Legislature(1999 - 2000)

04/04/2000 02:00 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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HOUSE FINANCE COMMITTEE                                                                                                         
April 4, 2000                                                                                                                   
2:00 P.M.                                                                                                                       
                                                                                                                                
TAPE HFC 00 -  99, Side 1.                                                                                                      
TAPE HFC 00 -  99, Side 2.                                                                                                      
TAPE HFC 00 - 100, Side 1.                                                                                                      
TAPE HFC 00 - 100, Side 2.                                                                                                      
TAPE HFC 00 - 101, Side 1.                                                                                                      
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair Therriault called the House Finance Committee                                                                          
meeting to order at 2:00 P.M.                                                                                                   
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair Therriault   Representative Foster                                                                                     
Co-Chair Mulder    Representative Grussendorf                                                                                   
Representative Austerman  Representative Moses                                                                                  
Representative Bunde   Representative Phillips                                                                                  
Representative J. Davies  Representative Williams                                                                               
Representative G. Davis                                                                                                         
                                                                                                                                
ALSO PRESENT                                                                                                                    
                                                                                                                                
John Barnett, Board of Storage Tanks, Juneau; Edward Crane,                                                                     
President, Alaska Commercial Fishing and Agriculture Bank                                                                       
(CFAB), Anchorage; Lisa Kirsch, Assistant Attorney General,                                                                     
Department of Law; Lorraine Derr, Alaska State Hospital and                                                                     
Nursing Association, Juneau; Wendy Redman, Vice President,                                                                      
Statewide Programs, University of Alaska-Fairbanks; Lorali                                                                      
Meier, Staff, Representative Beverly Masek; Jon Sherwood,                                                                       
Division of Medical Assistance, Department of Health and                                                                        
Social Services; Bob Labbe, Director, Division of Medical                                                                       
Assistance, Department of Health and Social Services.                                                                           
                                                                                                                                
TESTIFIED VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Susan Springer, Seldovia; Robert Gilfilian, Anchorage;                                                                          
Leonard Anderson, State of Alaska Third Party Recovery in                                                                       
Medicaid Matters, Anchorage; John Cook, Anchorage; Gary                                                                         
Weber, Secretary Treasurer, Alaska Underground Tank Owners                                                                      
(AUTO), Mat-Su; Charles Parker, Mat-Su.                                                                                         
                                                                                                                                
SUMMARY                                                                                                                         
                                                                                                                                
HB 265 An Act extending the termination date of the                                                                             
Alaska regional economic assistance program; and                                                                                
providing for an effective date.                                                                                                
                                                                                                                                
 HB 265 was reported out of Committee with a "do                                                                                
pass" recommendation and with a fiscal note by                                                                                  
Department of Community & Economic Development                                                                                  
dated 3/1/00.                                                                                                                   
                                                                                                                                
HB 325 An Act relating to priorities, claims, and liens                                                                         
for payment for certain medical services provided                                                                               
to medical assistance recipients; and providing                                                                                 
for an effective date.                                                                                                          
                                                                                                                                
CS HB 325 (JUD) was reported out of Committee with                                                                              
a "do pass" recommendation and with a fiscal note                                                                               
by Department of Health and Social Services dated                                                                               
2/2/00.                                                                                                                         
                                                                                                                                
HB 339 An Act authorizing the Alaska Commercial Fishing                                                                         
and Agriculture Bank to make loans relating to                                                                                  
tourism and development or exploitation of natural                                                                              
resources.                                                                                                                      
                                                                                                                                
CS HB 339 (FIN) was reported out of Committee with                                                                              
a "do pass" recommendation and with a zero fiscal                                                                               
note by the Department of Community & Economic                                                                                  
Development dated 4/3/00.                                                                                                       
HB 349 An Act relating to powers of the Board of Game,                                                                          
means of access for hunting, trapping, and                                                                                      
fishing, the definition of `means' and `methods,'                                                                               
and hunting safety education and game conservation                                                                              
education programs; relating to the purposes of                                                                                 
game refuges, fish and game critical habitat                                                                                    
areas, and public use areas.                                                                                                    
                                                                                                                                
