4  and explained  that the  new section  referred to                                                                    
Fair licenses. The  section defined the type  of license and                                                                    
established  a  biennial  fee  of  $800.  She  related  that                                                                    
Section  5 amended  AS 04.11.330  (d) to  require performing                                                                    
art  theatres and  recreational site  licenses to  use their                                                                    
license at  least once  in two calendar  years in  order for                                                                    
renewal.  She  reported  that Section  6  included  existing                                                                    
language that  limited entry to  individuals under  21 years                                                                    
of age to  be accompanied by a parent or  individual over 21                                                                    
years of  age. The  individual was  permitted entry  under a                                                                    
club  license  issued  under   AS.04.11.  (g)  or  otherwise                                                                    
provided  under (c),  (d), or  (g), or  (i) of  the section.                                                                    
Section  7  added  provisions for  conditions  which  minors                                                                    
could be  permitted on a  licensed premise,  performing arts                                                                    
theatre  or  golf course  with  alcohol  service. Section  8                                                                    
amended AS 04.21.065  (a) that required posting  a notice of                                                                    
the license  on the premise.  Sections 9 through  11 amended                                                                    
AS 43.60.040 relating to  the administration and enforcement                                                                    
of  taxes. The  provisions provided  incentives for  on-time                                                                    
filing for the  most recent three years.  She specified that                                                                    
the   provisions  removed   a  $25   thousand  surety   bond                                                                    
requirement  if   all  other  requirements  were   met.  The                                                                    
remainder of  the bill added effective  dates sections which                                                                    
included retroactivity.                                                                                                         
                                                                                                                                
4:18:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Wilson OPENED public testimony.                                                                                        
                                                                                                                                
Co-Chair  Wilson indicated  that  the  committee would  hear                                                                    
additional public testimony the following morning.                                                                              
                                                                                                                                
CHRIS MAHER, ALASKA TRAVEL  ADVENTURES, JUNEAU, provided his                                                                    
testimony. He  elaborated that the  company was  in business                                                                    
for 40  years and operated  the Gold Creek Salmon  Bake. The                                                                    
salmon  bake served  beer and  wine for  40 years  under the                                                                    
recreational  site  license,  which  also  allowed  them  to                                                                    
provide music for  its guests. They were  given notice three                                                                    
years prior  that their license  would be revoked,  and they                                                                    
purchased  a  restaurant license.  In  order  to obtain  the                                                                    
restaurant  license, he  had  to  surrender to  recreational                                                                    
site license. He  explained that the current  version of the                                                                    
bill limited music  to the hours of 3:00 p.m.  to 11:00 p.m.                                                                    
The prior version of the  bill allowed music from 11:00 a.m.                                                                    
to 7:00  p.m. He had hoped  to request an extension  to 8:00                                                                    
p.m.  but was  astonished to  find  that he  could not  play                                                                    
music for his  lunch guests. He requested  an amendment that                                                                    
would enable him to regain his recreational site license.                                                                       
                                                                                                                                
Co-Chair Wilson deduced that if  his license was reinstated,                                                                    
would he  be able  to play  music at  lunch time.  Mr. Maher                                                                    
responded  in the  affirmative. Co-Chair  Wilson appreciated                                                                    
the   testimony.  She   was  unaware   that   some  of   the                                                                    
grandfathered licenses were surrendered.                                                                                        
                                                                                                                                
Representative Merrick asked for  the hours of operation for                                                                    
the salmon bake.  Mr. Maher responded that  the hours varied                                                                    
depending on the cruise ship  schedule but was roughly 10:30                                                                    
a.m. to 9:30 p.m. He hoped  that music would be allowed from                                                                    
11:00 a.m. to  11:00 p.m. The timeframe  would encompass all                                                                    
his customers.                                                                                                                  
                                                                                                                                
Co-Chair Wilson  reiterated her  surprise upon  hearing some                                                                    
businesses had to surrender their  prior license in order to                                                                    
comply with  the boards  new regulatory  interpretation. She                                                                    
pledged to address the issue.                                                                                                   
                                                                                                                                
