Legislature(1995 - 1996)

04/20/1995 08:45 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         April 20, 1995                                        
                            8:30 A.M.                                          
                                                                               
  TAPE HFC 95-87, Side 1, #000 - end.                                          
  TAPE HFC 95-87, Side 2, #000 - #572.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark Hanley  called  the  House Finance  Committee                 
  meeting to order at 8:45 a.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Therriault                      
  Representative Grussendorf                                                   
  Representative Kelly                                                         
                                                                               
  Representatives  Kohring, Parnell  and  Navarre were  absent                 
  from the meeting.                                                            
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Representative    Brian    Porter;   Tom    Wright,   Staff,                 
  Representative Ivan;  Bob Bartholomew, Director,  Income and                 
  Excise Audit Division, Department of Revenue; Michael Stark,                 
  Assistant  Attorney  General,  Department   of  Law;  Dennis                 
  DeWitt, Staff, Representative Mulder; Jerry Shriner, Special                 
  Assistant, Department of Corrections; Jerry Weaver, National                 
  Bank of Alaska,  Anchorage; Stan Ridgeway,  Deputy Director,                 
  Division   of   Vocational  Rehabilitation,   Department  of                 
  Education.                                                                   
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 65     An Act establishing a  loan guarantee and interest                 
            rate subsidy program for assistive technology.                     
                                                                               
            CSHB 65 (HES) was reported out of Committee with a                 
            "do  pass" recommendation and  with a  zero fiscal                 
            note  by   the  Department  of   Education,  dated                 
            3/22/95.                                                           
                                                                               
  HB 219    An  Act  authorizing  special medical  parole  for                 
            terminally ill prisoners.                                          
                                                                               
            CSHB 219 (FIN) was reported  out of Committee with                 
            a  "do  pass"  recommendation and  with  two  zero                 
                                                                               
                                1                                              
                                                                               
                                                                               
            fiscal   notes;   one   by   the   Department   of                 
            Administration, dated  3/27/95;  and  one  by  the                 
            House  Finance  Committee  for the  Department  of                 
            Corrections, dated 4/20/95.                                        
                                                                               
  HB 230    An  Act making appropriations to the Department of                 
            Education  for  support of  kindergarten, primary,                 
            and secondary education and for community  schools                 
            programs for  fiscal  year 1996  and  fiscal  year                 
            1997;    making     appropriations    from     the                 
            constitutional budget reserve fund under art.  IX,                 
            sec. 17(c),  Constitution of the State  of Alaska;                 
            and providing for an effective date.                               
                                                                               
            HB 230 was rescheduled.                                            
                                                                               
  HB 269    An Act  relating to credits against  certain taxes                 
            for  contributions  to certain  public educational                 
            radio and television networks  and stations and to                 
            endowments  for  public   educational  radio   and                 
            television   networks;   and   providing  for   an                 
            effective date.                                                    
                                                                               
            HB  269   was  HELD   in  Committee   for  further                 
            discussion.                                                        
                                                                               
  HB 286    An  Act providing  an exemption from  gambling and                 
            certain  alcoholic  beverage  laws   for  gambling                 
            conducted  by  cruise  ships  for  their  ticketed                 
            passengers in  the  offshore water  of the  state;                 
            relating  to  promotions  on  board cruise  ships;                 
            defining  'cruise  ship'; providing  for exemption                 
            procedures  for certain  cruise ships  before they                 
            can conduct gambling in the  offshore water of the                 
            state;   providing   an    exemption   from    the                 
            coin-operated device tax for cruise ships exempted                 
            from  the  gambling  laws;  and  providing for  an                 
            effective date.                                                    
                                                                               
            HB 286 was rescheduled to 1:30 p.m. on 4/20/95.                    
  HOUSE BILL NO. 65                                                            
                                                                               
       "An Act establishing a loan guarantee and interest rate                 
       subsidy program for assistive technology."                              
                                                                               
  REPRESENTATIVE  BRIAN PORTER,  sponsor HB  65, testified  in                 
  support of the legislation.   He explained that HB  65 would                 
  provide  a  mechanism  to  use  federal funding  to  provide                 
  assistive  technology  opportunities  to   individuals  with                 
  disabilities.  The  state would guarantee 90  percent of the                 
  federal loan.   He emphasized  that the  program will  allow                 
                                                                               
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  disabled persons  to  buy  items that  can  assist  them  in                 
  becoming productive members of society.   The legislation is                 
  pointed to those who cannot afford the  technologies but are                 
  not poor  enough to  qualify  for welfare  assistance.   The                 
  program  would  be  administered by  individual  banks.   He                 
  emphasized that other states that have initiated the program                 
  have had a default rate of 5 to 5.5 percent.                                 
                                                                               