  HB 349 was POSTPONED for hearing to a latter date.                                                                            
HB 432 An Act extending the termination date of the Board                                                                       
of Storage Tank Assistance; expanding the                                                                                       
authority of the board to issue recommendations                                                                                 
concerning cleanup decisions; and providing for an                                                                              
effective date.                                                                                                                 
                                                                                                                                
CS HB 432 (FIN) was reported out of Committee with                                                                              
a "do pass" recommendation and with a fiscal note                                                                               
by the Department of Environmental Conservation                                                                                 
dated 3/2/00.                                                                                                                   
                                                                                                                                
SB 281 An Act relating to missions and measures to be                                                                           
applied to certain expenditures by the executive                                                                                
branch of state government and the University of                                                                                
Alaska from the state operating budget for the                                                                                  
fiscal year ending June 30, 2001; and providing                                                                                 
for an effective date.                                                                                                          
                                                                                                                                
 HCS CS SB 281 (FIN) was reported out of Committee                                                                              
with a "do pass" recommendation and with a zero                                                                                 
fiscal note by the Office of the Governor dated                                                                                 
3/17/00.                                                                                                                        
HOUSE BILL NO. 339                                                                                                              
                                                                                                                                
An Act authorizing the Alaska Commercial Fishing and                                                                            
Agriculture Bank to make loans relating to tourism and                                                                          
development or exploitation of natural resources.                                                                               
                                                                                                                                
Co-Chair Mulder explained that the legislation would expand                                                                     
the lending authority of the Commercial Fishing and                                                                             
Agriculture Bank (CFAB) and would enable it to make loans to                                                                    
Alaskan small business enterprises involved in natural                                                                          
resource development and tourism.  Presently, CFAB makes                                                                        
loans to Alaska residents engaged only in commercial                                                                            
agriculture or fishing.  The bank seeks expanded authority                                                                      
to provide financing opportunities to small Alaskan business                                                                    
entrepreneurs who generally have trouble obtaining                                                                              
commercial loans because of their relative small size and                                                                       
lack of financial experience.                                                                                                   
                                                                                                                                
Co-Chair Mulder noted that currently, CFAB's loan portfolio                                                                     
is very narrow and susceptible to ups and downs of the                                                                          
market.  The bill would allow CFAB to make loans to natural                                                                     
resource development and also tourism.                                                                                          
                                                                                                                                
Co-Chair Therriault MOVED to adopt the committee substitute,                                                                    
1-LS1285\I, Utermohle, 4/1/00, as the version of the                                                                            
legislation before the Committee.  [Copy on File].  There                                                                       
being NO OBJECTION, it was adopted.                                                                                             
                                                                                                                                
ED CRANE, PRESIDENT, COMMERCIAL FISHING AND AGRICULTURAL                                                                        
BANK (CFAB), ANCHORAGE, stated that when the bill was                                                                           
originally drafted, "general" language was used to provide                                                                      
as much flexibility as possible.  Some of that language has                                                                     
been found to be unacceptable.  Consequently, loan limits                                                                       
were added.                                                                                                                     
                                                                                                                                
Mr. Crane noted that the House Finance Committee substitute                                                                     
changes some of the original language. He outlined changes                                                                      
made to the proposed committee substitute that would make                                                                       
the bill more specific.                                                                                                         
                                                                                                                                
Mr. Crane explained that the Alaska State Legislature                                                                           
created CFAB in AS 44.81 in 1980.  The statute governs                                                                          
CFAB's operation and provided for its accountability to the                                                                     
Legislature and Administration.  Because CFAB is                                                                                
incorporated under that statute, it requires legislative                                                                        
approval for any changes in operational authority.                                                                              
                                                                                                                                
Twenty years ago, limited access to commercial financing by                                                                     
resident Alaska commercial seafood harvesters, processors                                                                       
and farmers, stimulated the need for CFAB as a private                                                                          
cooperative.  The State of Alaska responded by providing                                                                        
initial capital through the purchase of $32 million dollars                                                                     
of special preferred stock in 1980.  CFAB began making                                                                          
monthly payments in 1991 to the State, repurchasing                                                                             
increments of the stock.  In September of 1998, the stock                                                                       
repurchase agreement was completed as specified in statute                                                                      
and today CFAB is owned solely by its past and present                                                                          
borrowing members.                                                                                                              
                                                                                                                                
