Legislature(1995 - 1996)

02/22/1996 01:41 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                        February 22, 1996                                      
                            1:41 P.M.                                          
                                                                               
  TAPE HFC 96-47, Side 1, #000 - end.                                          
  TAPE HFC 96-47, Side 2, #000 - end.                                          
  TAPE HFC 96-48, Side 2, #000 - 485.                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 1:41 p.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Kelly          Representative Parnell                         
  Representative Kohring        Representative Therriault                      
  Representative Martin                                                        
                                                                               
  Co-Chair Foster  and Representative Grussendorf  were absent                 
  from the meeting.                                                            
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Anne   Carpeneti,   Assistant  Attorney   General,  Criminal                 
  Division,  Department of  Law; Jerry  Luckhaupt, Legislative                 
  Legal Counsel,  Legislative Affairs  Agency; Jerry  Shriner,                 
  Special   Assistant,   Department  of   Corrections;  Willis                 
  Kirkpatrick, Director,  Division of Banking,  Securities and                 
  Corporations,   Department   of   Commerce    and   Economic                 
  Development; Arthur H. Snowden, II, Administrative Director,                 
  Alaska  Court System;  George Dosier,  Staff, Representative                 
  Kott; John Higgins, General Manager, Northland  Credit; John                 
  Shibe,  National Bank  of Alaska;  Chris Christensen,  Staff                 
  Counsel, Alaska Court System.                                                
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 75     An Act relating to criminal mischief.                              
                                                                               
            CSHB 75 (FIN) was reported out of Committee with a                 
            "do  pass"  recommendation  and  with nine  fiscal                 
            impact notes; three by the  Department of Health &                 
            Social  Services,   dated  1/30/96;  one   by  the                 
            Department  of  Law,  dated  1/30/96; one  by  the                 
            Alaska  Court System,  dated 1/30/96;  two  by the                 
            Department of Public Safety, dated 1/30/96; one by                 
            the House Finance Committee  for the Department of                 
                                                                               
                                1                                              
                                                                               
                                                                               
            Corrections;  and   one  by   the  Department   of                 
            Administration.                                                    
                                                                               
  HB 204    An Act relating  to the administrative  revocation                 
            of a  minor's license to drive;  creating criminal                 
            offenses  of  minor   operating  a  vehicle  after                 
            consuming alcohol, a minor's refusal  to submit to                 
            chemical  test, and  driving during  the  24 hours                 
            after  being cited for  minor operating  a vehicle                 
            after  consuming  alcohol;  establishing penalties                 
            for  these  offenses;  and  relating  to   implied                 
            consent to  certain testing  if operating  a motor                 
            vehicle, aircraft, or watercraft.                                  
                                                                               
            CSHB 204 (FIN) was reported  out of Committee with                 
            a "do  pass"  recommendation and  with  five  zero                 
            fiscal notes, one  by the  Department of Law,  and                 
            two by  the Department of  Administration; two  by                 
            the Department of Public Safety; and with a fiscal                 
            impact note by the Alaska Court System.                            
                                                                               
  HB 319    An Act relating  to the  regulation of small  loan                 
            and retail installment transactions.                               
                                                                               
            CSHB 319 (FIN) was reported  out of Committee with                 
            a "do pass" recommendation and  with a zero fiscal                 
            note  by the  Department of Commerce  and Economic                 
            Development, dated 2/2/96.                                         
                                                                               
  HB 437    An   Act   establishing   the  Judicial   Officers                 
            Compensation   Commission;    relating   to    the                 
            compensation of supreme court justices, judges  of                 
            the  court  of  appeals, judges  of  the  superior                 
            court, and  district court  judges; and  providing                 
            for an effective date.                                             
                                                                               
            CSHB 437 (FIN) was reported  out of Committee with                 
            "no recommendation" and with a zero fiscal note by                 
            the Alaska Court System, dated 1/30/96; and with a                 
            fiscal impact note by the Office of the Governor.                  
  HOUSE BILL 75                                                                
                                                                               
       An Act relating to criminal mischief.                                   
                                                                               
  Co-Chair Hanley provided members with a committee substitute                 
  for HB  75, Work Draft  #9-LS0369\O, dated 2/15/96  (copy on                 
  file).                                                                       
                                                                               
  ANNE CARPENETI,  ASSISTANT ATTORNEY  GENERAL, DEPARTMENT  OF                 
  LAW reviewed the  committee substitute.  She  noted that the                 
  Committee discussed the inclusion of  vehicles that would be                 
                                                                               