  In response  to  a question  by  Representative  Therriault,                 
  Representative  Porter  clarified  that  federal funding  is                 
  anticipated  at  $100.0  thousand  dollars  to  initiate the                 
  program.   He  clarified that  the  report required  by  the                 
  legislation would not be annual.                                             
                                                                               
  JERRY WEAVER, SENIOR VICE-PRESIDENT, NATIONAL BANK OF ALASKA                 
  testified  via  the  teleconference network.    He  spoke in                 
  support of HB 65.  He  observed that there are approximately                 
  20,000 persons with disabilities in Alaska.                                  
                                                                               
  STAN  RIDGEWAY,  DEPUTY  DIRECTOR,  DIVISION  OF  VOCATIONAL                 
  REHABILITATION, DEPARTMENT OF EDUCATION testified in support                 
  of HB  65.  He  noted that  the legislation provides  a loan                 
  guarantee  and  an  interest  rate  subsidy for  those  that                 
  qualify.  He anticipated that the program would be funded at                 
  $100.0 thousand dollars a year for four years though federal                 
  assistive technology funding.                                                
                                                                               
  Representative Brown asked  who would manage the loans.  Mr.                 
  Ridgeway   explained  that   the   Director  of   Vocational                 
  Rehabilitation  would  set up  a  loan committee  that would                 
  establish the guidelines and assure that funds are not over-                 
  committed.   The banking institutions  will administer their                 
  own loan funds.                                                              
                                                                               
  Representative Brown noted  that the Department of  Commerce                 
  and Economic Development  manages most  of the state's  loan                 
  programs.    Mr.  Ridgeway  stated  that the  Department  of                 
  Commerce and  Economic Development  is not  involved in  the                 
  program at this  time.   Representative Brown observed  that                 
  most  state  loan functions  have  been consolidated  in the                 
  Department of Commerce and Economic Development.                             
                                                                               
  Mr. Ridgeway clarified  that state  funding would come  into                 
  effect if a loan was defaulted.                                              
                                                                               
  In response to a question  by Representative Therriault, Mr.                 
  Ridgeway explained that  there is no actual  cash outlay for                 
  the interest subsidy.   The interest subsidy  is established                 
  by the state and  bank.  He explained that a  portion of the                 
  funds could be used for the buy down of interest rates.                      
                                                                               
  Representative Foster MOVED to  report CSHB 65 (HES)  out of                 
                                                                               
                                3                                              
                                                                               
                                                                               
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.                                                    
                                                                               
  CSHB 65 (HES) was reported out of Committee with a "do pass"                 
  recommendation and with a zero fiscal note by the Department                 
  of Education, dated 3/22/95.                                                 
  HOUSE BILL NO. 219                                                           
                                                                               
       "An  Act   authorizing  special   medical  parole   for                 
       terminally ill prisoners."                                              
                                                                               
  DENNIS  DEWITT,  STAFF, REPRESENTATIVE  MULDER  testified in                 
  support of  HB 219.   He  provided members  with a  proposed                 
  committee  substitute for  HB 219,  work  draft #9-LSO810\M,                 
  dated  4/19/95  (copy  on  file).   He  explained  that  the                 
  committee substitute  removes the  requirement for  parolees                 
  and prisoners to pay for drug testing.   He observed that HB                 
  219 provides the Department  of Corrections additional tools                 
  to control  spiraling inmate  health care  cost by  allowing                 
  special  medical  parole  for  terminally ill  and  severely                 
  disabled  prisoners.     The  legislation  also  allows  the                 
  Department to charge for medical services within facilities.                 
  The  legislation  creates a  new  category of  parole called                 
  "special medical parole" for inmates  who are suffering from                 
  terminal   diseases  or   are   severely   disabled.     The                 
  classification only allows  parole.   It does not  guarantee                 
  parole.  The judgment will still rest with the Parole Board.                 
  The  change  was  recommended   by  the  Alaska   Sentencing                 
  Commission.    He  observed  that  inmates may  be  medicaid                 
  eligible if they are  paroled.  Medicaid pays 50  percent of                 
  health care costs.                                                           
                                                                               
  Mr. DeWitt noted  that the legislation  will also allow  the                 
  Commissioner of the  Department of Corrections to  establish                 
  charges for the health care provided  by the Department.  He                 
  emphasized  that the legislation  will help  deter frivolous                 
  use of health care by inmates.                                               
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  DeWitt  clarified that the committee substitute would result                 
  in  a zero  fiscal note  by the  Department of  Corrections.                 
  Representative  Brown asked  if  there  would  be  projected                 
  savings.    Mr.  DeWitt  acknowledged   that  a  savings  is                 
  expected.  He  emphasized that it is difficult  to calculate                 
  the  savings.    Representative  Mulder  observed  that  the                 
  Department  expressed  concern  that  their  budget  not  be                 
  effected by an anticipated savings.                                          
                                                                               
