Legislature(1995 - 1996)

04/29/1996 02:10 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
                     HOUSE FINANCE COMMITTEE                                   
                         April 29, 1996                                        
                            2:10 P.M.                                          
                                                                               
  TAPE HFC 96-146, Side 1, #000 - end.                                         
  TAPE HFC 96-146, Side 2, #000 - end.                                         
  TAPE HFC 96-147, Side 1, #000 - end.                                         
  TAPE HFC 96-147, Side 2, #000 - #552.                                        
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House  Finance Committee                 
  meeting to order at 2:10 p.m.                                                
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Foster               Representative Martin                          
  Representative Brown          Representative Mulder                          
  Representative Grussendorf    Representative Navarre                         
  Representative Kelly          Representative Parnell                         
  Representative Kohring        Representative Therriault                      
                                                                               
  Co-Chair Hanley was absent from the meeting.                                 
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Alli Gordon, Staff, Senator  Frank; Diane Worley,  Director,                 
  Division of Family and Youth  Services, Department of Health                 
  &  Social  Services;  Anne   Carpeneti,  Assistant  Attorney                 
  General, Criminal Division, Department of Law; Bill  Ezzell,                 
  Deloitte  &  Touche  LLP, Washington  D.C.;  Guy  Patterson,                 
  Fairbanks;  Leslie  Drumhiller,  Fairbanks;  Judy  Shiffler,                 
  Fairbanks; Mark  Hickey, Alaska  Railroad Corporation;  Gary                 
  Anglan, American Federation of Government Employees; Senator                 
  Johne Binkley,  Board Member,  Alaska Railroad  Corporation;                 
  Former   Governor  Bill   Sheffield,   Chairman,  Board   of                 
  Directors,  Alaska Railroad  Corporation; Jeff  Cook, Mapco,                 
  Anchorage;                                                                   
                                                                               
  SUMMARY                                                                      
                                                                               
  HB 136    An Act mandating the sale  of the Alaska Railroad;                 
            and providing for an effective date."                              
                                                                               
            CSHB 136 (FIN) was reported  out of Committee with                 
            "no  recommendation" and with a fiscal impact note                 
            by  the  House  State  Affairs Committee  for  the                 
            Department of Commerce and Economic Development.                   
                                                                               
  SB 112    An Act establishing a discovery royalty credit for                 
                                                                               
                                1                                              
                                                                               
                                                                               
            the  lessees  of state  land  drilling exploratory                 
            wells and making the first discovery of oil or gas                 
            in commercial quantities.                                          
            SB 112 was rescheduled to another time.                            
                                                                               
  SB 186    An Act  relating to partnerships;  amending Alaska                 
            Rules of Civil Procedure 20  and 24; and providing                 
            for an effective date.                                             
                                                                               
            CSSB 186 (L&C) was reported  out of Committee with                 
            a  "no recommendation"  and  with a  fiscal impact                 
            note by  the Department  of Commerce  and Economic                 
            Development, dated 3/18/96.                                        
                                                                               
  SB 229    An Act relating to employment contributions and to                 
            making the state training and employment program a                 
            permanent state  program;  and  providing  for  an                 
            effective date.                                                    
                                                                               
            SB 229 was rescheduled to another time.                            
                                                                               
  SB 289    An  Act  relating  to  runaway  minors  and  their                 
            families or legal custodians.                                      
                                                                               
            SB  289   was  HELD  in   Committee  for   further                 
            consideration.                                                     
  HOUSE BILL NO. 136                                                           
                                                                               
       "An Act mandating the sale of the  Alaska Railroad; and                 
       providing for an effective date."                                       
                                                                               
  Representative Martin, sponsor  of HB 136, spoke  in support                 
  of  the  legislation.   He  noted that  the  legislation was                 
  introduced in recognition  of the  tenth anniversary of  the                 
  acquisition of the Alaska Railroad.  He emphasized that land                 
  is available for  transferred to  the State of  Alaska.   He                 
  noted  that  the  State paid  the  federal  government $20.0                 
  million dollars for the Alaska Railroad.  He maintained that                 
  the State should assess  what is the value of  the railroad.                 
  The legislation would provide for a commission to assess the                 
  value of the  railroad.  He  noted that the legislation  was                 
  changed from providing  for the  sale of the  railroad to  a                 
  commission evaluating the asset.                                             
                                                                               
  Representative  Martin  referred to  the  fiscal note.   The                 
  fiscal noted  by the House  State Affairs Committee  for the                 
  Department  of  Commerce   and  Economic  Development  would                 
  provide $250.0 thousand dollars.                                             
                                                                               
  In   response  to  a   question  by   Representative  Brown,                 
  Representative Martin noted that  other assets are addressed                 
                                                                               
                                2                                              
                                                                               
                                                                               
  on page 4, lines 17 - 27.                                                    
                                                                               
  Representative Brown  asked the  status of  the accompanying                 
  land.  She asked if the land  would become state land and be                 
  under  existing  procedures  for  disposal  of  state  land.                 
  Representative Martin stated  that the  intent is to  assess                 
  the extent of the assets and their current status.                           
                                                                               