                                2                                              
                                                                               
                                                                               
  covered under the felony vehicle  theft provision during the                 
  2/13/95 meeting.  This information was added on page 1, line                 
  12  of the  work draft.    She added  that page  2,  line 30                 
  provides  for vehicle  theft  in  the  second degree.    She                 
  observed that vehicles not specified  under vehicle theft in                 
  the first degree would be covered under vehicle theft in the                 
  second degree.  She  clarified that snow machines  fit under                 
  vehicle theft in the second degree.   Second degree theft is                 
  an A misdemeanor with  a maximum sentence of up  to a $5,000                 
  thousand dollar fine and one year in jail.                                   
                                                                               
  Representative Mulder MOVED to adopt Work Draft #9-LS0369\O,                 
  dated 2/15/96.  There being NO OBJECTION, it was so ordered.                 
                                                                               
  Representative  Mulder prepared  a  House Finance  Committee                 
  fiscal  note for the  Department of  Corrections (Attachment                 
  1).   He explained that  the House Finance  Committee fiscal                 
  note  was based  on assumptions  used  in the  Department of                 
  Corrections' fiscal  note for  SB 14.   Senate  Bill 14  was                 
  introduced in 1995  by Senator Leman.   Senate Bill 14  also                 
  addressed criminal mischief.                                                 
                                                                               
  Ms. Carpeneti characterized HB  75 as a "tougher" bill  than                 
  SB  14.   She  observed that  HB  75 raises  the offense  of                 
  vehicle  theft  from a  class  A  misdemeanor to  a  class C                 
  felony.   She  estimated  that this  change  will result  in                 
  additional costs.  Representative Mulder maintained that the                 
  costs would not be greater.  He provided members with copies                 
  of  the Department  of Corrections'  fiscal note  for SB  14                 
  (Attachment 2).                                                              
                                                                               
  Discussion ensued regarding the provisions of SB 14.                         
                                                                               
  JERRY  LUCKHAUPT,  LEGISLATIVE  LEGAL  COUNSEL,  LEGISLATIVE                 
  AFFAIRS  AGENCY clarified that CSSB 14  (JUD), vetoed by the                 
  Governor,  retained  the   existing  penalty  structure  for                 
  juveniles.  He  observed that  the original draft  of SB  14                 
  would  have  revised the  penalty  structure.   The original                 
  draft more closely resembled HB 75.                                          
                                                                               
  Representative  Mulder  pointed out  that  Attachment 2  was                 
  drafted  based  on  the  original  version  of SB  14.    He                 
  maintained that the provisions of SB  14 can be compared for                 
  fiscal impact.                                                               
                                                                               
  JERRY SHRINER, SPECIAL ASSISTANT, DEPARTMENT OF CORRECTIONS,                 
  DEPARTMENT OF CORRECTIONS discussed Attachments 1 and 2.  He                 
  explained that the calculations used in the  fiscal note for                 
  SB 14 did not  take into account the  number of second  time                 
  felons that would be presumptively sentenced to a minimum of                 
  four years.   Thirty-two of one hundred  and sixty offenders                 
  prosecuted under felony car theft in  HB 75 are estimated to                 
                                                                               
                                3                                              
                                                                               
                                                                               
  be second time offenders.                                                    
                                                                               
  Representative Mulder provided members with assumptions used                 
  in preparations of  the House Finance Committee  fiscal note                 
  for the Department of Corrections, HB 75 (Attachment 3).  He                 
  maintained that the  assumptions used  by the Department  of                 
  Corrections were excessive.  He observed that the Department                 
  estimated that  it will  cost $107  dollars a  day to  house                 
  these offenders.  He reviewed assumptions used in Attachment                 
  3.  He  estimated that  it will  cost $57 dollars  a day  to                 
  house second time offenders.  The fiscal note authorizes 1.4                 
  new  positions.    He  clarified   that  the  House  Finance                 
  Committee fiscal  note was based on assumptions  used in the                 
  fiscal note prepared by the Department of Corrections for SB
  14, regarding the number of offenders and days served.                       
                                                                               
  Mr. Shriner noted that the Department estimated that  32 out                 
  of  160 offenders would be second time offenders which would                 
  be incarcerated for a minimum of 90 days.  He  stressed that                 
  $107 dollars a day is  the Department's best guess regarding                 
  what  it  costs  to  operate.    He stated  that  CRC's  and                 
  probation costs would be more than $1.0 million dollars even                 
  if the prison time was eliminated.  The fiscal note prepared                 
  by  Representative Mulder  for the  House Finance  Committee                 
  estimates  a  cost  of  $801.0   thousand  dollars  for  the                 
  Department  of Corrections.   The  Department's fiscal  note                 
  estimates a cost of $1.306.7 million dollars.                                
                                                                               