  Representative Mulder spoke in support of  HB 219.  He noted                 
  that the Department is in  strong support of the legislation                 
  in  order  to   control  spiraling  medical  costs   in  the                 
                                                                               
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  institutions.  He  MOVED to  adopt the committee  substitute                 
  for  HB 219,  work  draft #9-LSO810\M,  dated  4/19/95.   He                 
  explained that the  costs of administering the  drug testing                 
  repayment  overshadowed  the  benefits  in the  legislation.                 
  There  being  NO  OBJECTION,   work  draft  #9-LSO810\M  was                 
  adopted.                                                                     
                                                                               
  JERRY SHRINER, SPECIAL ASSISTANT, DEPARTMENT OF  CORRECTIONS                 
  clarified that the Department of Corrections would support a                 
  zero fiscal note  with the adoption of  CSHB 219 (FIN).   He                 
  stressed that collection would be  difficult and the cost of                 
  collecting could exceed the amount collected.                                
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Shriner  noted that  there  are no  prisoners  who would  be                 
  currently affected by the legislation.  He stated that it is                 
  difficult to anticipate potential savings.                                   
                                                                               
  Mr. DeWitt reiterated  that parolees  would be eligible  for                 
  the medicaid program.                                                        
                                                                               
  In response to a question by Representative Grussendorf, Mr.                 
  DeWitt  clarified  that  parole  cannot   be  forced  on  an                 
  individual.  He  stated that the  state or the inmate  could                 
  initiate a request for parole.   The current terms of parole                 
  would not be changed.  Representative Grussendorf noted that                 
  some  prisoners  may have  no  place  to go  outside  of the                 
  prison.                                                                      
                                                                               
  Representative  Brown  noted   that  the  sponsor  statement                 
  estimated  that  5 to  10 prisoners  may  be affected.   Mr.                 
  DeWitt emphasized that there would not  be a large number of                 
  inmates affected.  Representative Mulder stressed that a few                 
  drive  the  majority of  the costs.    He observed  that one                 
  terminally ill prisoner had medical bills of $567.0 thousand                 
  dollars over two months.                                                     
                                                                               
  Representative  Brown asked  if  prisoners have  alternative                 
  health insurance.  Mr. Shriner estimated that very few would                 
  have alternative health  insurance other than medicaid.   He                 
  noted that one prisoner  who would have been eligible  under                 
  the bill was recently placed in a nursing home.                              
                                                                               
  Representative  Brown  noted  that  section  13 states  that                 
  prisoners are  responsible for  their own  medical care  and                 
  would  be required to pay a  portion of the costs based upon                 
  the  prisoner's  ability to  pay.    Mr. DeWitt  noted  that                 
  section 13 is  new policy.   He stressed  that many  inmates                 
  have some funds.   He stated  that the co-payments would  be                 
  small.  The  provision is designed to act as  a deterrent to                 
  frivolous complaints.                                                        
                                                                               
                                                                               
                                5                                              
                                                                               
                                                                               
  Representative Brown  expressed concern with the effect that                 
  the provision  would have on  people with resources  and who                 
  are confined for  some period  of time.   She observed  that                 
  health insurance is more expensive if the person is not part                 
  of  an  employee's  plan.    Mr.  DeWitt  replied  that  the                 
  expectation is that there would be a relatively small number                 
  of inmates that would  have the independent wealth  to cover                 
  their own health care.  He stressed that it is an attempt to                 
  allow  the  Department  to  get  control on  utilization  as                 
  opposed to securing revenue.                                                 
                                                                               
  Mr. DeWitt noted that there  will be individuals in  halfway                 
  houses  and soft  beds  that  will  have other  coverage  or                 
  resources.  The legislation allows  the Department to become                 
  a secondary payer to the primary health care provider.                       
                                                                               
  Representative Brown asked if the income of a working spouse                 
  could be  reached by  the Department.   Mr. DeWitt  expected                 
  that  the  initial  focus  would  be  to  deter  unnecessary                 
  utilization  and  capture  available  other  coverage.    He                 
  acknowledged   that  the   legislation   allows  a   broader                 
  interpretation.    He  emphasized  that   Alaska  is  not  a                 
  community  property  state.   He  stressed that  because the                 
  institution does not have its own billing system it is going                 
  to be difficult to bill other coverage externally.  He noted                 
  that the intent is to allow the Department to take advantage                 
  of other  coverage  that  is  available  or  to  access  the                 
  resources of someone that is independently wealthy.                          
                                                                               