Mr. Crane continued, in 1986, the Alaska Supreme Court                                                                          
identified CFAB as a private entity.  AS 44.81 states that                                                                      
it is not subject to the Alaska Cooperative Corporation Code                                                                    
or the Alaska Banking Code.  It pays federal and state                                                                          
corporate income tax, state auditing fees and is subject to                                                                     
legislative audits.  In short, CFAB is now a private lender                                                                     
operating within the free enterprise system with limited                                                                        
ties to the State of Alaska.                                                                                                    
                                                                                                                                
CFAB's auditors, from both the public and private sector,                                                                       
give the bank favorable reviews but consistently note the                                                                       
concentration in agricultural and fishing industry loans                                                                        
resulting in an unusual level of risk exposure and                                                                              
vulnerability to the ups and downs of the industries.                                                                           
                                                                                                                                
Representative Grussendorf asked if the only new ability                                                                        
granted in the proposed legislation was that to loan to                                                                         
tourism.  Mr. Crane replied that it would be to either                                                                          
tourism and/or operators in the natural resources.                                                                              
Representative Grussendorf asked if there would be a limit                                                                      
on how each company could borrow.  Mr. Crane pointed out                                                                        
that there are no statutory limits on the size of a loan                                                                        
that can be made for fish and agriculture purposes.                                                                             
                                                                                                                                
Representative J. Davies observed that this would be a                                                                          
lending operation chartered by the State.  He asked the                                                                         
requirements to become a member of the bank to qualify for                                                                      
borrowing.  Mr. Crane explained that CFAB is operated as a                                                                      
cooperative with the customers as owners.  "Member" is                                                                          
defined as one of the stockholders of the board.  Any Alaska                                                                    
resident who is engaged in commercial fishing or agriculture                                                                    
can become a member by purchasing one share of stock.                                                                           
Representative J. Davies interjected that CFAB is a                                                                             
cooperative lending organization.                                                                                               
                                                                                                                                
Co-Chair Therriault reminded member's from where the entity                                                                     
originally came from.  The limited entry system had just                                                                        
started and it was important that the State guarantees that                                                                     
Alaskans had access to capital so that they could get the                                                                       
permits and keep them in Alaska's hands.  Co-Chair                                                                              
Therriault suggested that the original concerns have been                                                                       
diminished at this time. There is no shortage of loan                                                                           
programs in State government.  He did not see the compelling                                                                    
reason to implement the proposed legislation.                                                                                   
                                                                                                                                
Mr. Crane commented that it has not been a problem in recent                                                                    
years.  He agreed that the same circumstances do not appear                                                                     
to exist in relationship to tourism.  The bill is a                                                                             
defensive effort by CFAB.  The limited entry system does not                                                                    
have the same concerns as it did 25 years ago.  Today, it                                                                       
has greater concerns.  Many of the individuals in rural                                                                         
Alaska who were initial recipients of the loan are now                                                                          
reaching an age where they want to retire.  Many of them now                                                                    
want to sell their permit.  The needs have changed.  He                                                                         
believed that there is a need to continue the support for                                                                       
Alaska resident's ability to buy limited entry permits.  Co-                                                                    
Chair Therriault agreed that it is important to keep them in                                                                    
Alaskan's hands.  He voiced concern with expansion of the                                                                       
operation.  Mr. Crane clarified that CFAB must build                                                                            
diversification.                                                                                                                
                                                                                                                                
Co-Chair Mulder spoke to the State's compelling interest.                                                                       
He commented that CFAB has taken on a new life of economic                                                                      
expansion and opportunity.  He noted that there is a lot of                                                                     
frustration among the Alaskan people who are attempting to                                                                      
get the smaller loans.  The loans that CFAB is proposing are                                                                    
low-level loans which are not in the best interest of most                                                                      
banks.                                                                                                                          
                                                                                                                                