  Representative  Brown   noted  that  state  prisons  are  at                 
  capacity.    She questioned  how  the cost  of incarceration                 
  could  be  zero.   Representative  Mulder stated  that every                 
  institution is not at full capacity.  He maintained that the                 
  32 offenders can be absorbed into existing institutions.  He                 
  asserted  that  there  is elasticity  in  the  Department in                 
  regards to cost.  He maintained  that 32 extra offenders are                 
  not  going  to  increase  the  Department's  cost  of  doing                 
  business.   Representative  Brown expressed  doubt that  the                 
  Department could  absorb  32  prisoners  without  additional                 
  cost.                                                                        
                                                                               
  In   response  to   a  question  by   Representative  Kelly,                 
  Representative  Mulder   reiterated  factors  used   in  the                 
  calculations of the fiscal note.                                             
                                                                               
  Representative Mulder MOVED  to report CSHB 75 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes, with the  exception of the fiscal                 
  note for  the  Department of  Corrections.   There being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  Representative Mulder  MOVED  to adopt  the $801.0  thousand                 
  dollar  House   Finance  Committee   fiscal  note   for  the                 
                                                                               
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  Department of Corrections.   Representative Brown  OBJECTED.                 
  A roll call vote was taken on the MOTION.                                    
                                                                               
  IN FAVOR: Kelly, Kohring, Martin, Mulder,  Navarre, Parnell,                 
            Therriault, Hanley                                                 
  OPPOSED:  Brown                                                              
                                                                               
  Co-Chair Foster  and Representative Grussendorf  were absent                 
  from the vote.                                                               
                                                                               
  The MOTION PASSED (8-1).                                                     
                                                                               
  CSHB 75 (FIN) was reported out of Committee with a "do pass"                 
  recommendation and with  nine fiscal impact notes;  three by                 
  the Department of  Health & Social Services,  dated 1/30/96;                 
  one by  the Department  of Law,  dated 1/30/96;  one by  the                 
  Alaska Court System, dated 1/30/96; two by the Department of                 
  Public  Safety,  dated  1/30/96; one  by  the  House Finance                 
  Committee for the  Department of Corrections; and one by the                 
  Department of Administration.                                                
  HOUSE BILL NO. 437                                                           
                                                                               
       "An Act establishing the Judicial Officers Compensation                 
       Commission;  relating  to the  compensation  of supreme                 
       court justices, judges of the  court of appeals, judges                 
       of the superior  court, and district court  judges; and                 
       providing for an effective date."                                       
                                                                               
  Representatives  Brown  and  Parnell provided  members  with                 
  Amendment 1 (Attachment 4).   Representative Brown explained                 
  Amendment  1.   She  noted  that  the first  portion  of the                 
  amendment on page 2, lines 23 -25 restate qualifications for                 
  membership   on   the  Commission.      She  stressed   that                 
  qualifications would be  more flexible.  "An  economist" was                 
  changed  to  "one  person  with  experience  in  economics",                 
  "business  executive"  was  changed  to  "one   person  with                 
  experience in business",  and "lawyer"  was changed to  "one                 
  attorney licensed to practice law in this state".                            
                                                                               
  ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT                 
  SYSTEM  spoke  in  support  of  the  first  portion  of  the                 
  amendment.                                                                   
                                                                               
  Representative  Brown  noted  that the  second  part  of the                 
  amendment  would  amend  the  time  an  order  changing  the                 
  compensation of a justice  or judge would take effect.   She                 
  observed that  the legislation  states that  an order  would                 
  take effect unless it  is disapproved in its entirety  in 60                 
  days.  She noted that the  amendment would delete "within 60                 
  days  after" and insert  "on or before  the last  day of the                 
  legislative  session."   She maintained  that the  amendment                 
                                                                               
                                5                                              
                                                                               
                                                                               
  would  allow  a  coordinated  decision between  disapproving                 
  legislation  and the budget.   Representative Brown asserted                 
  that  if  the Legislature  did  not  act and  the  change of                 
  compensation was not  funded in the  budget that the  Alaska                 
  Court System  would have to absorb any costs associated with                 
  the order in their budget.   She stressed that the intent is                 
  to make a decision, up or  down, and coordinate the decision                 
  in the budget.                                                               
                                                                               
  Mr.  Snowden emphasized that there  would not be enough time                 
  to include the  change in compensation  in the budget if  it                 
  was not approved prior to the end  of session.  He suggested                 
  that 80 or 85 days would allow  time to include this item in                 
  the House  Budget.   He stressed  the  difficulty of  adding                 
  items to the budget late in the process.                                     
                                                                               
