Legislature(1995 - 1996)

05/06/1996 12:25 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                     HOUSE FINANCE COMMITTEE                                   
                           May 6, 1996                                         
                           12:25 P.M.                                          
                                                                               
  TAPE HFC 96-167, Side 1, #000 - end.                                         
  TAPE HFC 96-167, Side 2, #000 - end.                                         
  TAPE HFC 96-168, Side 1, #000 - end.                                         
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Co-Chair  Mark  Hanley called  the  House Finance  Committee                 
  meeting to order at 12:25 p.m.                                               
                                                                               
  PRESENT                                                                      
                                                                               
  Co-Chair Hanley               Representative Martin                          
  Co-Chair Foster               Representative Mulder                          
  Representative Brown          Representative Navarre                         
  Representative Grussendorf    Representative Parnell                         
  Representative Kelly          Representative Therriault                      
  Representative Kohring                                                       
                                                                               
  ALSO PRESENT                                                                 
                                                                               
  Nancy Slagle, Director, Division of Budget Review, Office of                 
  the  Management  and  Budget, Office  of  the  Governor; Bob                 
  Bartholomew,  Assistant Director,  Income  and Excise  Audit                 
  Division,  Department  of  Revenue; Jerry  Shriner,  Special                 
  Assistant,   Department   of   Corrections;  Janice   Adair,                 
  Director, Division of Environmental Health; Dwight  Perkins,                 
  Deputy  Commissioner,  Department  of  Labor;  Paul  Grossi,                 
  Director, Worker's Compensation,  Department of Labor;  Eric                 
  Tollefsen,   Attorney,   Carr-Gottstein,   Anchorage;  Kevin                 
  Brooks, Director, Division  of Administration, Department of                 
  Fish and Game; Ken Boyd, Director,  Division of Oil and Gas,                 
  Department of  Natural Resources;  Elmer Lindstrom,  Special                 
  Assistant, Department  of Health and  Social Services; Carol                 
  Caroll, Special Assistant, Department  of Public Safety; Tom                 
  Wright, Staff, Representative Ivan Ivan; Bob Cole, Director,                 
  Division   of   Administrative   Services,   Department   of                 
  Corrections.                                                                 
                                                                               
  SUMMARY                                                                      
                                                                               
  SB 215    An  Act   streamlining  the  functions   of  state                 
            government, including authorizing the commissioner                 
            of  fish  and  game to  award  grants  for certain                 
            resource activities; allowing agents  selling fish                 
            and  game  licenses  and  tags  to retain  certain                 
            compensation; authorizing the Department of Health                 
                                                                               
                                1                                              
                                                                               
                                                                               
            and Social  Services to  award grants for  certain                 
            services for developmentally  delayed or  disabled                 
            children;   relating   to   rabies   control   and                 
            administration of flour and bread standards by the                 
            Department    of    Environmental    Conservation;                 
            repealing the Athletic Commission,  the regulation                 
            of  boxing  and  wrestling,  the certification  of                 
            professional geologists, and  the Water  Resources                 
            Board;  repealing  certain  filing statements  and                 
            bonds for  enforcement and  collection of  certain                 
            taxes; and providing for an effective date.                        
                                                                               
            CS SB  215 (FIN) am was reported  out of Committee                 
            with  "no recommendation"  and  with three  fiscal                 
            impact notes, one  by the  Department of Fish  and                 
            Game, one  by  the Department  of  Revenue,  dated                 
            5/1/96, and one by the  Department of Commerce and                 
            Economic Development, dated 1/12/96; and with four                 
            zero  fiscal  notes,  one  by  the  Department  of                 
            Revenue,  dated 5/1/96,  one by the  Department of                 
            Environmental Conservation, dated 1/12/96,  one by                 
            the Department  of Health & Social Services, dated                 
            1/12/96, and  one  by the  Department  of  Natural                 
            Resources, dated 5/1/96.                                           
                                                                               
  SB 216    An Act relating to fees or assessment of costs for                 
            certain  services  provided  by state  government,                 
            including hearing costs related to the real estate                 
            surety fund; fees for  authorization to operate  a                 
            postsecondary  educational  institution or  for an                 
            agent's   permit   to  perform   services   for  a                 
            postsecondary       educational       institution;                 
            administrative fees for self-insurers  in workers'                 
            compensation;  business  license  fees;  fees  for                 
            activities  related  to  coastal zone  management,                 
            training   relating   to    emergency   management                 
            response, regulation of   pesticides and broadcast                 
            chemicals, and subdivision plans for sewage  waste                 
            disposal  or  treatment;   and  providing  for  an                 
            effective date.                                                    
                                                                               
            HCS CSSB 216  (FIN) was reported out  of Committee                 
            with  "no  recommendation"  and  with nine  fiscal                 
            impact notes, two  by the Office of  the Governor,                 
            1/12/96,   one  by   the  Department   of  Natural                 
            Resources,  5/2/96,  one  by   the  Department  of                 
            Revenue,  5/2/96,   one  by   the  Department   of                 
            Environmental  Conservation,  5/4/96,  one by  the                 
            Department of Commerce  and Economic  Development,                 
            1/12/96,  one  by  the  Department  of  Education,                 
            5/2/96,  Department  of   Military  and   Veterans                 
            Affairs,  1/12/96 and  one  by  the Department  of                 
                                                                               
                                2                                              
                                                                               
                                                                               
            Labor.                                                             
                                                                               
  SCR 23    Relating to long range financial planning.                         
                                                                               