  Representative Brown  suggested  that the  land  would  fall                 
  under  a default  status.   She expressed  concern  that the                 
  Commission would  recommend procedures for  the disposal  to                 
  the State.  She thought that the  State would already be the                 
  owner.  She observed that there are existing contracts.  She                 
  asked if contracts are addressed.                                            
                                                                               
  Representative Martin  referred  to a  memorandum by  George                 
  Utermohle, dated 11/9/92.   He stated  that he did not  know                 
  the  extent of contracts entered into by the Alaska Railroad                 
  Corporation.  He noted that section  (B) on page 5 addresses                 
  contracts.   He reiterated that  the intent is  to determine                 
  what is there.                                                               
                                                                               
  Representative Brown questioned what would happen  to assets                 
  that would not be part of the sale.                                          
                                                                               
  Representative Mulder  pointed out that the  current version                 
  does not mandate  a sale.   The legislation  will created  a                 
  Commission to provide guidance and counsel.                                  
                                                                               
  Representative Brown  referred  to page  4,  line 19.    She                 
  suggested that "recommend procedures for the disposal of" be                 
  changed to  "inventory real  property and  contracts of  the                 
  Alaska Railroad Corporation  that are not necessary  for the                 
  operation  of  the railroad,  and  make recommendations  for                 
  their disposition."   She stressed that the  amendment would                 
  recognize that there  are contracts attached to some  of the                 
  real property that is not necessary for the operation of the                 
  railroad.                                                                    
                                                                               
  Representative  Mulder   questioned  if   the  addition   of                 
  "possible"  before  disposal would  alleviate Representative                 
  Brown's concerns.  Representative Brown  reiterated that her                 
  suggested language would clarify the  section.  She stressed                 
  that the current language refers  to the specific conditions                 
  attached to the sale.                                                        
                                                                               
  Representative Brown  MOVED to delete  "recommend procedures                 
  for the disposal of" and insert "inventory real property and                 
  contracts of the  Alaska Railroad  Corporation that are  not                 
  necessary  for  the  operation  of  the railroad,  and  make                 
  recommendations for  their  disposition."   There  being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
                                3                                              
                                                                               
                                                                               
  Representative Brown  referred to page  2, lines 23  and 24.                 
  She noted that the contract for evaluation is exempt from AS                 
  36.30, Procurement Code.                                                     
                                                                               
  Representative Mulder asked how long  it would take to issue                 
  a request for procurement.  He questioned if the procurement                 
  bid could be finished by the November 1, 1996 target date.                   
                                                                               
  Representative  Martin stressed  that  there  are a  limited                 
  amount of people that specialize  in railroad properties and                 
  functions.                                                                   
                                                                               
  Representative  Brown  noted  exceptions   for  professional                 
  services  on page  2, lines 16  and 17.   She questioned the                 
  need  for this  exception.   She noted  that (d)  is  out of                 
  railroad  receipts,  (c)  states  that   it  is  subject  to                 
  appropriation.    She  asked  if  subject  to  appropriation                 
  includes   the   $250.0   thousand   dollar   fiscal   note.                 
  Representative Martin stated  that the  reference is to  the                 
  $250.0 thousand dollar fiscal  note.  He noted that  (c) and                 
  (d) would  both be  covered  by the  $250.0 thousand  dollar                 
  fiscal note.                                                                 
                                                                               
  Representative  Brown  asked why  it  was necessary  to give                 
  consideration  to  persons  with  experience  in   corporate                 
  mergers   and  acquisitions.     She  questioned   how  many                 
  individuals    would    have   the    required   experience.                 
  Representative Mulder stressed the  logic of having  persons                 
  with experience in business practices.                                       
                                                                               
  Representative  Brown stated  that it  would be at  least as                 
  important to  have people  who are  familiar with  the local                 
  communities  and  the  issue  of   land  disposition.    She                 
  emphasized  that  the  needs of  communities  be  taken into                 
  account.                                                                     
                                                                               
  Representative  Martin   observed  that  a  wide   range  of                 
  individuals and communities  would want to participate.   He                 
  emphasized  that everyone  will have  opportunities in  open                 
  meetings to express their concerns.                                          
                                                                               
  Representative Therriault stated that it  was unclear if all                 
  the individuals should  have experience.  He  suggested that                 
  "at least one person" be inserted.                                           
                                                                               
  Representative Martin  stressed that all user  groups cannot                 
  be  represented on the  Commission.  He  reiterated that all                 
  will be able to testify in open meetings.                                    
                                                                               
  Representative Mulder pointed out that the language does not                 
  mandate that all members have experience.                                    
                                                                               
                                4                                              
                                                                               
                                                                               
  Representative Brown  questioned how  open the  Commission's                 
  proceedings would be.   She noted provisions on page  5 that                 
  the  Commission  could discuss  in  executive session.   She                 
  stressed that it could  be argued under subsection (1)  that                 
  the entire conversation has an  adverse effect on the Alaska                 
  Railroad Corporation's finance.   She added that  subsection                 
  (5)  and (6) would cover large  portions of the discussions.                 
  She maintained that the whole  conversation could take place                 
  in secret.   She  asserted that it  is a valid  concern that                 
  public  members  be  involved.    She  questioned  why  land                 
  acquisition or disposal  needs to be included  in allowances                 
  for executive session.                                                       
                                                                               