  Co-Chair Hanley  referred to  Amendment 2  by Representative                 
  Brown (Attachment 5).   He questioned if the  order changing                 
  the compensation  was not specifically appropriated  and the                 
  Legislature fails  to  enact  legislation  disapproving  the                 
  order would the Alaska Court System absorb the change in its                 
  budget.                                                                      
                                                                               
  Mr.  Snowden stated  that there  would be  an obligation  to                 
  provide the pay  raise to judges.  He  stated that the raise                 
  would be paid from the Alaska Court System's budget.                         
                                                                               
  Co-Chair   Hanley   noted   that   the  issue   becomes   an                 
  appropriation choice.  Mr. Snowden emphasized that without a                 
  date for consideration of the appropriation "it is up in the                 
  air".                                                                        
  Representative Brown stated that there  should be a separate                 
  appropriation.                                                               
                                                                               
  Co-Chair  Hanley  suggested  that  Amendment 1  be  divided.                 
  Representative Brown  MOVED to  divide Amendment  1.   There                 
  being NO OBJECTION, it was so ordered.  Representative Brown                 
  MOVED to adopt Amendment 1A, amending page 2, lines 23 - 25.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Representative  Martin  spoke in  support  of providing  the                 
  legislature  with  the maximum  amount  of flexibility.   He                 
  stressed that salary  raises for  judges should be  analyzed                 
  with the total budget.                                                       
                                                                               
  Representative Mulder suggested that "on  or before the last                 
  day of the legislative session" be inserted into Amendment 2                 
  and "within 60 days after" be deleted.                                       
                                                                               
  Representative Navarre  suggested that the order take effect                 
  on  the  date  of  a  separate  appropriation  to  fund  the                 
  increase.  He  noted that two  steps would be taken.   First                 
                                                                               
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  the  increase  would  be  turned  down  if  the  legislature                 
  disapproves the order.  Secondly,  the order would be turned                 
  down if it is not included in a separate appropriation.                      
                                                                               
  CHRIS  CHRISTENSEN,  STAFF  COUNSEL,  ALASKA  COURT   SYSTEM                 
  explained that the Court has  held that to be constitutional                 
  there has to be a two step process.  He noted that the Court                 
  did not address whether the steps can run concurrently.                      
                                                                               
  Mr.  Snowden  questioned if  problems  would occur  from one                 
  legislature  binding  another if  both  actions do  not take                 
  place  in  the  same  year.    He  emphasized  that  if  the                 
  Legislature  does   not  disapprove   of  the   Commission's                 
  recommendations that the raise would be 12 months later.                     
                                                                               
  (Tape Change, HFC 96-47, Side 2)                                             
                                                                               
  Mr. Snowden estimated that the Legislature will take as much                 
  time as is  given to act.   Co-Chair Hanley questioned  if a                 
  bill  disapproving the recommendations would be passed prior                 
  to 90 days.  He suggested  that the most likely scenario  is                 
  that the decision  will be made in the budget  process.  Mr.                 
  Snowden asked the  Committee to consider inserting  110 days                 
  in order to allow the  conference committee time to consider                 
  the item.  Representative Martin did not feel that this item                 
  should be treated  differently from  other items.   Co-Chair                 
  Hanley stated that  if the Legislature does not  take action                 
  then the Executive  Director of the Alaska Court System will                 
  argue  that  the  item  was  approved  because  it  was  not                 
  disapproved.                                                                 
                                                                               
  Representative Navarre  expressed concern that  on or before                 
  the last day  of the session  would not allow adequate  time                 
  for the recommendations  to be incorporated into  the budget                 
  if they are  not disapproved.  He  noted that if an  item is                 
  not in either the House or Senate budget it cannot be  added                 
  in conference  committee.   He  suggested  that  disapproval                 
  should be by  90 or 100 days  in order to  allow time for  a                 
  budget amendment.                                                            
                                                                               
  Representative  Mulder MOVED to adopted amended Amendment 2:                 
                                                                               
                                                                               
       "(c)  An  order  changing  the  compensation of  a                      
       justice  or  judge  takes  effect  unless  a  bill                      
       disapproving the order in its entirety is  enacted                      
       into  law  on  or  before  the  last  day  of  the                      
       legislative   session  in   which  the   order  is                      
       submitted to the legislature.  Unless disapproved,                      
       an order  increasing the compensation of a justice                      
       or judge is subject to funding through legislative                      
       appropriation and  takes effect  on the  effective                      
                                                                               
                                7                                              
                                                                               
                                                                               
       date of the first  separate appropriation to  fund                      
       the increase."                                                          
  Representative Navarre OBJECTED.  A roll call vote was taken                 
  on the MOTION.                                                               
                                                                               