Co-Chair Mulder pointed out currently, only CFAB can loan on                                                                    
the limited entry permits.  He pointed out that there is a                                                                      
compelling reason, as the State interests are at stake.  Mr.                                                                    
Crane added that CFAB is acting as an agent for the State.                                                                      
There is no way to limit that privilege to one class of                                                                         
private lender.                                                                                                                 
                                                                                                                                
Co-Chair Mulder pointed out that limited entry and CFAB won                                                                     
the case with the Internal Revenue Service (IRS) to retain                                                                      
control of the permits.  To open that up to outside lenders                                                                     
would jeopardize the direction which the State intended to                                                                      
go.                                                                                                                             
                                                                                                                                
Vice Chair Bunde agreed that this is a unique Alaskan                                                                           
program.  He asked if there were similar programs like this                                                                     
available through other states.  Mr. Crane replied that the                                                                     
only one he was aware of was through a lending institution                                                                      
in Canada.                                                                                                                      
                                                                                                                                
(TAPE CHANGE, HFC 00 - 99, Side 2).                                                                                             
                                                                                                                                
Mr. Crane stated that the proposed bill would provide that                                                                      
CFAB continue to be a viable entity.                                                                                            
                                                                                                                                
Vice Chair Bunde suggested if it would be more accurate to                                                                      
change CFAB from a "bank" to a "revolving loan fund".  Mr.                                                                      
Crane replied that would not be a move that CFAB would make                                                                     
hastily.  He noted that CFAB has not yet fully considered                                                                       
all the legal documentation such a transition would require.                                                                    
                                                                                                                                
Vice Chair Bunde commented if supporting the legislation                                                                        
would be "questionable" given the Legislature's commitment                                                                      
to encouraging privatization.                                                                                                   
                                                                                                                                
Representative Foster inquired if there was a mechanism                                                                         
included in the proposal to cover concerns for bed and                                                                          
breakfast associations.  He asked if the board membership                                                                       
would change.  Mr. Crane thought that the legislation would                                                                     
address that concern.  Currently, the board consists of                                                                         
seven people; two members appointed by the Governor and the                                                                     
other five elected from the membership.                                                                                         
                                                                                                                                
In response to Representative Williams, Mr. Crane reiterated                                                                    
the original purpose of CFAB to insure that Alaska resident                                                                     
fishermen had sufficient access to capital to maintain                                                                          
participation in Alaska's fisheries.  Representative                                                                            
Williams inquired if the banking community supported CFAB at                                                                    
this time.  Mr. Crane replied those entities are "waving                                                                        
their arms" with concern about the legislation.  However, at                                                                    
the same time, there are joint ventures happening with the                                                                      
State.                                                                                                                          
                                                                                                                                
Representative Austerman pointed out that there are many                                                                        
commercial fishermen now considering the charter boat                                                                           
tourism industry.                                                                                                               
                                                                                                                                
SUSAN SPRINGER, (TESTIFIED VIA TELECONFERENCE), HERRING BAY                                                                     
MERCANTILE, TOURIST BUSINESS, SELDOVIA, spoke in support of                                                                     
the legislation and urged Committee support to extend the                                                                       
lending authority of CFAB to include resource development                                                                       
and tourism.                                                                                                                    
                                                                                                                                
She suggested that the legislation was the most important                                                                       
thing that Alaska could do to help small businesses so to                                                                       
have greater access to low interest business loans.  The                                                                        
existing loan process needs to be streamlined.  She noted                                                                       
that the conventional banking institutions in Alaska are not                                                                    
serving the small business people.                                                                                              
                                                                                                                                
Ms. Springer addressed her impressions of CFAB:                                                                                 
                                                                                                                                
? CFAB is well respected for its support of small                                                                               
business development through the Fisheries                                                                                      
Business Assistance Program;                                                                                                    
? Not many of the state-funded small business                                                                                   
assistance programs work as effectively as CFAB;                                                                                
and                                                                                                                             
? Access to start-up and operating capital is one of                                                                            
the primary challenges facing small Alaskan                                                                                     
entrepreneurs trying to establish themselves in                                                                                 
business.                                                                                                                       
                                                                                                                                