            HCS SCR  23 (STA)  was reported  out of  Committee                 
            with a "do  pass" recommendation  and with a  zero                 
            fiscal note by the Senate State Affairs Committee,                 
            2/9/96.                                                            
  SENATE BILL NO. 216                                                          
                                                                               
       An Act relating to fees or assessment of costs for                      
       certain  services  provided  by state  government,                      
       including hearing costs related to the real estate                      
       surety fund; fees for  authorization to operate  a                      
       postsecondary  educational  institution or  for an                      
       agent's   permit  to   perform   services  for   a                      
       postsecondary       educational       institution;                      
       administrative fees for self-insurers  in workers'                      
       compensation;  business  license  fees;  fees  for                      
       activities  related  to  coastal zone  management,                      
       training   relating   to    emergency   management                      
       response, regulation of  pesticides and  broadcast                      
       chemicals, and subdivision  plans for sewage waste                      
       disposal  or  treatment;  and   providing  for  an                      
       effective date.                                                         
                                                                               
  NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF                 
  MANAGEMENT  AND BUDGET,  OFFICE  OF  THE  GOVERNOR  provided                 
  members with a sectional analysis of  SB 216 (copy on file).                 
  She reviewed the sectional analysis.                                         
                                                                               
       *    Section 1.  Allows the Department of Commerce                      
            and Economic Development  to charge costs  of                      
            hearings related  to the  Real Estate  Surety                      
            Fund.   This is a fund shift from the General                      
            Fund.  There is a cap in how much can be held                      
            in this fund.   The  Fund is approaching  its                      
            cap.                                                               
                                                                               
       *    Section  2.     Allows   the  Department   of                      
            Education  to charge  fees by  regulation for                      
            applications to operate  and permits  related                      
            to postsecondary education institutions.                           
                                                                               
       *    Section   3.     Allows   the   Human  Rights                      
            Commission to  charge fees for  education and                      
            training services.                                                 
                                                                               
       *    Section 4.  Allows the Department of Labor to                      
            charge a 4  percent user fee on  self insured                      
            employers.      Municipalities    and   local                      
                                                                               
                                3                                              
                                                                               
                                                                               
            governments would be exempted.                                     
                                                                               
       *    Section 5.  Allows  the Department of Natural                      
            Resources to  charge a fee  for direct  costs                      
            associated  with  the  Exploration  Incentive                      
            Program for mine development.                                      
                                                                               
       *    Section 6.   Allows municipalities  to charge                      
            for prisoners in their facilities up to $70.0                      
            dollars a day.                                                     
                                                                               
  Representative Mulder  questioned if Section 6  would refers                 
  to prisoners in state funded contract jails.                                 
                                                                               
  JERRY  SHRINER, SPECIAL  ASSISTANT DEPARTMENT  OF CORRECTION                 
  explained   that  Section  6   only  applies   to  municipal                 
  prisoners.  Prisoners  held on a  state charge could not  be                 
  assessed the  fee.   There would  no impact  on the  General                 
  Fund.                                                                        
                                                                               
  In response  to a  question by  Representative Parnell,  Mr.                 
  Shriner explained  that state contract jails are  paid for a                 
  lump sum number of beds regardless if they are full.                         
                                                                               
  Representative Mulder  noted that Juneau  and Anchorage  are                 
  the only two municipalities charging under municipal law.                    
                                                                               
  Representative Brown  MOVED to  insert after  "may charge  a                 
  prisoner," "prosecuted under a  municipal ordinance or  held                 
  in a municipal facility" on page 3, line 21.  There being NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
       *    Section   7.     Allows  the   Department  of                      
            Transportation  and   Public  Facilities   to                      
            charge for the use of  state marine or harbor                      
            facilities and  requires municipalities  that                      
            lease state  marine or  harbor facilities  to                      
            charge comparable fees and account for  those                      
            fee separately.                                                    
                                                                               
       *    Section 8 & 12.   Involve the removal of  the                      
            exemption  of gasohol  for the  definition of                      
            motor fuel.                                                        
                                                                               
  Ms.  Slagle  estimated  that  the  State lost  $6.0  million                 
  dollars in FY 96 from the exemption of gasohol  in the motor                 
  fuel definition.                                                             
                                                                               
  BOB BARTHOLOMEW, DEPUTY  DIRECTOR, INCOME  AND EXCISE  AUDIT                 
  DIVISION, DEPARTMENT  OF REVENUE  explained that gasohol  is                 
  being sold year around.   He could not estimate how the  tax                 
  would effect the price or availability of gasohol.                           
                                                                               
                                4                                              
                                                                               
                                                                               
       *    Section 9.  Increases business licenses  fees                      
            charged by Occupational  Licensing by  $12.50                      
            dollars per year for a two year license.                           
                                                                               
       *    Section  10.     Allows  the   Department  of                      
            Military and Veterans Affairs  to charge fees                      
            for emergency management response training.                        
                                                                               
       *    Section  11.     Allows  the  Department   of                      
            Environmental Conservation to charge chemical                      
            firms  fees  for   pesticide  and   broadcast                      
            chemical use  and for  review of  subdivision                      
            plans for sewage waste disposal.                                   
                                                                               
  Representative Therriault asked the estimated fee cost.  Ms.                 
  Slagle stated that the estimated yearly income for pesticide                 
  and broadcast chemical use fees  is $100.0 thousand dollars.                 
  The  estimation  yearly   income  from  subdivision   sewage                 
  disposal plan review fees would be $22.0 thousand dollars.                   
                                                                               