  Representative Martin expressed concern that the discussions                 
  be open.  He pointed out that page 2, line 1 states that the                 
  Commission "shall" give consideration  to the appointment of                 
  persons who have experience involving corporate mergers  and                 
  acquisitions.                                                                
                                                                               
  Representative Therriault MOVED to delete "persons who have"                 
  and insert "at least one person  who has" experience on page                 
  2, line 1.  There being NO OBJECTION, it was so ordered.                     
                                                                               
  Representative  Martin emphasized  that  it is  important to                 
  know what is  available.  He  observed that the language  on                 
  page 5,  lines 7  - 19  is taken  from the Corporation's  by                 
  laws.                                                                        
                                                                               
  Representative  Therriault  questioned if  the Corporation's                 
  concerned regarding negotiations currently  under discussion                 
  for  purchase of  or disposal  of a  piece of property.   He                 
  stated that the  language could be expanded  to clarify that                 
  only those things that are currently in negotiation would be                 
  allowed discussion under executive session.                                  
                                                                               
  Representative Therriault expressed support for the addition                 
  on page 5  line 15, of  "currently under negotiations."   He                 
  added that consideration should be given to  the customer or                 
  customers that pay the majority of the freight costs.                        
                                                                               
  Representative Parnell MOVED  to adopt Amendment 3  (copy on                 
  file).  He explained  that the amendment would  require that                 
  reports  be  given  to the  Speaker  of  the  House and  the                 
  President  of  the Senate  as  well  as the  Governor.   The                 
  amendment would also  require that copies  of the report  be                 
  made available for the public.  There being NO OBJECTION, it                 
  was so ordered.                                                              
                                                                               
  BILL  SHEFFIELD,   FORMER  GOVERNOR,   CHAIRMAN,  BOARD   OF                 
  DIRECTORS,  ALASKA RAILROAD  CORPORATION  testified via  the                 
  teleconference  network.     He  noted  that  a   number  of                 
                                                                               
                                5                                              
                                                                               
                                                                               
  individuals   were   interested   in   testifying   on   the                 
  legislation.  He gave a brief history of the creation of the                 
  railroad.  He noted that the State purchased the railroad to                 
  obtain ownership of an important transportation corridor  in                 
  the Interior  of Alaska.   He  noted that  the railroad  was                 
  built to allow  expansion where needed.   He maintained that                 
  the railroad is  a performing asset.   He observed that  the                 
  railroad has  only  lost  money  in two  years  while  under                 
  ownership by the State.  He  asserted that the railroad will                 
  continue to make a profit.   He emphasized that the railroad                 
  is a major player in the State's economy.                                    
                                                                               
  (Tape Change, HFC 96-147, Side 2)                                            
                                                                               
  Mr. Sheffield noted other functions  of the Alaska Railroad.                 
  He  emphasized  that  the  Corporation  is  developing  real                 
  estate.  He discussed  land managed by the Corporation.   He                 
  observed  that all  the land  was  transferred to  the State                 
  owned  Corporation.  If the  Corporation is disposed of then                 
  the land would also  have to be disposed.   He stressed that                 
  the sale raises public questions.                                            
                                                                               
  Mr. Sheffield stated that  he is opposed to the sale  of the                 
  Alaska Railroad.   He maintained that the  membership of the                 
  Commission  is too  small.   He  did not  think that  a five                 
  member commission would allow for sufficient representation.                 
  He maintained that it is wrong to require the Corporation to                 
  pay for a  fast track appraisal.  He noted  that the federal                 
  government paid $850.0 thousand dollars for the first cut of                 
  an appraisal of the fair market value of the Alaska Railroad                 
  in 1984.  Mr.  Sheffield emphasized that money spent  for an                 
  appraisal will  reduce funding available  for railroad  ties                 
  and other expenses.                                                          
                                                                               
  Mr. Sheffield stressed that the  Corporation could convene a                 
  Committee to address the issue and make recommendations.                     
                                                                               
  Mr. Sheffield  viewed plans for expansion  and improvements.                 
  He discussed efforts  to obtain federal funds  for passenger                 
  service.  He  clarified that the  reversionary clause is  in                 
  relationship to the land ownership.   He noted that if there                 
  were  a sale  of the  railroad prior to  ten years  then the                 
  difference between what was  paid for the railroad  and what                 
  was received  for  the  railroad  would go  to  the  federal                 
  government.  After  ten years any profits would  remain with                 
  the State.                                                                   
                                                                               
  Mr.  Sheffield reiterated that the Corporation could appoint                 
  a committee consisting of legislators,  users and the public                 
  to address the issue at no cost to the State.                                
                                                                               
  Representative Therriault referred to page 5,  line 15.  Mr.                 
                                                                               