  IN FAVOR: Brown,   Kohring,    Martin,   Mulder,    Parnell,                 
  Therriault,         Hanley                                                   
  OPPOSED:  Navarre                                                            
                                                                               
  Co-Chair Foster  and Representatives  Kelly and  Grussendorf                 
  were absent from the vote.                                                   
                                                                               
  The MOTION PASSED (7-1).                                                     
                                                                               
  Representative  Navarre  stated that  salary recommendations                 
  for   the  Legislature  should   be  contained   in  similar                 
  legislation.   He  noted  the  political nature  surrounding                 
  legislative  salaries.     He  gave   a  brief  history   of                 
  legislative salary levels.  He  suggested that the inclusion                 
  of legislative salary recommendations in similar legislation                 
  would  allow  for   objective  deliberation  regarding  fair                 
  compensation.  Representative Martin  noted that the  public                 
  expects  the  Legislature  to set  salary  levels  for state                 
  employees.                                                                   
                                                                               
  Representative Mulder MOVED to report CSHB 437 (FIN)  out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal notes.                                                   
                                                                               
  CSHB  437  (FIN)  was  reported out  of  Committee  with "no                 
  recommendation" and with  a zero fiscal  note by the  Alaska                 
  Court System, dated 1/30/96;  and with a fiscal impact  note                 
  by the Office of the Governor.                                               
  HOUSE BILL 75                                                                
                                                                               
       An Act relating to criminal mischief.                                   
                                                                               
  Representative Mulder clarified  that CSHB 75 (FIN)  and the                 
  original version of  SB 14  were both tougher  than CSSB  14                 
  (JUD)  which  was  vetoed by  the  Governor  after  the last                 
  session.                                                                     
  HOUSE BILL NO. 319                                                           
                                                                               
       "An Act relating  to the regulation  of small loan  and                 
       retail installment transactions."                                       
                                                                               
  GEORGE DOSIER, STAFF, REPRESENTATIVE PETE  KOTT testified in                 
  support of HB 319.  He gave a brief overview of HB  319.  He                 
  noted that HB 319 addresses the  Alaska's Small Loan Act and                 
  the Retail Installment  Sales Act.   He observed that  under                 
                                                                               
                                8                                              
                                                                               
                                                                               
  the Small Loan Act HB 319:                                                   
                                                                               
       *    Increases the application  fee from $400.0 hundred                 
            dollars to $1.0 thousand dollars:                                  
                                                                               
       *    Authorizes    multiple    office    licenses   and                 
            establishes 10 offices  as the  maximum number  of                 
            offices eligible under one license;                                
                                                                               
       *    Increases the annual license fee from $200 to $500                 
            hundred dollars in the case of a single office and                 
            allows a multiple office  license of $2.0 thousand                 
            dollars;                                                           
                                                                               
       *    Increases liquid asset  requirements from $20.0 to                 
            $25  thousand  dollars;  and   clarifies  that  an                 
            equivalent  amount  must  be  available  for  each                 
            office licensed under a multiple office license;                   
                                                                               
       *    Increases  the bond requirement from $5.0 to $20.0                 
            thousand dollars; and clarifies that only one bond                 
            is required for a multiple office license;                         
                                                                               
       *    Allows  licensees to  maintain  books and  records                 
            consistent with contemporary  data processing  and                 
            accounting methods (the licensee would not have to                 
            maintain separate books for associated business);                  
                                                                               
       *    Clarifies regulations regarding splitting of loans                 
            (husbands and  wives may receive  separate loans);                 
            and                                                                
                                                                               
       *    Broadens  the  scope  of  non-interest  fees  that                 
            lenders  may  charge borrowers  and  increases the                 
            amount of late  payment fees  that may be  charged                 
            from  10 percent or  $15 dollars to  10 percent or                 
            $25 dollars whichever is less.                                     
                                                                               
  Mr. Dosier explained that HB 319  would permit the charge of                 
  reasonable costs and fees for appraisals, surveys, and title                 
  insurance and  reports on loans of $10.0 thousand dollars or                 
  less where real property is taken as collateral.  This would                 
  also  apply  to loans  over $10.0  thousand dollars  even in                 
  cases where real  collateral is not taken for the  loan.  He                 
  added  that reasonable  attorney fees,  actual expenses  and                 
  costs would be allowed in connection  to the collection of a                 
  delinquent loan or foreclosure.                                              
                                                                               
  Mr.  Dosier  noted  the effects  of  HB  319  on the  Retail                 
  Installment Sales Act:                                                       
                                                                               