  JANICE ADAIR,  DIRECTOR, DIVISION  OF ENVIRONMENTAL  HEALTH,                 
  DEPARTMENT OF ENVIRONMENTAL CONSERVATION explained that  the                 
  Department would be allowed to  charge a fee for subdivision                 
  sewage disposal plan review only in  areas outside a borough                 
  or municipality.  Only approximately 10 percent of the plans                 
  would be affected.  The estimated fee per subdivision sewage                 
  plan would be $300 hundred dollars.                                          
                                                                               
  Representative Mulder questioned if plans could  be approved                 
  by  civil  engineers.    Ms.  Adair  explained  the  current                 
  procedure.  She  noted that the Department  of Environmental                 
  Conservation does the compliance review  in all areas of the                 
  State except for  Valdez.   She noted that  waste water  and                 
  sewage disposal  is being reviewed  to ensure that  lots are                 
  sized sufficiently  and water  systems are  far enough  away                 
  from an on lot sewage system.                                                
                                                                               
  Representative Mulder  questioned if there  is a duplication                 
  of the civil  engineer's review.   Ms. Adair explained  that                 
  the civil engineer reviews municipal  ordinances or Title 29                 
  requirements.    She   noted  that  Anchorage  has   adopted                 
  ordinances  on  this  topic.    She  acknowledged  that  the                 
  Department  of  Environmental   Conservation  reviews   work                 
  completed by the civil engineer.                                             
                                                                               
  Representative Mulder argued that civil engineers "are going                 
  to  be  extremely  cautious  about   making  those  kind  of                 
  determinations and putting their name on any document."                      
                                                                               
  Representative  Therriault asked  if all  organized boroughs                 
  would  do  their own  review.    Ms. Adair  agreed  that the                 
                                                                               
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  implication is that  all organized  boroughs would do  their                 
  own  review.  She referred to  a letter of intent adopted by                 
  the Senate.  She noted that the  Department of Environmental                 
  Conservation did not support the amendment to make organized                 
  boroughs responsible  for this review.   She noted  that the                 
  implementation  date of  July 1,  1996, would  occur in  the                 
  middle of the construction  season.  She stressed  that with                 
  more time some organized municipalities  could take over the                 
  review, but estimated that some second class cities will not                 
  be able to implement the review.                                             
                                                                               
  Ms. Adair clarified that the  Department would not charge  a                 
  fee  in areas  that have their  own system.   Representative                 
  Therriault acknowledged that local communities should do the                 
  function.  He  stressed that  there should be  more time  to                 
  allow  negotiation  between  the  Administration  and  local                 
  governments.  He expressed concern with the section.                         
                                                                               
  Ms.  Adair  noted  that   the  Administration  supports  the                 
  restriction requiring that  each of the four  parcels within                 
  the lot  is at least 1 acre  in size.  Ms.  Adair noted that                 
  the  Administration  would  like  to  have  "outside  of  an                 
  organized  borough or municipality"  deleted from  the bill.                 
  She emphasized that  the Department  would continue to  work                 
  with local governments.                                                      
                                                                               
  Representative   Brown   asked   if   it   is   clear   that                 
  municipalities have  the authority  to charge  fees if  they                 
  assume  this function.   Ms.  Adair could  not confirm  that                 
  there  is authorization in  statute.   She pointed  out that                 
  Anchorage and  Valdez charge fees.  She  stressed that there                 
  is  nothing  in  Title 29  to  preclude  municipalities from                 
  charging a fee.   She noted that there is  specific language                 
  in the Department's statues stating that  to the extent that                 
  a  program is done by a  municipal government the Department                 
  of  Environmental Conservation may not charge a fee for that                 
  service.                                                                     
                                                                               
  In  response  to a  question  by Representative  Martin, Ms.                 
  Slagle explained  that there  are only  three sections  that                 
  have  any   effect  on   expenditures.     She  noted   that                 
  unrestricted  general  fund dollars  would  be freed  by the                 
  transfer to program receipts.                                                
                                                                               
  Representative Brown  MOVED to delete "outside  an organized                 
  borough or  municipality" on page  5, lines 13 &  14.  There                 
  being NO OBJECTION, Amendment 1 was so ordered.                              
                                                                               
  Representative Grussendorf referred to page 3, line 20.   He                 
  suggested   that  "prosecuted   or  held"   be   changed  to                 
  "prosecuted and  held".   He MOVED  to RESCIND  Amendment 1.                 
  There being NO  OBJECTION, it was  so ordered.  He  MOVED to                 
                                                                               
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  AMEND Amendment  1 by  adding "prosecuted  and held".  There                 
  being NO  OBJECTION, it was  so ordered.  He  MOVED to adopt                 
  Amendment 1 as  amended, "may  charge a prisoner  prosecuted                 
  and under a municipal ordinance."  There being NO OBJECTION,                 
  it was so ordered.                                                           
                                                                               
  PAUL GROSSI, DIRECTOR, WORKMEN'S COMPENSATION, DEPARTMENT OF                 
  LABOR discussed Section  4.  He  noted that the section  was                 
  included to approximate the fee that employers pay when they                 
  buy a workers'  compensation policy.  He emphasized that the                 
  legislation would  assure that self-insurers  pay their fair                 
  share.  He estimated that the amount is less than they would                 
  pay if they  purchased a workers'  compensation policy.   He                 
  noted that state and local governments are exempt.  He noted                 
  that  local   governments  were  included  in  the  original                 
  version.  He explained  that the State was  excluded because                 
  it was deemed that the State  already pays.  The legislation                 
  was amended in the Senate Finance Committee.  The University                 
  is also exempted from the requirement.                                       
                                                                               