  Representative   Brown  questioned   the  legality   of  the                 
  retroactive provision.                                                       
                                                                               
  MICHAEL STARK, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW                 
  assured her that the retroactive provision would not present                 
  a legal problem.   He emphasized  that the provision is  not                 
  intended as part of the punishment imposed on an inmate.  It                 
  is a reasonable effort by  the state to defer expenses.   He                 
  added  that  institutionalized  populations   often  include                 
  individuals that manifest medical complaints in which  there                 
  is no basis in fact.  He stressed  that the legislation will                 
  deter frivolous medical complaints.                                          
                                                                               
  Representative Brown reiterated concerns with the breadth of                 
  the provision.   She asked  to what extent  the state  would                 
  pursue  other  resources.   Mr.  Stark  suggested  that some                 
  mechanism  could  be  developed  to  pursue  resources  that                 
  inmates  may have.   He stressed that  it will take  time to                 
  develop  procedures.  He  emphasized that  there will  be no                 
  denial of medical  services.   He observed that  regulations                 
  will have to be adopted.                                                     
                                                                               
  Representative Therriault MOVED to report CSHB 219 (FIN) out                 
                                                                               
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  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CSHB 219  (FIN) was  reported out  of Committee  with a  "do                 
  pass" recommendation and with two  zero fiscal notes; one by                 
  the Department of Administration, dated  3/27/95; and one by                 
  the   House  Finance   Committee  for   the   Department  of                 
  Corrections, dated 4/20/95.                                                  
  HOUSE BILL NO. 269                                                           
                                                                               
       "An Act relating  to credits against certain  taxes for                 
       contributions to  certain public educational  radio and                 
       television networks  and stations and to endowments for                 
       public educational radio  and television networks;  and                 
       providing for an effective date."                                       
                                                                               
  TOM WRIGHT, STAFF, REPRESENTATIVE IVAN provided members with                 
  Amendment 1 (Attachment 1).  He explained that the amendment                 
  added the Fisheries Resource Landing  Tax at the request  of                 
  the  Department  of Revenue  to  the list  of  allowable tax                 
  credits; limits  the  tax contribution  at  $400.0  thousand                 
  dollars; and sunsets the credit  for contributions to public                 
  broadcasting after five years.                                               
                                                                               
  (Tape Change, HFC 95-87, Side 2)                                             
                                                                               
  Mr. Wright clarified  that upon the sunset  the contribution                 
  ceiling will revert to the current  level.  He observed that                 
  the sunset was  included in  response to concerns  regarding                 
  the  Endowment   Trust  and   contributions  to   individual                 
  stations.                                                                    
                                                                               
  Representative Martin  expressed concern with  the inclusion                 
  of the Fisheries Resource Landing Tax.                                       
                                                                               
  BOB  BARTHOLOMEW, DEPUTY  DIRECTOR, DIVISION  OF INCOME  AND                 
  EXCISE AUDIT, DEPARTMENT OF REVENUE explained that the state                 
  shares 50 percent  of the collection  of shared fish  taxes.                 
  The tax  credit will  reduced what  is shared  to the  local                 
  governments.   The general  fund contribution  would not  be                 
  reduced.                                                                     
                                                                               
  Representative Therriault spoke in  support of including the                 
  Fisheries Resource  Landing Tax in  the contribution credit.                 
  Mr. Bartholomew observed that the Department of Revenue felt                 
  that the tax should be included so that all tax payers would                 
  be afforded the same credit.                                                 
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Bartholomew explained how the Fisheries Resource Landing Tax                 
                                                                               
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  operates.    It was  instituted  in FY  94.   It  is applied                 
  against fish caught  outside of the three  mile state waters                 
  limit and landed inside of Alaska to be transported to other                 
  areas.  The value of the fish is taxed by 3.3 percent.  Fish                 
  caught  inside Alaskan  waters are  taxed at the  same rate.                 
  The  tax is  estimated  to bring  in  $6.0 million  dollars.                 
  Fifty percent of the tax would be shared  to the areas where                 
  the fish tax  was collected.   The state would receive  $3.0                 
  million  dollars.    The  tax  program  is  currently  under                 
  litigation.   The tax  will not  be shared  until all  legal                 
  challenges have been resolved.                                               
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Bartholomew clarified that general fund  revenue will not be                 
  reduced by the  addition of  the Fisheries Resource  Landing                 
  Tax.  The credit would be  deducted from the municipal share                 
  of the tax.  He explained that all municipalities will share                 
  in the  loss of  the credit.   Any  municipality subject  to                 
  sharing will be reduced a pro-rata share.                                    
                                                                               