                                6                                              
                                                                               
                                                                               
  Sheffield  observed   that  lines   7  -   15  are  in   the                 
  Corporation's by-laws.   He  acknowledged that  some of  the                 
  items  are  more   important  than  others  in   regards  to                 
  confidentiality.    He  stressed  that  matters  related  to                 
  personnel or finances are of most concern.                                   
                                                                               
  Representative  Brown  questioned if  the discussion  of the                 
  possible  sale of the railroad would  have an adverse effect                 
  on  the finances of  the railroad.   Mr. Sheffield responded                 
  that discussion of the sale could have an adverse effect.                    
                                                                               
  Representative Brown observed that the Commission is not the                 
  same as the Board  of the Alaska Railroad Corporation.   She                 
  acknowledged that the  Corporation would want to  keep items                 
  (1) - (7) in  executive session.  She maintained  that there                 
  should be a different  standard for the Commission  than for                 
  the Board.                                                                   
                                                                               
  Mr.  Sheffield acknowledged that some  of the items could be                 
  revised.                                                                     
                                                                               
  JEFF   COOK,   VICE   PRESIDENT,    EXTERNAL   AFFAIRS   AND                 
  ADMINISTRATION,   MAPCO   PETROLEUM   testified    via   the                 
  teleconference  network.    He  noted  that Mapco  paid  the                 
  railroad  approximately  $23 million  dollars  in 1995.   He                 
  stressed  the  need for  efficiency.   He  expressed concern                 
  about any sale  of the railroad.   He emphasized that  Mapco                 
  has  an  excellent  relationship  with  the  railroad.    He                 
  stressed  the  quality  of  service  and  partnership.    He                 
  expressed  concern that the  Commission's membership  is too                 
  small.  He questioned if the  Commission should first see if                 
  it is in  the State's best interest to sell.  He stated that                 
  the provisions of subsection (g)  would best be addressed if                 
  a decision is made  to pursue a sale.  He  stressed that the                 
  Commission should  be big  enough to  represent the  diverse                 
  users that have an interest in  the railroad.  He reiterated                 
  that he did not see a reason for the sale.                                   
                                                                               
  JOHNE  BINKLEY, EX-SENATOR,  BOARD  MEMBER, ALASKA  RAILROAD                 
  CORPORATION testified  via the  teleconference network.   He                 
  spoke in  opposition to the  legislation.  He  observed that                 
  the railroad  has been  instrumental in  the development  of                 
  Fairbanks.  He  stressed that the  railroad is an  important                 
  transportation  corridor.  He  maintained that  the railroad                 
  should not be  sold.  He  asserted that  the railroad is  an                 
  important asset that should be protected.  He stated that he                 
  has  been  impressed  with  the  management  of  the  Alaska                 
  Railroad.  He  observed that the  railroad made a profit  in                 
  the current year.   He stressed that the Board  protects the                 
  public's interest.  He agreed that  the Board should look at                 
  the issue.   He observed that $250.0  thousand dollars could                 
  be used to purchase needed equipment.                                        
                                                                               
                                7                                              
                                                                               
                                                                               
  GARY  ANGLAN, AMERICAN  FEDERATION  OF GOVERNMENT  EMPLOYEES                 
  (AFGE) testified via  the teleconference network.   He noted                 
  that  AFGE  represents  many of  the  employees  on railroad                 
  property.   He expressed concern  with the legislation.   He                 
  noted that the  transfer from the federal  government was an                 
  agonizing experience for  the railroad employees.   He noted                 
  that employees were retained in the Civil Service Retirement                 
  System during the transfer in 1985.   He emphasized that the                 
  stress  and  uncertainty   that  accompanied  the   transfer                 
  resulted in the loss of qualified  employees.  He noted that                 
  there  was an unfunded  liability for  the employees  in the                 
  Civil  Service  Retirement   System.    He   emphasized  the                 
  difficulty of ascertaining the unfunded  liability for these                 
  employees.  He maintained that  in the advent of a  sale the                 
  new  owner  should   assume  the  cost  of   the  employee's                 
  participation in Civil Service Retirement  System.  He noted                 
  that  employee unions  are  actively engaged  in  collective                 
  bargaining.  He  stated that the discussions  regarding sale                 
  of  the railroad  is  having a  destablizing  effect on  the                 
  negotiation process.  He asked if the  railroad is currently                 
  running okay  and what  is the  potential to  Alaska if  the                 
  railroad  was   free   of   legislative   interference   and                 
  regulation.    He  noted that  the  railroad  received $10.0                 
  million dollars for tie upgrades.   He asked the total worth                 
  of these improvements  for future  operations.  He  observed                 
  that  Governor Sheffield  indicated that the  railroad would                 
  fall apart if this money is not spent.                                       
                                                                               
  MARK HICKEY, ALASKA RAILROAD CORPORATION discussed  item (6)                 
  on  page 5, line 15.  He stated that the additional language                 
  recommended by Representative Therriault should not create a                 
  problem.  Representative Therriault asked if a problem would                 
  be created if (6) was deleted.   Mr. Hickey pointed out that                 
  the language is not  mandatory.  He stated that  there could                 
  be  a  matter pending  that would  need  to be  discussed in                 
  executive session.                                                           
                                                                               