  Representative  Grussendorf  questioned  if the  legislation                 
  could be amended to include a  fee of up to 4 percent.   Mr.                 
  Grossi  explained that  it  would be  possible  to make  the                 
  amendment.  He was uncertain of the effect.                                  
                                                                               
  Representative  Martin   noted  that   the  University   was                 
  encouraged to become self insured to save funds.  Mr. Grossi                 
  agreed that self-insurers  save money.   He emphasized  that                 
  some of the Division's workload  is accounted to interaction                 
  with self-insurers.                                                          
                                                                               
  In  response  to a  question  by Representative  Martin, Mr.                 
  Grossi noted that approximately $55.0 thousand dollars would                 
  be charged to CARRS Inc.                                                     
                                                                               
  Representative  Therriault  summarized  that the  4  percent                 
  would be based on the amount paid out in previous years.                     
                                                                               
  (Tape Change, HFC 96-167, Side 2)                                            
                                                                               
  Mr. Grossi  noted that  the Division's  total  cost is  $2.6                 
  million dollars.                                                             
                                                                               
  Representative Martin MOVED  to adopt  Amendment 3 (copy  on                 
  file).   Amendment 3  would delete the  requirement for self                 
  insurers to pay  4 percent of  the total amount reported  in                 
  the report filed by the employer under AS 223.30155 (m), for                 
  the preceding calendar  year and  substitute a $100  hundred                 
  dollar fee.  Representative Brown  OBJECTED.  Representative                 
  Brown OBJECTED.                                                              
                                                                               
  DWIGHT PERKINS, SPECIAL ASSISTANT, DEPARTMENT OF LABOR noted                 
                                                                               
                                7                                              
                                                                               
                                                                               
  that the Department intended that the  fee be included in SB                 
  216 from its origin.  He spoke in support  of the amendment.                 
  He maintained that self-insurers receive  the same work from                 
  the  Department  that employers  that  are not  self insured                 
  receive.                                                                     
                                                                               
  Mr.  Grossi  explained  that  the Division  regulates  self-                 
  insured  employers, conduct  hearings  to resolve  disputes,                 
  provides data  base  information, and  maintains  an  injury                 
  fund.                                                                        
                                                                               
  Representative Kohring expressed concern with the amendment.                 
  He noted that  self-insurers do  not support the  amendment.                 
  He pointed  to the exemption of state and local governments.                 
                                                                               
                                                                               
  Mr. Grossi explained that employers  who purchase a workers'                 
  compensation  plan  pay a  2.7  percent annual  premium tax.                 
  Self-insurers do not pay this amount.  The fees paid  by the                 
  premium tax goes to the General Fund.  He noted that the fee                 
  is not an exact representation of costs.                                     
                                                                               
  Mr.  Dwight pointed  to a  seafood company that  became self                 
  insured.   He noted  that their  last workers'  compensation                 
  premium was $1.4 million  dollars at a premium tax  of $37.0                 
  thousand dollars.  If the Company was charged a four percent                 
  fee  on all  compensation paid  they  would have  paid under                 
  $15.0 thousand dollars to the State.   He explained that the                 
  four percent is  only charged  on actual claims  paid.   Mr.                 
  Grossi added  that  even if  their access  premium tax  were                 
  added in they would pay under $20.0 thousand dollars.                        
                                                                               
  Representative Mulder questioned the  actual cost to process                 
  the claims.   Mr. Grossi  acknowledged that  the concept  is                 
  fair, but stressed that it would  be difficult to assess the                 
  exact cost.   He  emphasized that there  are also  ancillary                 
  costs.   Representative  Mulder suggested  that the  section                 
  could be amended to state that  the self insurers "shall pay                 
  a  fee  through  regulation  to  cover  the direct  cost  of                 
  administrative  overhead by  the Department,  not to  exceed                 
  four percent of the total amount reported."                                  
                                                                               
  ERIC   TOLLEFSEN,   ATTORNEY,    CARR-GOTTSTEIN,   ANCHORAGE                 
  testified  against  the legislation.    He noted  that Carr-                 
  Gottstein Inc. would be the largest payer.  He observed that                 
  their  cost  for the  last  four years  would  average $57.0                 
  thousand dollars.  He maintained that  the tax would be paid                 
  on something that they did not purchase.  He emphasized that                 
  they are self insured  to save money.   He pointed out  that                 
  their claims are self adjusted.  He noted that their fees on                 
  insurance was $19.0 thousand dollars  last year.  He alleged                 
  that the four percent  fee would be greater than  the amount                 
                                                                               
                                8                                              
                                                                               
                                                                               
  needed   to   directly   fund  the   Division   of  Workers'                 
  Compensation and the Division of  Insurance.  He pointed out                 
  that the first year  of self insurance is not  reflective of                 
  the average cost of several years.                                           
                                                                               
  Representative Mulder asked  if the  industry is willing  to                 
  cover their cost to  the system.  Mr. Tollefsen  stated that                 
  the industry would be willing to look at what makes sense.                   
                                                                               
  Representative Mulder  asked why  the Workers'  Compensation                 
  Committee of Alaska (WCCA) did not oppose the legislation in                 
  the Senate.  Mr. Tollefson  acknowledged that they were  not                 
  paying as much attention as they should have been.                           
                                                                               