       *    Clarifies  and  broadens  the scope  of  fees  and                 
                                                                               
                                9                                              
                                                                               
                                                                               
            charges  that may  be imposed  in  connection with                 
            transactions,  including  late   fees,  collection                 
            charges and dishonored check charges which are not                 
            currently allowed; and                                             
                                                                               
       *    Amends current  law to  permit  lenders to  charge                 
            interest rates at whatever rate  the parties agree                 
            to charge.                                                         
                                                                               
  Representative  Navarre  referred  to   the  increased  bond                 
  requirement.    Mr.  Dosier  clarified  that  currently  all                 
  licensees pay a  $5.0 thousand dollar bond.   Representative                 
  Navarre noted that  a business  with five offices  currently                 
  maintains a $25.0 thousand dollar bond.  Under the bill they                 
  would still need a  $25.0 thousand dollar bond.   He pointed                 
  out that small operations would be  penalized.  He asked the                 
  justification for the change.                                                
                                                                               
  Representative Brown noted that the legislation would remove                 
  limits on interest.   She  questioned if the  rate could  be                 
  changed without the agreement of  both parties.  Mr.  Dosier                 
  stated that notification  of term  changes would pertain  to                 
  future  use  of the  card.    The terms  are  established by                 
  agreement.                                                                   
                                                                               
  WILLIS   KIRKPATRICK,   DIRECTOR,   DIVISION   OF   BANKING,                 
  SECURITIES  AND  CORPORATIONS,  DEPARTMENT OF  COMMERCE  AND                 
  ECONOMIC DEVELOPMENT stated that the Small Loan Act needs to                 
  be  addressed.     He  noted  that  the   legislation  is  a                 
  collaboration  between  the  Division  and  businesses.   He                 
  observed that the Act was enacted at statehood.  He observed                 
  that the  bond requirement was raised to reflect the maximum                 
  personal loan a small loan company can make.                                 
                                                                               
  Representative  Navarre  pointed  out  that one  bond  could                 
  pertain to 10  separate offices.   Mr. Kirkpatrick  observed                 
  that  currently each office has  their own license and bond.                 
  He noted that there  has not been an  action against a  bond                 
  since  he  began   working  with   the  Division  in   1968.                 
  Representative Navarre reiterated  multiple licensees  would                 
  have an economic advantage.                                                  
  Representative  Brown  asked   Mr.  Kirkpatrick  to  discuss                 
  interest rates.  Mr. Kirkpatrick maintained that if one side                 
  of the balance sheet  is deregulated that the other  side of                 
  the  balance sheet  should be  deregulated.   He  noted that                 
  interest rates  are highly  competitive.   He observed  that                 
  interest  rates  are   imported  from  other  states.     He                 
  emphasized that the Division receives  a lot of applications                 
  from merchants that want to become small loan companies.  He                 
  maintained that Alaskan  businesses want  to compete in  the                 
  market  place  but cannot  compete  using the  Alaska Retail                 
  Installment  Sales  Act.    He  noted that  one  company  in                 
                                                                               
                               10                                              
                                                                               
                                                                               
  Anchorage    offers computers  at  no  money  down  with  an                 
  interest rate of  21 percent.  He  stressed that competition                 
  determines the interest rate.                                                
                                                                               
  Representative  Navarre  asked why  the  fiscal note  by the                 
  Department of Commerce and Economic Development is zero.  He                 
  asked if the Division has any concerns.                                      
                                                                               
  Mr. Kirkpatrick  told the  Committee that  he would  provide                 
  them with an  updated fiscal  note explaining why  it is  at                 
  zero.  He  observed that application fees  will be increased                 
  from $400.0 to $1.0 thousand dollars.   The legislation also                 
  allows the Department to charge actual expenses.  He  stated                 
  that he did not  foresee any substantial increase in  actual                 
  expenses.    He stated  that  any  expected impact  will  be                 
  positive.  He  could not estimate  the actual impact of  the                 
  legislation.                                                                 
                                                                               
  Representative Navarre  asked how many single  offices would                 
  have fees reduced  by going  to a multiple  license and  how                 
  many  offices would have  their fees raised  by 150 percent.                 
  Mr. Kirkpatrick noted that there are 18 licensees.   Norwest                 
  is the only licensee which has multiple offices.                             
                                                                               
  (Tape Change, HFC 96-48, Side 1)                                             
                                                                               
  Representative Navarre asked if the Division has suggestions                 
  for  improvement.    Mr.  Kirkpatrick   responded  that  the                 
  Department is in  total agreement with the  legislation.  He                 
  observed that some adjustments were  made through the debate                 
  process.  He noted that the Division met with members of the                 
  industry on several occasions.                                               
                                                                               