  Representative Martin stressed that once the guidelines  are                 
  placed into law there would be a greater barrier.                            
                                                                               
  (Tape Change, HFC 96-147, Side 1)                                            
                                                                               
  Representative Brown referred  to subsection (1) on  page 5.                 
  She  suggested  that  "except as  related  to  the potential                 
  sale,"  be added  to the beginning of line 7.   She stressed                 
  that it should  be clear that discussions  should take place                 
  in public.                                                                   
                                                                               
  Mr.  Hickey  stated that  the intent  is  clear that  to the                 
  extent  possible  the proceedings  are  to  be public.    He                 
  emphasized that subsection (1)  states, would "clearly" have                 
                                                                               
                                8                                              
                                                                               
                                                                               
  an  adverse effect upon the  finances of the Alaska Railroad                 
  Corporation.     He  emphasized   that  assuming   that  the                 
  Commission intends to operate to  the extent practical in  a                 
  public way, that the language is adequate.  He observed that                 
  the application  of the Corporation  Act in relating  to its                 
  work with the Commission needs to be considered.                             
                                                                               
  Representative Brown clarified that her  concern is that the                 
  Corporation, with all  its concerns, by laws,  and practices                 
  will want to  go into executive  session in its  discussions                 
  with the Commission.                                                         
                                                                               
  Representative Brown referred  to subsection (5) on  page 5,                 
  line 14.   She suggested the addition of "current litigation                 
  involving the Alaska Railroad Corporation".  She stated that                 
  the entire issue addresses the legal  position of the Alaska                 
  Railroad Corporation.                                                        
                                                                               
  Mr.  Hickey  stressed  that current  litigation  may  be too                 
  narrow.   He  observed  that there  could  be legal  matters                 
  pending.                                                                     
                                                                               
  Mr.  Sheffield  noted  that  the  Corporation  discusses  in                 
  executive session matters under  litigation and matters that                 
  may be potential subjects for litigation.                                    
                                                                               
  Mr.  Sheffield noted that $250.0 thousand dollars represents                 
  25,000 railroad ties or 40 miles of track.                                   
                                                                               
  HB 136 was HELD in Committee for further consideration.                      
  SENATE BILL NO. 186                                                          
                                                                               
       "An Act relating to partnerships; amending Alaska Rules                 
       of  Civil Procedure  20  and 24;  and providing  for an                 
       effective date."                                                        
                                                                               
  BILL EZZELL, PARTNER,  DELOITTE &  TOUCHE LLP testified  via                 
  the teleconference network.  He spoke  in support of SB 186.                 
  (Mr.  Ezzell's complete  written remarks are  on file.)   He                 
  noted   that  41   states  have  passed   limited  liability                 
  partnership (LLP) legislation.   He noted that  in a general                 
  partnership, all the partners are  personally liable for all                 
  the obligations of the partnership and for damages caused by                 
  the actions of any other partner acting  in the scope of the                 
  partnership business.  In a LLP, a partner is not personally                 
  liable  for those  partnership  obligations  arising out  of                 
  negligence, wrongful acts,  wrongful omissions,  malpractice                 
  or   misconduct   committed  by   another  partner   of  the                 
  partnership.  The partnership itself remains fully liable to                 
  the  extent of  its assets,  capital and  insurance for  the                 
  obligations  of  the partnership.    Personal assets  of the                 
                                                                               
                                9                                              
                                                                               
                                                                               
  partner or partners directly involved  in the negligent acts                 
  that  cause the  obligation  are not  protected  by the  LLP                 
  status.   The legislation  provides for  insurance or  other                 
  financial  assets  to be  set  aside to  substitute  for the                 
  personal assets  of any partner not involved in acts causing                 
  the obligation.                                                              
                                                                               
  Mr. Ezzell compared LLP's to limited liability corporations.                 
  He  maintained  that  other  forms  of organization  provide                 
  greater protections of personal assets of their owners.                      
                                                                               
  Representative Therriault observed that  similar legislation                 
  was passed on  limited liability for corporations.   Limited                 
  liability partnerships were not included.                                    
                                                                               
  Mr. Ezzell noted that protections offered  a partner are not                 
  as extensive  as protections afforded  a share  holder in  a                 
  limited liability company.  The  legislation would provide a                 
  similar form for partnerships.                                               
                                                                               
  Representative Martin MOVED to report CSSB 186  (L&C) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal  note.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CSSB 186  (L&C) was  reported out  of Committee  with a  "no                 
  recommendation"  and  with  a  fiscal  impact  note  by  the                 
  Department  of  Commerce  and  Economic  Development,  dated                 
  3/18/96.                                                                     
  HOUSE BILL NO. 136                                                           
                                                                               
       "An Act mandating the sale  of the Alaska Railroad; and                 
       providing for an effective date."                                       
                                                                               
  Representative Therriault  MOVED to delete subsection (6) on                 
  page 5,  line 15.    There being  NO  OBJECTION, it  was  so                 
  ordered.                                                                     
                                                                               