  Representative Therriault  asked the total amount brought in                 
  by the 2.7 percent  premium tax.  Mr. Grossi stated that the                 
  2.7  percent  premium  tax  results  in  approximately  $4.7                 
  million dollars.   The Division  of Workers'  Compensation's                 
  general fund  budget is approximately $2.6  million dollars.                 
  The Division of  Insurance's general fund  budget pertaining                 
  to  self  insurers is  approximately  $1.5  million dollars.                 
  Representative Therriault concluded that the program is self                 
  funded.  Mr. Grossi maintained that the total cost is closer                 
  to $5.0 million dollars.                                                     
                                                                               
  Representative Brown questioned if the effective date should                 
  be  delayed  to July  1, 1997  to  allow parties  to  find a                 
  solution.    Representative  Mulder  expressed concern  with                 
  Representative  Brown's  proposal.     Representative  Brown                 
  pointed out that if a solution is not found the  issue could                 
  be  brought   to  the  next  Legislature.     Representative                 
  Therriault  recommended   that  the   section  be   deleted.                 
  Representative  Brown   noted  that  there  would   be  less                 
  incentive  to  resolve  the  issue  if the  section  is  not                 
  contained  in  the  legislation.    Representative   Parnell                 
  pointed out that the section is contained in the title.                      
                                                                               
  Representative  Martin emphasized  that  the industry  needs                 
  time to find a solution.   Representative Therriault pointed                 
  out  that   the  title  consideration  could   be  resolved.                 
  Representative Grussendorf agreed  that the title  would not                 
  prevent the section's removal.                                               
                                                                               
  A roll call vote was taken  on the MOTION to adopt Amendment                 
  3.                                                                           
                                                                               
  IN FAVOR: Kelly, Kohring, Martin, Navarre, Foster                            
  OPPOSED:  Brown, Grussendorf, Mulder, Parnell, Therriault                    
                                                                               
  Co-Chair Hanley was absent from the vote.                                    
                                                                               
  The MOTION FAILED (5-5).                                                     
                                                                               
                                9                                              
                                                                               
                                                                               
  Representative  Mulder  MOVED to  delete  Section 4.   There                 
  being NO OBJECTION, it  was so ordered.   He noted that  the                 
  deletion does not reflect that self insurers should pay  for                 
  their  service.    He  emphasized   that  the  industry  and                 
  Department need to work together for a solution.                             
                                                                               
  Co-Chair Foster MOVED to adopt Amendment 2 (copy on file).                   
                                                                               
  TOM  WRIGHT,  STAFF, IVAN  IVAN  explained that  Amendment 2                 
  would increase the fees charged prisoners in municipal jails                 
  from  $70 to $100  dollars.  Representative  Mulder spoke in                 
  support of the amendment.  He noted that indigent  prisoners                 
  will not pay  the fee.  He emphasized  the high prison costs                 
  in Alaska.                                                                   
                                                                               
  Representative Mulder  suggested that if  municipalities are                 
  reimbursed the  reimbursement would  be used  to offset  the                 
  state contract jail contract.                                                
                                                                               
  BOB COLE,  DIRECTOR, ADMINISTRATIVE SERVICES,  DEPARTMENT OF                 
  CORRECTIONS explained  that community jails contracts are at                 
  a fixed price for FY 97  - 98.  The amount was fixed  by the                 
  Community  Jails  Task   Force.     There  is  no   matching                 
  requirement in the contracts.  The  cost per care varies per                 
  contract.   The Department did not  object to the amendment.                 
  He did  not think there would be a savings to the State.  He                 
  noted  that many  contract jails  are supported  in  part by                 
  local funds.   The State only pays  the full cost in  one or                 
  two contracts.   He  emphasized that  many communities  feel                 
  that the state share does not  meet the total operating cost                 
  of the jails.                                                                
                                                                               
  Representative Grussendorf spoke against the amendment.                      
                                                                               
  A roll call vote was taken on the MOTION to adopt  Amendment                 
  2.                                                                           
                                                                               
  IN FAVOR: Kohring, Mulder, Kelly, Foster                                     
  OPPOSED:  Martin,  Navarre,   Parnell,  Therriault,   Brown,                 
  Grussendorf                                                                  
                                                                               
  Co-Chair Hanley was absent from the vote.                                    
                                                                               
  The MOTION FAILED (4-6).                                                     
                                                                               
  Representative Therriault referred to Section  11.  He noted                 
  constituent frustration  with the administration  of reviews                 
  of subdivision sewage  plans.  Representative Brown  pointed                 
  out  that the  funding  has been  removed  which would  have                 
  allowed  the  Department  of Environmental  Conservation  to                 
  continue the function.                                                       
                                                                               
                               10                                              
                                                                               
                                                                               
  Representative Therriault disagreed that the funding was cut                 
  for the function.  He pointed out that the funding was  left                 
  in  the  transfer   to  statewide  public  services.     The                 
  Department choose to take the cut  that was given and spread                 
  it to this function.   Representative Brown pointed out that                 
  the result is  that the  money is  not in the  budget.   She                 
  emphasized that the function will not be done if there is no                 
  money to pay for it.                                                         
                                                                               
  Ms.  Adair   summarized  that  the   Subcommittee  did   not                 
  specifically  identify subdivision  planning reviews  in the                 
  reduction to the Division of Statewide Public Service.   She                 
  emphasized that this is the only function that is funded one                 
  hundred percent  by general  funds.   She stressed  that the                 
  Department   cannot   make   further    reductions   without                 
  eliminating programs.  She stated that this is the only area                 
  that the reduction could be taken from.                                      
                                                                               