Ms. Springer pointed out that CFAB serves a "niche" to a                                                                        
specific clientele.  It will not pose a threat to the                                                                           
banking institutions.  She noted that CFAB shareholders are                                                                     
all Alaskan's and will continue to be Alaskan and that they                                                                     
have Alaska's interest at stake.  She emphasized that                                                                           
passage of HB 339 would give entrepreneurs a "shot in the                                                                       
arm".                                                                                                                           
                                                                                                                                
Representative J. Davies MOVED an amendment to Page 4, Line                                                                     
28, deleting "tourism" and inserting "tourists".                                                                                
                                                                                                                                
Representative Moses commented that if the bill passes, it                                                                      
would allow CFAB the authority to move more into the rural                                                                      
areas to provide loan financing for tourism facilities. He                                                                      
noted at present, CFAB could not finance a loan for a                                                                           
charter boat.  He stated that 99% of the financing                                                                              
undertaken in the commercial fishing business is done in the                                                                    
Seattle area.  Representative Moses added that the majority                                                                     
of the fishing industry is done in Seattle because Seattle                                                                      
is where most of the head business are located such as                                                                          
processor parent companies.  He interjected that definitely                                                                     
will not change with the Wells Fargo Bank take-over.                                                                            
                                                                                                                                
Representative Foster reiterated his concern about the                                                                          
composition of the Board's makeup.  Mr. Crane explained that                                                                    
the Board would also be expanded.  Currently, the Board                                                                         
functions with an oversight role.  The Board takes no part                                                                      
in the loan decisions; it only approves basic policy and                                                                        
standards.  CFAB will acquire additional expertise and that                                                                     
the Board is 100% behind the expansion.                                                                                         
                                                                                                                                
Co-Chair Mulder MOVED to report CS HB 399 (FIN) out of                                                                          
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Williams OBJECTED stating that the bill would                                                                    
compete with the private sector.  Following further                                                                             
comments, Representative Williams WITHDREW his OBJECTION.                                                                       
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CS HB 399 (FIN) was reported out of Committee with a "do                                                                        
pass" and with a new zero fiscal note by Department of                                                                          
Community & Economic Development dated 4/3/00.                                                                                  
                                                                                                                                
HOUSE BILL NO. 432                                                                                                              
                                                                                                                                
An Act extending the termination date of the Board of                                                                           
Storage Tank Assistance; expanding the authority of the                                                                         
board to issue recommendations concerning cleanup                                                                               
decisions; and providing for an effective date.                                                                                 
                                                                                                                                
LORALI MEIER, STAFF, REPRESENTATIVE BEVERLY MASEK, commented                                                                    
that the Board of Storage Tank Assistance was created in                                                                        
1990 in response to a clean up program initiated by                                                                             
increased federal regulations and aggressive Environmental                                                                      
Protection Agency (EPA) enforcement actions. Many Alaskan                                                                       
underground storage tank owners were forced out of business                                                                     
because they could not afford the high cost of clean up of                                                                      
contamination from their leaking tanks.                                                                                         
                                                                                                                                
Ms. Meier stated that the Storage Tank Assistance Program                                                                       
was established to protect Alaska's drinking water supplies                                                                     
and to help Alaska's regulated underground storage tank                                                                         
owners and operators meet EPA's tough new environmental laws                                                                    
and regulations pertaining to underground petroleum storage                                                                     
tanks. The goals of the program were simple:                                                                                    
                                                                                                                                
? Cleanup existing leaks,                                                                                                       
? Prevent future leaks, and                                                                                                     
? Help Alaska's tank owners and operators through                                                                               
educational, technical, and financial assistance.                                                                               
                                                                                                                                
Although originally established as a financial assistance                                                                       
grant program, the program was restructured in 1999 as                                                                          
predominately a loan program.                                                                                                   
                                                                                                                                
Ms. Meier noted that HB 432 extends the termination date of                                                                     
the Board of Storage Tank Assistance to June 30, 2003. It is                                                                    
necessary to extend the termination date because many sites                                                                     
have just initiated cleanup or are in the midst of a long                                                                       
term cleanup process which are not expected to be completed                                                                     
for a few years. Furthermore, as the new loan program is                                                                        
expected to be implemented this upcoming construction                                                                           
season, it is imperative that the Board remain available to                                                                     
mediate and resolve disputes between the Department of                                                                          
Environmental Conservation (DEC) and Alaska's underground                                                                       
storage tank owners.                                                                                                            
                                                                                                                                