  JOHN HIGGINS, GENERAL MANAGER,  NORTHLAND CREDIT CORPORATION                 
  testified in support  of HB 319.   He noted that he  is also                 
  speaking on behalf of the Alaska Consumer Financial Services                 
  Association.   He explained  that the  difference between  a                 
  $5.0 and $25.0  thousand dollar bond is  only $100.0 hundred                 
  dollars a year in premiums.   He maintained that the license                 
  fee  cost is reasonable  and in line with  other states.  He                 
  reviewed highlights of HB 319.   He stressed that joint loan                 
  provisions are currently restrictive.   House Bill 319 would                 
  allow more than  one open account with  the same party  or a                 
  spouse.  He observed that currently only 30  day incremental                 
  payment cycles are  allowed between payments.   He suggested                 
  that this is restrictive to seasonal workers.  He noted that                 
  increased fees for insufficient fund checks will assure that                 
  costs are  passed on to non-payers.  He restated that HB 319                 
  will allow  a competitive  interest rate  structure to  meet                 
  competition with outside companies  that export their  rates                 
  into the state of  Alaska.  He requested that  the Committee                 
  add an immediate effective date.                                             
                                                                               
                               11                                              
                                                                               
                                                                               
  Mr. Higgins emphasized  that HB 319 would  create and retain                 
  jobs  in  Alaska's  financial   industry  and  provide  more                 
  financing  to local  communities.  He  stressed that  HB 319                 
  would provide credit to a broader base of Alaskan consumers.                 
                                                                               
                                                                               
  JOHN  SHIBE, EXECUTIVE  VICE  PRESIDENT,  NATIONAL  BANK  OF                 
  ALASKA, NORTHLAND CREDIT CORPORATION spoke  in support of HB
  319.  He noted that the material has been well represented.                  
                                                                               
  In response to a question  by Representative Therriault, Mr.                 
  Kirkpatrick  stated that  an immediate effective  date would                 
  have no impact on the agency.                                                
                                                                               
  Representative Brown asked how the legislation  would change                 
  the  late  fee  authorization.    Mr.  Higgins  stated  that                 
  currently it is  unclear if late  fees are authorized.   The                 
  industry  does  not charge  a  late fee  at  this time.   He                 
  observed that Section  13 clarifies  what can be  done.   He                 
  clarified that Section 13 applies  to the Retail Installment                 
  Sales Act.  Representative Brown  noted that the legislation                 
  allows for  a "reasonable" charge.   She questioned  what is                 
  reasonable.  Mr. Higgins stated that a dollar amount was not                 
  inserted because  of the  changing nature  of the  industry.                 
  Representative Brown suggested that the Department could use                 
  regulations   to   determine    what   is   "reasonable".                    
  Representative Brown asked  what recourse  a consumer  would                 
  have it  they felt  they were  charged an  unreasonable fee.                 
  Mr. Higgins stated that they could  contact the company.  He                 
  explained  that  it  would  not   be  under  the  Division's                 
  regulation.  He observed  that the consumer has the  ability                 
  to go to  the State  Attorney General or  other agencies  to                 
  voice their concerns.   Mr. Shibe added that late  fees have                 
  to be disclosed.                                                             
                                                                               
  SUSAN  BIZE,  GOVERNMENT  RELATIONS,  CREDIT DEPARTMENT,  JC                 
  PENNY INC. testified  via the  teleconference network.   She                 
  spoke in  support of HB 319.   She explained that  late fees                 
  are  agreed to once  the charge account has  been used.  She                 
  restated that  the purpose  of HB  319 is  to allow  Alaskan                 
  retailers to  effectively compete with  out-of-state vendors                 
  who are importing rates into the State.                                      
                                                                               
  Representative  Therriault  MOVED   to  adopt  an  immediate                 
  effective  date.   There  being  NO  OBJECTION,  it  was  so                 
  ordered.                                                                     
                                                                               
  Representative Therriault MOVED to report CSHB 319 (FIN) out                 
  of Committee  with individual  recommendations and with  the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
                               12                                              
                                                                               
                                                                               
  CSHB 319  (FIN) was  reported out  of Committee  with a  "do                 
  pass" recommendation  and  with a  zero fiscal  note by  the                 
  Department  of  Commerce  and  Economic  Development,  dated                 
  2/2/96.                                                                      
  HOUSE BILL NO. 204                                                           
                                                                               