  Representative  Therriault  questioned  if the  municipality                 
  could empower a  local engineer to do the review.  Ms. Adair                 
  could not  answer.  She  pointed out  that this is  a public                 
  health function.  There may be restrictions on delegating to                 
  a private entity a public health function that is seen as an                 
  inherent  power  of  government.   She  emphasized  that the                 
  Department  wants  to  establish  the   function  on  a  fee                 
  structure so  that a  local government could  take it  over.                 
  She suggested that it may not be as controversial as a local                 
  fee program if it is established by the State.                               
                                                                               
  Ms.  Slagle  noted that  there is  a  drafting error  in the                 
  effective date section.   She noted  that Sections 8 and  12                 
  are not reflected in  the effective date clause.   She noted                 
  that Section 16,  on page 6 needs  to be amended to  include                 
  Sections 8 and 12.                                                           
                                                                               
  Representative   Navarre  MOVED  to   amend  Section  16  by                 
  including Sections 8 and 12.                                                 
                                                                               
  Representative Brown MOVED to report HCS CSSB 216 (FIN)  out                 
  of  Committee with  individual recommendations and  with the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  HCS CSSB 216  (FIN) was reported  out of Committee with  "no                 
  recommendation" and with  nine fiscal  impact notes, two  by                 
  the Office of  the Governor, 1/12/96, one  by the Department                 
  of  Natural  Resources,  5/2/96, one  by  the  Department of                 
  Revenue,  5/2/96,  one by  the  Department  of Environmental                 
  Conservation, 5/4/96, one by the  Department of Commerce and                 
  Economic Development,  1/12/96,  one by  the  Department  of                 
  Education,  5/2/96,  Department  of  Military  and  Veterans                 
                                                                               
                               11                                              
                                                                               
                                                                               
  Affairs, 1/12/96 and one by the Department of Labor.                         
                                                                               
  (Tape Change, HFC 96-168, Side 1)                                            
  SENATE CONCURRENT RESOLUTION NO. 23                                          
                                                                               
       Relating to long range financial planning.                              
                                                                               
  Representative Mulder MOVED to report HCS CSSCR 23 (STA) out                 
  of Committee  with individual  recommendations and  with the                 
  accompanying fiscal note.  There  being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  HCS SCR 23 (STA)  was reported out  of Committee with a  "do                 
  pass"  recommendation and  with a  zero fiscal  note by  the                 
  Senate State Affairs Committee, 2/9/96.                                      
  SENATE BILL NO. 215                                                          
                                                                               
       "An  Act  streamlining  the  functions  of   state                      
       government, including authorizing the commissioner                      
       of  fish  and  game to  award  grants  for certain                      
       resource activities; allowing agents  selling fish                      
       and  game  licenses  and tags  to  retain  certain                      
       compensation; authorizing the Department of Health                      
       and Social  Services to  award grants  for certain                      
       services for developmentally  delayed or  disabled                      
       children;   relating   to   rabies   control   and                      
       administration of flour and bread standards by the                      
       Department    of    Environmental    Conservation;                      
       repealing the Athletic Commission,  the regulation                      
       of boxing  and  wrestling,  the  certification  of                      
       professional geologists, and  the Water  Resources                      
       Board;  repealing  certain  filing statements  and                      
       bonds for  enforcement and  collection of  certain                      
       taxes; and providing for an effective date."                            
                                                                               
                                                                               
  ANNALEE  MCCONNELL,  DIRECTOR,   OFFICE  OF  MANAGEMENT  AND                 
  BUDGET,  OFFICE OF  THE GOVERNOR noted  that there  are some                 
  legal concerns regarding portions of the legislation.                        
                                                                               
  Ms. Slagle  provided members  with a  sectional analysis  of                 
  CSSB 216 (FIN) am (copy on  file).  She review the sectional                 
  analysis.                                                                    
                                                                               
       *    Sections 1 & 2.  Allows school districts to submit                 
            reports for  their  six  year  plans  for  capital                 
            maintenance and construction  requirements to  the                 
            Department of Education on a biennial basis.                       
                                                                               
       *    Section 2.   Allows  the University  of Alaska  to                 
                                                                               
                               12                                              
                                                                               
                                                                               
            require  employees  to deposit  paychecks directly                 
            into a  bank, savings  and loan  or credit  union.                 
            Processing cuts will be reduced.                                   
                                                                               
       *    Section 4.  Allows the Department of Fish and Game                 
            to  award grants for Kenai River drainage projects                 
            specifically  appropriated  for FY  94 and  FY 96.                 
            Without this section  the grants would have  to be                 
            passed  through  another  state organization  with                 
            granting authority.                                                
                                                                               
       *    Sections 5,  6,  and 8.   Allows  agents of  sport                 
            fishing  and hunting  licenses and tags  to retain                 
            the full 5  percent allowed  for compensation  for                 
            their  services.    Without these  sections  money                 
            would be paid  to the  State and then  transferred                 
            back.                                                              
                                                                               
       *    Section 7.   Allows  agents of  sport fishing  and                 
            hunting licenses and  tags to assign a  portion of                 
            their compensation  to an in-state  nonprofit fish                 
            or game association.   This  section was added  in                 
            the Senate.                                                        
                                                                               