4:24:45 PM                                                                                                                    
                                                                                                                                
ROBERT   BREWSTER,   CEO,   ALAKSA  CLUB,   ANCHORAGE   (via                                                                    
teleconference), spoke  in favor  of the bill.  He indicated                                                                    
that the club  had a recreational site license  for 8 years.                                                                    
He related  that the club  complied with all aspects  of the                                                                    
license  and  operated  their   business  model  to  include                                                                    
serving  beer and  wine. The  ABC board  forced the  club to                                                                    
stop  serving alcoholic  beverages for  11 months  while the                                                                    
issue was  under appeal. An administrative  judge reinstated                                                                    
their   license.   The   judge   ruled   that   the   clubs                                                                     
constitutional rights  to equal protection was  violated and                                                                    
was inappropriate  for the license  to be revoked  while the                                                                    
issue  was under  appeal. He  noted that  he was  once again                                                                    
informed that  his license  would not  be renewed.  He feels                                                                    
that   his   and   other  businesses   were   subjected   to                                                                    
 devastating  results    due  to   the  boards    change  in                                                                    
licensing. He  stated that his and  other businesses applied                                                                    
for the license and operated  responsibly and in good faith.                                                                    
He asked  the committee  to correct the  situation regarding                                                                    
non-renewals  that  served  no valid  public purpose   while                                                                    
harming responsible  businesses. He  asked the  committee to                                                                    
pass the bill.                                                                                                                  
                                                                                                                                
Co-Chair Wilson asked whether  the committee substitute (CS)                                                                    
version  of  the  bill  would  rectify  his  situation.  Mr.                                                                    
Brewster responded in the affirmative.                                                                                          
                                                                                                                                
4:28:41 PM                                                                                                                    
                                                                                                                                
Representative  Knopp asked  if  the  language that  allowed                                                                    
music  from  the  hours  of  3:00 p.m.  to  11:00  p.m.  was                                                                    
eliminated  from the  CS. Co-Chair  Wilson was  unaware that                                                                    
certain  businesses  had  surrendered  their  licenses.  She                                                                    
thought that if language  was added to include reinstatement                                                                    
of  the   surrendered  licenses  it  would   cover  all  the                                                                    
activities that  were previously allowed. She  conveyed that                                                                    
if the activity under the  license changed then the licenses                                                                    
would  not  be renewed.  However,  she  understood that  the                                                                    
current  situation  involved  reinterpretation  by  the  ABC                                                                    
Board that caused  the businesses to lose  their license and                                                                    
the  licensees   were  operating  in  compliance   with  the                                                                    
license. Representative  Knopp wanted to offer  an amendment                                                                    
that  would allow  music from  11:00 a.m.  to 11:00  p.m. He                                                                    
thought  that  the 3:00  p.m.  to  11:00 p.m.  language  was                                                                    
limiting  and nonsensical.  Co-Chair  Wilson concurred  with                                                                    
the amendment.  She also wanted  to address  the surrendered                                                                    
license issue.                                                                                                                  
                                                                                                                                
Representative   Merrick   cited   Mr.   Mahers    testimony                                                                    
regarding a  9:30 P.m.  end time.  She wondered  whether the                                                                    
9:30  p.m.  end  time  was  more  appropriate  in  case  the                                                                    
location  was in  a residential  area.  Mr. Maher  responded                                                                    
that the company  had been in business at  the current sight                                                                    
for over  25 years  without any  problems. He  believed that                                                                    
noise  ordinances  regulated   the  concern.  Representative                                                                    
Merrick did not want to cause any problems.                                                                                     
                                                                                                                                
Co-Chair Wilson  relayed that city ordinances  trumped state                                                                    
statute.                                                                                                                        
                                                                                                                                
4:32:59 PM                                                                                                                    
                                                                                                                                
Vice-Chair Ortiz  asked about the  amendment process  for SB
16.                                                                                                                             
                                                                                                                                
Co-Chair Wilson  announced that amendments  were due  by the                                                                    
following  mornings  meeting.  She  discussed the  amendment                                                                    
process.                                                                                                                        
                                                                                                                                
CSSB 16(FIN) was HEARD and HELD in committee for further                                                                        
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Wilson reviewed the agenda for the following day's                                                                     
meeting at 9:00 a.m.                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
4:35:01 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 4:35 p.m.                                                                                          

Document Name Date/Time Subjects
SB 44 HCS WORKDRAFT FIN v.G (included presc. drug items).pdf HFIN 5/13/2019 2:30:00 PM
SB 44
HB 139 APFC Follow Up HFIN_11MAY19.pdf HFIN 5/13/2019 2:30:00 PM
HB 139
SB44 vsn O Explanation of Changes House FIN 5-13-19.pdf HFIN 5/13/2019 2:30:00 PM
SB 44
SB 16 HCS WORKDRAFT FIN v.C.pdf HFIN 5/13/2019 2:30:00 PM
SB 16