Ms. Meier stated that HB 432 also expands the authority of                                                                      
the Board. Historically, there has been a delay by DEC in                                                                       
sending final cleanup decisions to businesses. Clean-up                                                                         
decisions, provide evidence that the contaminated site has                                                                      
been cleaned up.  Many sites are pending sale or are waiting                                                                    
on bank financing.  The transactions cannot proceed until                                                                       
final cleanup decision letters are distributed by DEC. By                                                                       
expanding the Board's authority to issue recommendations                                                                        
concerning cleanup decisions, it is expected that many new                                                                      
cleanup decisions will be issued that in the past have been                                                                     
delayed or simply overlooked. The expansion of authority                                                                        
will not be binding authority; it will simply provide a                                                                         
forum for the Board, businesses, and DEC to discuss final                                                                       
decision letters.                                                                                                               
                                                                                                                                
Representative Phillips asked for more detail regarding the                                                                     
additional responsibility of the Board and the expansion of                                                                     
that authority.  Ms. Meier replied that it would not be a                                                                       
binding authority; they would provide a form and                                                                                
recommendations concerning the clean up decisions.  She                                                                         
noted that last session, SB 128 dealt with the Board of                                                                         
Storage Tank program and transferred it from a grant program                                                                    
to a loan program.  It did not extend the Board.                                                                                
                                                                                                                                
JOHN BARNETT, PRIVATE CONTRACTOR PROVIDING SERVICES TO THE                                                                      
BOARD OF STORAGE TANKS, JUNEAU, responded to queries from                                                                       
Representative Phillips.  He noted that there has been                                                                          
discussion over the past few years regarding "no further                                                                        
action" letters and delays associated with that.  These are                                                                     
essentially "clean-up" decisions with the owner clarifying                                                                      
that their property is free of contamination which frees up                                                                     
their property for resale.                                                                                                      
                                                                                                                                
Mr. Barnett pointed out that the problem which has occurred                                                                     
in the last few years, is that the backlog of sites that                                                                        
need to have the clean-up decisions, have created tremendous                                                                    
delays.  Many times, it is an over site by the Department or                                                                    
some type of communication break down. A lot of the disputes                                                                    
and appeals are resolved at the table.  Given the proposed                                                                      
legislation, the Board could make recommendations either to                                                                     
the Department or to the tank owner to undertake a certain                                                                      
amount of activities.  Such action could resolve 90% of the                                                                     
problems.                                                                                                                       
                                                                                                                                
Co-Chair Therriault asked for comments on the amendments.                                                                       
                                                                                                                                
Mr. Barnett noted that the Board was in full support of the                                                                     
amendment submitted by Co-Chair Mulder, 1-LS1539\A.1,                                                                           
Lauterbach, 4/4/00.  [Copy on File].  He pointed out that                                                                       
the list had been closed since 1994 and that the amendment                                                                      
would only affect entities on that list.                                                                                        
                                                                                                                                
Co-Chair Therriault asked about impact of Amendment #2,                                                                         
which would change the date.  [Copy on File].  Mr. Barnett                                                                      
replied that amendment would be acceptable.                                                                                     
                                                                                                                                
Representative Phillips asked why the date extension had not                                                                    
been added last year. Ms. Meier replied that there had not                                                                      
been support on the Senate side.  She added, this year,                                                                         
there appears to be more support from the Senate if the date                                                                    
was "2002".                                                                                                                     
                                                                                                                                
Representative J. Davies asked if the list included non-                                                                        
profits.  Mr. Barnett stated that there are two on the                                                                          
current list.  They are currently not eligible for a grant.                                                                     
                                                                                                                                
GARY WEBER, (TESTIFIED VIA TELECONFERENCE), SECRETARY                                                                           
TREASURER, ALASKA UNDERGROUND TANK OWNERS (AUTO), WASILLA,                                                                      
noted that the under ground tank owners totally support the                                                                     
proposed legislation.                                                                                                           
                                                                                                                                