  Representative Brown MOVED to delete  "the legal position of                 
  the" and insert "current or potential litigation involving."                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Representative Therriault MOVED to report CSHB 136 (FIN) out                 
  of Committee  with individual  recommendations and  with the                 
  accompanying fiscal  note.   Representative Brown  OBJECTED.                 
  She noted that the legislation is structured into two parts.                 
  Section (f) provides  for a determination of  best interest.                 
  Section  (g)  contains   the  particulars  related  to   the                 
  determination to  sell.  She asserted that subsection (3) on                 
  page 4, lines 17 and  18 should be moved under section  (f).                 
  She  noted  that   subsection  (3)  allows  for   a  broader                 
                                                                               
                               10                                              
                                                                               
                                                                               
  interpretation.                                                              
                                                                               
  Representative Therriault  WITHDREW his motion to  move CSHB                 
  136 (FIN).  There being NO OBJECTION, it was so ordered.                     
                                                                               
  Representative Brown MOVED to move subsection (3) on page 4,                 
  lines 17 and  18 to be placed  under section (f) on  page 2,                 
  line 31.  There being NO OBJECTION, it was so ordered.                       
                                                                               
  Representative Kohring MOVED to report CSHB 136 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  A roll call vote was taken on the                 
  MOTION.                                                                      
                                                                               
  IN FAVOR: Kohring,  Martin,  Mulder,   Parnell,  Therriault,                 
  Foster                                                                       
  OPPOSED:  Brown, Navarre                                                     
                                                                               
  Co-Chair Hanley  and Representatives  Kelly and  Grussendorf                 
  were absent for the vote.                                                    
                                                                               
  The MOTION PASSED (6-2).                                                     
                                                                               
  CSHB  136  (FIN) was  reported  out  of Committee  with  "no                 
  recommendation" and with a  fiscal impact note by  the House                 
  State Affairs Committee  for the Department of  Commerce and                 
  Economic Development.                                                        
  SENATE BILL NO. 289                                                          
                                                                               
       "An Act relating  to runaway minors and  their families                 
       or legal custodians."                                                   
                                                                               
  Members were provide  with a proposed  committee substitute,                 
  Work Draft 9-LS1635\D, 4/27/96 (copy on file).                               
                                                                               
  JUDY SHIFFLER,  FAIRBANKS testified  via the  teleconference                 
  network.  (Ms. Shiffler's written testimony is on file.) She                 
  expressed concern that  section 6 of the  proposed committee                 
  substitute on page 5 would not  adequately slow down or stop                 
  the revolving door.  She stated that SB 289 needs to provide                 
  clear and  immediate consequences.   She  stressed that  the                 
  section  allows  to much  time  to pass  before consequences                 
  occur.  She maintained that the  bills should be designed as                 
  an early intervention measure.  She emphasized that the bill                 
  does not  replace other  facilities that  troubled kids  can                 
  turn to on a voluntary basis.                                                
                                                                               
  GUY PATTERSON,  FAIRBANKS testified  via the  teleconference                 
  network.    He  observed  that  there  are  two  classes  of                 
  children.  The abused child that  is running from an abusive                 
  situation and those that are out  on the street because they                 
                                                                               
                               11                                              
                                                                               
                                                                               
  do not want to  follow their parent's rules.   He maintained                 
  that children are encouraged to run away by other  kids.  He                 
  suggested that  the process  be simplified.   He  emphasized                 
  that it should not be assumed that the parents are at fault.                 
  He stated that when the State takes custody the State should                 
  provide a safe place.   He maintained that the  State should                 
  know where the  child is  in the  middle of the  night.   He                 
  spoke to the  expense of  lock up facilities.   He  asserted                 
  that children would  not leave home  if they knew that  they                 
  would be placed in lock up facilities.                                       
                                                                               
  In  response  to  a question  by  Representative  Brown, Mr.                 
  Patterson clarified that Fairbanks does not have children on                 
  the streets that are under 12 years old.                                     
                                                                               
  LESLIE    DRUMHILLER,    FAIRBANKS    testified   via    the                 
  teleconference network.  She noted that she is the parent of                 
  a 15 year old  runaway.  She recounted experiences  with her                 
  child.  She  emphasized that early intervention  can protect                 
  children.    She stressed  that the  threat  of lock  up can                 
  persuade children to seek help.                                              
                                                                               
  (Tape Change, HFC 96-147, Side 2)                                            
                                                                               