  Representative Brown asked if the  credit will reduce income                 
  to communities  that receive a portion of  the shared taxes.                 
  Mr. Bartholomew stated that  the portion of the tax  credits                 
  that are claimed  against the  fisheries taxes would  reduce                 
  the municipal share.  He stressed the inability to determine                 
  the exact amount that would be potentially reduced.                          
                                                                               
  Representative Martin expressed concern  that the Department                 
  of  Revenue   is  being   required  to  perform   additional                 
  administrative  duties.    Mr.  Bartholomew  noted that  the                 
  Department does not  allocate the cost of  administering the                 
  tax programs.                                                                
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Wright acknowledged that  local governments  had not had  an                 
  opportunity to respond to the amendment.                                     
                                                                               
  Representative Grussendorf suggested that including a credit                 
  for the fisheries tax amounts to cost shifting.  He spoke in                 
  support of the five year sunset provision.                                   
                                                                               
  Mr. Bartholomew  noted that  the Fisheries  Tax was  already                 
  included in HB  269.  He emphasized that the new credit will                 
  be treated the  same as the current credit in  statute.  Co-                 
  Chair Hanley observed  that section 15  is current law.   He                 
  stated that the Fisheries Business Tax which applies to fish                 
  caught in Alaskan waters was included  in previous law.  The                 
  credit  was  taken  out  of  the  municipal  portion.    The                 
  amendment  adds fish  that are caught  outside of  the three                 
  mile limit.                                                                  
                                                                               
  Representative Brown asked the  impact on local governments.                 
                                                                               
                                8                                              
                                                                               
                                                                               
  Mr. Bartholomew stated that  it is hard to estimate  new tax                 
  payers.    He observed  that the  fiscal  note was  based on                 
  current contributions.  He noted  that the fiscal impact  to                 
  municipalities would not change with  the addition of public                 
  broadcasting.   He  stated  that  there  is  no  sharing  on                 
  contributions to  public broadcasting  or  education on  the                 
  taxpayers part.  He stressed that  the impact is one hundred                 
  percent on the state treasury.                                               
                                                                               
  Representative   Mulder   MOVED   to   adopt  Amendment   1.                 
  Representative  Martin OBJECTED.    He stressed  that  local                 
  governments should have a chance  to testify on the  change.                 
  Mr. Wright  noted that some public radio  stations are owned                 
  by local governments.   Representative Brown suggested  that                 
  the  question  be  divided.    Representative  Mulder  spoke                 
  against dividing  the question.   He  emphasized that  rural                 
  Alaska is the real beneficiary.   A roll call vote was taken                 
  on the main MOTION.                                                          
                                                                               
  IN FAVOR: Kelly, Mulder, Therriault, Hanley                                  
  OPPOSED:  Brown, Grussendorf, Martin                                         
                                                                               
  Representatives Kohring,  Navarre, Parnell  and Foster  were                 
  absent from the vote.                                                        
                                                                               
  The MOTION FAILED (4-3).                                                     
                                                                               
  Representative Mulder stressed that  rural communities would                 
  benefit from  the  amendment.    Representative  Grussendorf                 
  emphasized the  need  for more  discussion.   Representative                 
  Therriault suggested the bill be held.                                       
                                                                               
  Representative  Brown  provided  members  with  Amendment  2                 
  (Attachment  2).   She  explained  that the  amendment would                 
  include  contributions  to  public  schools  for   education                 
  technology,  among  organizations  that  are  authorized  to                 
  receive  the  tax   credit.    She  stressed  the  need  for                 
  educational technology.                                                      
                                                                               
  Co-Chair Hanley  expressed concern that the  legislation not                 
  become  too inclusive.   Representative Kelly  asserted that                 
  public radio and television are a low priority.                              
                                                                               
  Representative   Therriault   suggested  the   amendment  be                 
  included in HB 106, Percent for Art.                                         
                                                                               
  Representative Grussendorf  encouraged Representative  Brown                 
  to withdraw the amendment.                                                   
                                                                               
  Representative  Brown observed  that  new schools  generally                 
  allocate  dollars for educational  technology.  She observed                 
  that  older  schools are  the  most in  need  of educational                 
                                                                               
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  technology.                                                                  
                                                                               
  Co-Chair Hanley noted that Amendment 2 had not been moved.                   
                                                                               
  HB 269 was HELD in Committee for further discussion.                         
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 10:00 a.m.                                          
                                                                               
                                                                               
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