Co-Chair Mulder MOVED to adopt Amendment #1.  There being NO                                                                    
OBJECTION, it was adopted.                                                                                                      
                                                                                                                                
(TAPE CHANGE, HFC 00 - 100, Side 1)                                                                                             
                                                                                                                                
                                                                                                                                
Co-Chair Mulder MOVED to adopt Amendment #2 which would                                                                         
shorten the extension date.  Representative J. Davies                                                                           
OBJECTED.  He stated that if the amendment was adopted, it                                                                      
would need to be placed in the title.  Co-Chair Mulder                                                                          
WITHDREW Amendment #2.                                                                                                          
                                                                                                                                
Co-Chair Therriault asked if the fiscal note proposed                                                                           
continuation of the existing funding.  Mr. Barnett replied                                                                      
that the fiscal note covers travel costs for the Board                                                                          
members and a contract to be placed out for competitive bid                                                                     
this spring.  He pointed out that the Board was privatized                                                                      
last year and that costs associated with the Board has                                                                          
dramatically dropped.  The revenue source would be                                                                              
registration receipts received from the tank owners.                                                                            
                                                                                                                                
Representative Foster MOVED to report CS HB 432 (FIN) out of                                                                    
Committee with individual recommendations and with the                                                                          
accompanying note.  There being NO OBJECTION, it was so                                                                         
ordered.                                                                                                                        
                                                                                                                                
CS HB 432 (FIN) was reported out of Committee with a "do                                                                        
pass" recommendation and with a fiscal note by Department of                                                                    
Environmental Conservation dated 3/21/00.                                                                                       
                                                                                                                                
HOUSE BILL NO. 325                                                                                                              
                                                                                                                                
An Act relating to priorities, claims, and liens for                                                                            
payment for certain medical services provided to                                                                                
medical assistance recipients; and providing for an                                                                             
effective date.                                                                                                                 
                                                                                                                                
JON SHERWOOD, DIVISION OF MEDICAL ASSISTANCE, DEPARTMENT OF                                                                     
HEALTH AND SOCIAL SERVICES, testified in support of the                                                                         
legislation.  He noted that HB 325 would:                                                                                       
                                                                                                                                
? Provide the Department of Health and Social Services                                                                          
with unambiguous authority to recover medical costs                                                                             
incurred by the Division of Medical Assistance when a                                                                           
legal settlement making a monetary award to cover                                                                               
injuries has been made; and                                                                                                     
? Allow providers to bill the Division for services up to                                                                       
twelve months from the date of service. The current                                                                             
period is six months.                                                                                                           
                                                                                                                                
Mr. Sherwood stated that the Department would like to                                                                           
provide an exemption for good cause. If there was good cause                                                                    
for missing a deadline, then the services that have been                                                                        
provided should be paid for by the Department.                                                                                  
                                                                                                                                
Co-Chair Therriault noted that the members were provided                                                                        
with a proposed committee substitute, 1-GH2058\H,                                                                               
Lauterbach, 4/4/00. [Copy on File].  He noted that the                                                                          
proposed committee substitute would separate the two issues.                                                                    
The draft contains the provisions of the bill going after                                                                       
the third party payments.  He noted that he was attempting                                                                      
to determine a way to cover the assisted living aspect of                                                                       
the bill.                                                                                                                       
                                                                                                                                
In response to a question by Representative Phillips, Mr.                                                                       
Sherwood explained that the legislation would apply to                                                                          
Medicaid and chronic and acute medical assistance                                                                               
recipients.                                                                                                                     
                                                                                                                                
Co-Chair Therriault inquired if a third party claim could go                                                                    
beyond the six months.  Mr. Sherwood responded that at                                                                          
present time, you could.  If you have private insurance, the                                                                    
provider bills insurance and then bills the Division for the                                                                    
balance of the claims.  The proposed legislation does not                                                                       
change that provision.                                                                                                          
                                                                                                                                
Co-Chair Therriault noted that the committee substitute                                                                         
drops off the blanket extension to twelve months from                                                                           
payments of providers.  He referenced the fiscal note,                                                                          
pointing out that the committee substitute would capture                                                                        
additional revenue.                                                                                                             
                                                                                                                                