  ALLISON GORDON, STAFF, SENATOR FRANK testified in support of                 
  SB 289. She observed that the legislation was  introduced to                 
  address  the growing concern among parents for the safety of                 
  their runaway children.   She maintained that:  "The runaway                 
  epidemic is a  significant problem  in our communities  that                 
  needs serious  consideration.  The  overwhelming frustration                 
  parents currently feel can be best attributed to the lack of                 
  support they  receive from the government.  Parents are held                 
  accountable for their  children's actions  yet they are  not                 
  given the necessary tools to  exercise authority and instill                 
  guidance in their  children's lives.   Current law  provides                 
  minors with the ability  to thumb their noses at  figures of                 
  authority,   whether   they   be   parents,  teachers,   law                 
  enforcement or otherwise.   Their freedom is  guaranteed and                 
  they have learned how to  exploit and manipulate the  system                 
  in order to get what they want.  We feel that parents should                 
  be  the  ones  who should  decide  what  is  best for  their                 
  children and be able  to nurture and guide them  in a manner                 
  they see fit until the child is old enough to make their own                 
  decisions, support themselves, and be on their own.   Senate                 
  bill 289 tightens  existing law in  an attempt to close  the                 
  revolving door that currently allows runaways the freedom to                 
  avoid having to abide by rules and parental authority."                      
                                                                               
  Ms.  Gordon  noted  that  the  legislation  strengthens  the                 
  language within AS 11.51.130  regarding contributing to  the                 
  delinquency  of  a  minor.    "By discouraging  people  from                 
  harboring runaways, it  will compel  these children to  take                 
                                                                               
                               12                                              
                                                                               
                                                                               
  advantage  of available  services  that  are  necessary  for                 
  assessing  the  individual's  situation  and  beginning  the                 
  process of reconciliation with the child's family."                          
                                                                               
  Ms. Gordon stressed  that the  legislation clarifies that  a                 
  police officer's first course of  action, after picking up a                 
  runaway, will  be  to take  that child  back to  his or  her                 
  parents  unless  the officer  believes  that there  has been                 
  abuse to  the minor.   If  the  parent will  not accept  the                 
  child, then the  second course of action will be to take the                 
  minor  to a  safe place agreed  to by  the parent.   If this                 
  cannot be accomplished then the police officer must take the                 
  child to a semi-secure shelter for assessment of the child's                 
  situation and  determination of the course of action that is                 
  in the best interest of the child.                                           
                                                                               
  Ms. Gordon  noted that various  ways to  address the  secure                 
  placement  of  a  minor  who  is  a  habitual  runaway  were                 
  addressed.   The version that  passed the Senate would place                 
  runaways who run from placement in semi-secure shelters into                 
  secure placements.  This provision jeopardized OJJDP funding                 
  from the federal government in the  amount of $600,000.  The                 
  Department  of  Health &  Social  Services also  attached an                 
  extremely high fiscal note.                                                  
                                                                               
  Ms. Gordon noted that members were provided with  a proposed                 
  committee substitute, Work  Draft 9-LS1635\D, dated 4/29/96.                 
  This  version  authorizes  law  enforcement  to  temporarily                 
  detain  a minor  who  has fled  from  a semi-secure  shelter                 
  pending a court hearing to  ascertain whether probable cause                 
  exists to conclude that the child is a child in need of aid.                 
  At the  hearing the court is required to determine placement                 
  of  the minor  and to  order that  minor to  remain in  that                 
  placement.  If the minor runs from placement they will be in                 
  violation  of  a  court order  and  will  be  picked up  and                 
  detained  in  a  secure   environment,  thus  shutting   the                 
  revolving door.                                                              
                                                                               
  ANNE  CARPENETI, ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT OF                 
  LAW expressed concern with revisions  to the Contributing to                 
  the Delinquency of a Minor statute on page 3.  She urged the                 
  Committee  to change  this provision  to make  it easier  to                 
  prosecute individuals who contribute to the delinquency of a                 
  minor  and encourage children to be  absent from the custody                 
  of their parents.   She stressed that "just cause"  needs to                 
  be defined.  She observed that new language on  page 3, line                 
  30 - page 4, line 1 is not clear enough.   She noted that it                 
  is  easier  to  prove  lack  of  knowledged   than  lack  of                 
  permission.   She suggested  that on  page 3,  line 1  after                 
  "custodian" that "or  without the  knowledge of the  parent,                 
  guardian or  custodian"  be added.   Representative  Parnell                 
  pointed out that  Representative Kelly  has an amendment  to                 
                                                                               
                               13                                              
                                                                               
                                                                               
  that effect.                                                                 
                                                                               
  Ms. Carpeneti  referred to  page 6, lines  10 and  11.   She                 
  noted that  the Court can order  the child to  remain in the                 
  custody of the parents or another party without a finding of                 
  probable  cause if the child is a child in need of aid.  She                 
  stated  that  this  language  is   problematic.    Under  AS                 
  47.10.010(A)(2)(a) a finding of probable cause is needed for                 
  the court to have jurisdiction over the issue and child.                     
                                                                               
  Ms. Carpeneti observed that page 4, lines 21 - 25 takes away                 
  the provision that the sole fact that the child is a runaway                 
  is not enough to justify emergency custody.  She stated that                 
  it is unclear of the effect of this deletion.                                
                                                                               
  Ms. Carpeneti  suggested that  on page  6, line  9 that  the                 
  court when  making its order,  should specify the  terms and                 
  conditions that must be followed by the minor and the parent                 
  or guardian.   She observed that  there are cases where  the                 
  parents are as much of the problem as the child.                             
                                                                               