       "An Act relating to the  administrative revocation of a                 
       minor's license to drive; creating criminal offenses of                 
       minor operating  a vehicle after  consuming alcohol,  a                 
       minor's refusal to submit to chemical test, and driving                 
       during  the  24  hours  after  being  cited  for  minor                 
       operating   a   vehicle   after    consuming   alcohol;                 
       establishing penalties for these offenses; and relating                 
       to implied consent  to certain  testing if operating  a                 
       motor vehicle, aircraft, or watercraft."                                
                                                                               
  Ms. Carpeneti spoke  in support of  HB 204.  She  noted that                 
  the legislation creates three new offenses:                                  
                                                                               
       *    It establishes a "zero tolerance level" for minors                 
            who  consume alcohol and  operate a motor vehicle,                 
            aircraft or  watercraft.  The  legislation created                 
            an infraction for minors operating a vehicle under                 
            the influence of  alcohol, with  a penalty of  not                 
            more  than $1,000  thousand dollars  and community                 
            work service;                                                      
                                                                               
       *    Creates  a separate infraction  for the refusal to                 
            take a breath test;                                                
                                                                               
       *    Creates an  offense for operating a  motor vehicle                 
            within 24 hours of having  been cited for drinking                 
            and driving as a juvenile; and                                     
                                                                               
       *    Provides  for  administrative  revocation   of  an                 
            operator's  license  or  privilege  to  drive  for                 
            having driven  with any  amount of  alcohol for  a                 
            person under the age of 21.                                        
                                                                               
  Ms. Carpeneti maintained that the legislation was created to                 
  ensure  safety.   She  observed  that juveniles  represent a                 
  higher percentage  than  their population  group in  traffic                 
  accidents and  fatalities.   She added that  the State  will                 
  loose federal highway funds if a  zero tolerance bill is not                 
  passed by the fall of 1997.                                                  
                                                                               
  Ms. Carpeneti provided members with  Amendment 1 (Attachment                 
  6).  She noted  that Amendment 1 would correct  an oversight                 
  in the legislation.  She  explained that the amendment would                 
  provide for  an administrative  revocation of  an operator's                 
                                                                               
                               13                                              
                                                                               
                                                                               
  license after being cited for refusal to take a breath test.                 
  The  amendment also  provides that  a person  that has  been                 
  cited for refusal to take a breath test may not drive for 24                 
  hours after having been cited for the offense.                               
                                                                               
  Ms.  Carpeneti provided members with Amendment 2 (Attachment                 
  7).   She explained  that the  Court ruled  in Booth  versus                 
  State, that the possibility of  imposition of community work                 
  service on a  person who is  charged with an offense  raises                 
  the requirement of  court appointed counsel  and right to  a                 
  jury  trial.   The Department  would like  to litigate  this                 
  ruling.    She observed  that  the legislation  provides for                 
  penalties  of  up  to  a  $1,000  thousand  dollar  fine and                 
  community work service.  She stated that the Department does                 
  not want  to have  to provide  for court  appointed counsel.                 
  The amendment would  take effect  upon the  decision of  the                 
  Court.  The  amendment would  impose up to  a $1,000  dollar                 
  fine and allow the offender  to choose to work the fine  off                 
  with community  service.   This would  be contingent on  the                 
  Court's final decision  that the  offenses being created  in                 
  the bill do trigger the right to court appointed counsel and                 
  a  jury trial.   She further  discussed the  Court's ruling.                 
  She noted  that the penalties were drafted to be infractions                 
  in order to not trigger the  procedure safeguards due to the                 
  expense of counsel and jury trials.                                          
                                                                               
  Ms. Carpeneti discussed other related cases.  She noted that                 
  "use  it and loose it"  legislation passed in 1995, provided                 
  that a person under 21  who drinks automatically comes under                 
  administration  revocation of  a  motor operator's  license.                 
  This also covers the use of drugs.  She noted that the Court                 
  ruled  that because  of  the possibility  of  administrative                 
  revocation  of   a  motor   operator's  license   that  this                 
  legislation would also  trigger the right  to counsel and  a                 
  jury trial.  This issue is on appeal.                                        
                                                                               
  In  response  to  a question  by  Representative  Brown, Ms.                 
  Carpeneti  explained  that  when  a  person is  stopped  for                 
  driving under the influence a citation is  issued which acts                 
  as a temporary license for  7 days to allow time to  appeal.                 
  The legislation provides notification that  the minor is not                 
  allowed  to drive  for 24  hours after  having received  the                 
  citation.                                                                    
                                                                               
  Representative Mulder  MOVED to  adopt Amendment  1.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Mulder  MOVED to  adopt Amendment  2.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Mulder MOVED  to report CSHB 204  FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
                                                                               
                               14                                              
                                                                               
                                                                               
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 3:40 p.m.                                           
                                                                               
                                                                               
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