       *    Sections  9  -  13.    Allows  the  Department  of                 
            Commerce and Economic Development to collect taxes                 
            on insurance premiums  more frequently than  on an                 
            annual basis and to be collected electronically.                   
                                                                               
  Representative Parnell  asked  if this  change would  effect                 
  insurance  companies.    Ms. Slagle  stated  that  insurance                 
  industry representatives  testified that  they could  accept                 
  quarterly collection,  but did  not want  collections to  be                 
  more frequent.                                                               
                                                                               
       *    Section 14.  Reduces  the requirements for  filing                 
            of credits for  certain mining exploration  costs.                 
            This  would  eliminated  the  annual  filing   and                 
            certification process and  substitute a  threshold                 
            of when  a credit reaches $250.0  thousand dollars                 
            or the holder is ready to take the credit.                         
                                                                               
       *    Section  15.     Requires   the  Alaska   Railroad                 
            Corporation   to   use   competitive  bidding   on                 
            construction   contracts   over   $25.0   thousand                 
            dollars, that the Department of Transportation and                 
            Public Facilities  authorizes.   This section  was                 
            added in the Senate.                                               
                                                                               
       *    Section 16.  Shortens the time limit on payment of                 
            warrants to 1 year.  The  current statute is for 2                 
            years.     This  would  be  consistent   with  the                 
                                                                               
                               13                                              
                                                                               
                                                                               
            unclaimed property statutes.                                       
                                                                               
       *    Section  17.   Calculates terminal  leave payments                 
            based on annualized rate of pay.                                   
                                                                               
       *    Section 18.  Is in  conjunction with a repealer in                 
            Section 24 which  eliminated the non-resident  tax                 
            affidavit tax bond program.                                        
                                                                               
       *    Sections 19 & 20.  Allows the Department of Health                 
            &  Social  Services  granting  authority  for  the                 
            Infant Learning Program.                                           
                                                                               
       *    Section 21.   This section would restrict  certain                 
            state  corporations  to   contract  for   lobbying                 
            activities.  This section is a duplication.                        
                                                                               
       *    Section  22.   Repeals  the requirement  that  the                 
            Department  of  Environmental  Conservation report                 
            and care  for  animals  suspected  of  rabies  and                 
            handle the disposal of rabid  animals.  Eliminates                 
            the requirement that  the Department regulate  the                 
            vitamin and  mineral  content of  flour and  bread                 
            sold  in  the  State.     This  requirement  is  a                 
            duplication  of  federal regulations.   Eliminates                 
            the requirement that employees that have separated                 
            from state government  employment and rehired must                 
            repay  leave  received  in  cash  at the  time  of                 
            separation.                                                        
                                                                               
       *    Section 23.   Eliminates the Athletic  Commission,                 
            Boxing and  Wrestling Commission.   They have  not                 
            been active in the past several years.  Eliminates                 
            the  requirement  that professional  geologists be                 
            certified  by  the  Department  of  Commerce   and                 
            Economic  Development.     Eliminates  the   Water                 
            Resources Board.                                                   
                                                                               
       *    Section 24.   Eliminates the  calculation required                 
            to transmit remainder  of vendor compensation  for                 
            issuance of  sport fishing  and hinging  licenses.                 
            Eliminates   non-resident   affidavit   tax   bond                 
            program.                                                           
                                                                               
       *    Sections   25  and   26.     These  sections   are                 
            transitional language.                                             
                                                                               
       *    Section   27.     This  section  deals   with  the                 
            applicability of warrants  issued on or after  the                 
            effective date of Section 16.                                      
                                                                               
       *    Section 28.  Restricts the  payment of state money                 
                                                                               
                               14                                              
                                                                               
                                                                               
            to entities  that are  not incorporated under  the                 
            laws of the State.                                                 
                                                                               
       *    Sections  29  -  31.    These  sections  implement                 
            effective dates                                                    
                                                                               
  Representative Brown referred  to Section 5.   She asked  if                 
  there are provisions for auditing of vendors.                                
                                                                               
  KEVIN BROOKS, DIRECTOR, ADMINISTRATIVE  SERVICES, DEPARTMENT                 
  OF FISH AND GAME explained that there is a monthly reporting                 
  system with  vendors.   He  stated  that the  Department  is                 
  comfortable with the shift to a retained fee.  He emphasized                 
  that the current system is redundant.                                        
                                                                               
  Representative Brown referred to Section  14.  She expressed                 
  concern that the certification  be contemporaneous with when                 
  the money and records are available.  She emphasized that it                 
  would not be sensible  to allow records to be  collected for                 
  20 years before they are turned in.                                          
                                                                               
  CAROL  CAROLL,  SPECIAL  ASSISTANT,  DEPARTMENT  OF  NATURAL                 
  RESOURCES  pointed  out  that  CPA  certification  would  be                 
  required  when   credits  reach  $250.0   thousand  dollars.                 
  Representative Brown  noted that credits  could be collected                 
  for a number of  years.  Ms. Caroll reiterated  that credits                 
  would be turned in when they  reach at least $250.0 thousand                 
  dollars  or when  production begins.   She  agreed  that the                 
  language  could  be  tightened.    She  explained  that  the                 
  Department did not want to  require annual certification due                 
  to the amount of additional paperwork.  Representative Brown                 
  noted   that  the   credits   are  direct   credits  against                 
  obligations owed to  the State.  She noted that  there is no                 
  requirement for the CPA to certify  that credits are correct                 
  or that  the expenditures actually  took place.   Ms. Caroll                 
  suggested a three year limit.                                                
                                                                               