  DIANE  WORLEY,   DIRECTOR,  DIVISION  OF  FAMILY  AND  YOUTH                 
  SERVICES clarified  that  the Division  supports  the  House                 
  Judiciary version  of SB 289.   She expressed  concerns with                 
  the  proposed committee  substitute.   She  acknowledged the                 
  need for legislation.  She stated that the Division supports                 
  parents  having  more  control  over  their children.    She                 
  asserted that  some  of  the new  amendments  are  going  to                 
  complicate the  issue and  set up  false expectations.   She                 
  emphasized that the  State cannot  make children follow  the                 
  rules  any more than the parents can.  The State can provide                 
  early intervention, counseling and support.                                  
                                                                               
  Ms.  Worley  referred  to  page  2,  lines 12  -  14.    She                 
  emphasized  that  the  requirement  that the  Division  take                 
  emergency custody of a minor who has previously left a semi-                 
  secure  program  without  permission  would  take  away  any                 
  discretion from the Department.    She noted that  there are                 
  no cases where the Division is  currently required to take a                 
  child into custody.   She observed that language on  page 5,                 
  lines 27 - 30 also removes discretion from the Division.                     
                                                                               
  Ms. Worley expressed concern that if children know that they                 
  will be detained  and taken into  state custody if they  run                 
  from  semi-secure  shelters  that  they  will  not  use  the                 
  shelters.  She acknowledged frustration  of parents with the                 
  revolving door  syndrome.   She emphasized  that semi-secure                 
  shelters  provide safety for  children that would  be on the                 
  streets.  Children  have the opportunity for  counseling and                 
  intervention services in the semi-secure shelters.                           
                                                                               
  Representative Therriault  noted that  children often  go to                 
                                                                               
                               14                                              
                                                                               
                                                                               
  shelters only after being picked up by enforcement officers.                 
  Ms. Worley agreed  and added  that the police  will have  to                 
  take the child home.  Children will only go to a  shelter if                 
  the parent refuses to accept the child.  She maintained that                 
  many children use the Family Focus shelter in Fairbanks on a                 
  voluntary  basis.    She  noted that  all  the  children  at                 
  Covenant House in Anchorage are voluntary.                                   
                                                                               
  Ms.  Worley observed that the legislation will only apply to                 
  children that are running from a semi-secure facility.  Only                 
  five facilities around the State  would be under the mandate                 
  to become semi-secure.  She observed that  children in other                 
  parts of the State will not be affected by the law.                          
                                                                               
  Ms. Worley  referred to page 7, lines 9  - 12.  She observed                 
  that Covenant House  operates on  a voluntary  basis.   This                 
  language would exempt  Covenant House from the  provision to                 
  maintain a semi-secure  facility.   She noted that  Covenant                 
  House stated  that they  would end  operations if they  were                 
  forced to operate  a semi-secure facility.   She pointed out                 
  that  Covenant  House  serves  84  percent  of  the  State's                 
  runaways.                                                                    
                                                                               
  Ms.  Worley summarized  that the  Division supports  tougher                 
  consequences  for  adults  that  harbor  runaways  and  more                 
  parental involvement  and responsibility.  The  Division has                 
  concerns  regarding  the   mandate  to  take   runways  into                 
  protective custody.                                                          
                                                                               
  Representative Mulder asked if the fiscal note would change.                 
  Ms.  Worley  estimated that  it  would cost  $250.0 thousand                 
  dollars  to  implement  the  proposed   work  draft.    This                 
  represents  an  increase  of three  social  workers,  two in                 
  Anchorage and one in Fairbanks.                                              
                                                                               
  Representative  Martin  spoke  in support  of  the provision                 
  exempting Covenant House.                                                    
                                                                               
  Ms. Gordon noted that language on page 2, lines 13 -  15 was                 
  a  drafting  oversight based  on  a previous  version.   She                 
  observed   that  the  requirement  that  the  Division  take                 
  children  into  emergency state  custody  was removed.   She                 
  observed that this provision  should be deleted.   She added                 
  that  the  Department   of  Health  &  Social   Services  is                 
  instructed to file a child in need  of aid petition with the                 
  court.    The legislation  requires  that a  law enforcement                 
  officer take into  protective custody a minor  that has fled                 
  from a semi-security shelter.  A minor that has fled a semi-                 
  secure  shelter  after  placement  could  be arrested  as  a                 
  delinquent and could be detained under AS 47.10.080.                         
                                                                               
  Representative  Therriault   noted  Representative   Kelly's                 
                                                                               
                               15                                              
                                                                               
                                                                               
  intent to  delete (4) on page 2, lines 3  - 5 and lines 12 -                 
  15.                                                                          
                                                                               
  Ms. Worley clarified that the requirement to file a petition                 
  is a  higher standard than  the Division is  currently under                 
  for child in  need of aid cases.  Ms.  Gordon responded that                 
  the sponsor feels that something needs to be done to require                 
  the Department to take action in these situations.                           
                                                                               
  SB 289 was HELD in Committee for further consideration.                      
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 5:02 p.m.                                           
                                                                               
                                                                               
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