  Representative Brown referred to Sections 19 and 20.                         
                                                                               
  ELMER LINDSTROM, SPECIAL ASSISTANT, DEPARTMENT OF HEALTH AND                 
  SOCIAL SERVICES explained that these sections will allow the                 
  Department to continue  the status quo.   He noted that  the                 
  addition  of   federal  aid   required  regulations.     The                 
  Department of  Law  reviewed the  regulations and  concluded                 
  that the Department of Health & Social Services did not have                 
  sufficient grant making authority.                                           
                                                                               
  Representative Therriault provided  members with Amendment 1                 
  (copy on file).                                                              
                                                                               
  KEN BOYD, DIRECTOR,  DIVISION OF OIL AND  GAS, DEPARTMENT OF                 
  NATURAL RESOURCES discussed  Amendment 1.  He  stressed that                 
                                                                               
                               15                                              
                                                                               
                                                                               
  the amendment should be considered a conceptional amendment.                 
  He  explained  that  Section  17  clarifies under  and  over                 
  payment of royalties and how  they are calculated.   Section                 
  18  sets  up a  period of  time  during which  interest will                 
  accrue on overpayments.   He  observed royalty payments  are                 
  for the preceding month.  He  noted that there are generally                 
  metering errors.  He added that  smaller royalty payers base                 
  their payments on the larger royalty  payers.  If the larger                 
  payer is wrong  then the  smaller companies are  wrong.   He                 
  noted that errors are generally cleared  up in 60 days.   He                 
  stressed   that  small   adjustments   are  not   worth  the                 
  administrative  overhead.   The  amendment  would allow  the                 
  Department to dismiss small over or under payments.  The set                 
  interest  rate is  11  percent.   He  maintained that  "may"                 
  should be changed to "shall".                                                
                                                                               
  Representative   Parnell   questioned  the   interest  rate.                 
  Representative Therriault noted  that the existing statutory                 
  language sets the interest rate.                                             
                                                                               
  Amendment 1 was HELD.                                                        
                                                                               
  Representative Mulder  MOVED to report CSSB 215 (FIN) am out                 
  of Committee  with individual  recommendations and  with the                 
  accompanying fiscal notes.  There being NO OBJECTION, it was                 
  so ordered.                                                                  
                                                                               
  CS SB  215 (FIN) am was  reported out of Committee  with "no                 
  recommendation" and with  three fiscal impact notes,  one by                 
  the Department of  Fish and Game,  one by the Department  of                 
  Revenue, dated 5/1/96, and one by the Department of Commerce                 
  and Economic Development, dated 1/12/96;  and with four zero                 
  fiscal  notes,  one  by  the  Department of  Revenue,  dated                 
  5/1/96, one by the Department of Environmental Conservation,                 
  dated  1/12/96, one  by  the Department  of Health  & Social                 
  Services,  dated  1/12/96,  and  one  by the  Department  of                 
  Natural Resources, dated 5/1/96.                                             
  SENATE BILL NO. 216                                                          
                                                                               
       An Act relating to fees or assessment of costs for                      
       certain  services  provided  by state  government,                      
       including hearing costs related to the real estate                      
       surety  fund; fees for  authorization to operate a                      
       postsecondary  educational  institution or  for an                      
       agent's   permit   to  perform   services   for  a                      
       postsecondary       educational       institution;                      
       administrative fees for self-insurers  in workers'                      
       compensation;  business  license  fees;  fees  for                      
       activities  related  to  coastal zone  management,                      
       training   relating   to    emergency   management                      
       response, regulation of   pesticides and broadcast                      
                                                                               
                               16                                              
                                                                               
                                                                               
       chemicals, and subdivision plans  for sewage waste                      
       disposal  or  treatment;  and  providing  for   an                      
       effective date.                                                         
                                                                               
  Representative  Mulder  MOVED  to  RESCIND  the  Committee's                 
  action  in  reporting  HCS CSSB  216  (FIN)  from Committee.                 
  There being NO OBJECTION, it was so ordered.                                 
                                                                               
  Co-Chair Hanley noted that the removal of Section 4 resulted                 
  in the need for a Resolution adopting a title change.                        
                                                                               
  Representative  Mulder  MOVED  to  RESCIND  the  Committee's                 
  action in  failing to  adopt Amendment  3.   There being  NO                 
  OBJECTION, it was so ordered.                                                
                                                                               
  Representative Mulder  MOVED to  adopt Amendment  3.   There                 
  being NO OBJECTION, it was so ordered.                                       
                                                                               
  Representative Mulder MOVED to report HCS CSSB 216 (FIN) out                 
  of  Committee with  individual recommendations and  with the                 
  accompanying fiscal notes.                                                   
                                                                               
  HCS CSSB 216  (FIN) was reported  out of Committee with  "no                 
  recommendation" and with  nine fiscal  impact notes, two  by                 
  the Office of the  Governor, 1/12/96, one by  the Department                 
  of  Natural  Resources,  5/2/96, one  by  the  Department of                 
  Revenue,  5/2/96,  one by  the  Department of  Environmental                 
  Conservation, 5/4/96, one by the  Department of Commerce and                 
  Economic  Development,  1/12/96,  one by  the  Department of                 
  Education,  5/2/96,  Department  of  Military  and  Veterans                 
  Affairs, 1/12/96 and one by the Department of Labor.                         
  ADJOURNMENT                                                                  
                                                                               
  The meeting adjourned at 4:30 p.m.                                           
                                                                               
                                                                               
                               17                                              

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