In response to concerns voiced by Representative J. Davies,                                                                     
Mr. Sherwood noted that in the portion being deleted, the                                                                       
Division had proposed to extend the filing deadline for                                                                         
providers.  If there was no insurance to provide service,                                                                       
the third party providers would then have six months.  Under                                                                    
the proposed change, the period would be extended to twelve                                                                     
months; the committee substitute would keep it at six                                                                           
months. Mr. Sherwood added that the committee substitute                                                                        
would also eliminate exemptions for cause.  He observed that                                                                    
twelve months is the national standard practice for the                                                                         
industry.                                                                                                                       
                                                                                                                                
Co-Chair Therriault questioned the fiscal impact of allowing                                                                    
exemptions for "good cause". Mr. Sherwood did not know the                                                                      
amount.                                                                                                                         
                                                                                                                                
Representative J. Davies questioned the intent of the                                                                           
committee substitute.  He recommended that providers should                                                                     
have the opportunity to collect.                                                                                                
                                                                                                                                
Co-Chair Mulder pointed out that most claims would be made                                                                      
by doctors and hospitals and that it would be "reasonable"                                                                      
to expect billing within six months.  He added, that is                                                                         
standard practice in Alaska.                                                                                                    
                                                                                                                                
BOB LABBE, DIRECTOR, DIVISION OF MEDICAL ASSISTANCE,                                                                            
DEPARTMENT OF HEALTH AND SOCIAL SERVICES, provided                                                                              
information on the legislation.  He stated that there is not                                                                    
a lot of business that comes this way, but emphasized that                                                                      
there are some small providers with late filings. Mr. Labbe                                                                     
noted that the federal government allows twelve months to                                                                       
file a claim.  Alaska has a six-month filing time.  He                                                                          
stressed that the cost of longer filings is minimal and it                                                                      
would help the "provider community".                                                                                            
                                                                                                                                
Co-Chair Mulder asked if passage of the legislation would                                                                       
provide an "incentive" for companies to be late in their                                                                        
submissions. Mr. Labbe responded that 90% percent is                                                                            
received within the first 30 days.  He stated that it is the                                                                    
anomalies that come in later.  He admitted that the                                                                             
Department would have changed it in regulation if it had                                                                        
been possible.                                                                                                                  
                                                                                                                                
Co-Chair Mulder suggested that it would take longer to close                                                                    
out the State's accounting books.  Mr. Labbe explained that                                                                     
the Medicaid process runs on a cash basis and he did not                                                                        
foresee a problem in the Department's bookkeeping.                                                                              
Representative J. Davies pointed out that the incentive to                                                                      
file timely exists in order to receive payment.                                                                                 
                                                                                                                                
LEONARD ANDERSON, (TESTIFIED VIA TELECONFERENCE),                                                                               
REPRESENATIVE FOR THE STATE OF ALASKA THIRD PARTY RECOVERY                                                                      
FOR MEDICAID MATTERS, ANCHORAGE, stated that the current                                                                        
bill contains a "notice" problem and recognition in the                                                                         
State's right to recover Medicaid payments from a liable                                                                        
third party.  Currently, when cases are made and payments                                                                       
are paid, the State finds out about third party recipients                                                                      
through the third party. The State Medicaid portion is                                                                          
included in any recovery. Mr. Anderson found that the State                                                                     
is receiving notice of a potentially liable third party well                                                                    
into the case, possibly during settlement or after.  The                                                                        
bill would allow absolute notice of a third party earlier in                                                                    
the process.                                                                                                                    
                                                                                                                                
Mr. Anderson continued, the second problem is that current                                                                      
statute is based on segregation principles.  The new                                                                            
legislation gives the State the opportunity to get a better                                                                     
bargaining position and would allow them to have an                                                                             
opportunity to affect what is liable.                                                                                           
                                                                                                                                
LISA KIRSCH, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW,                                                                     
offered to answer questions of the Committee members.                                                                           
                                                                                                                                
LORRAINE DERR, ALASKA STATE HOSPITAL AND NURSING HOME                                                                           
ASSOCIATION (ASHANHA), JUNEAU, testified in support of the                                                                      
legislation as originally written.                                                                                              
                                                                                                                                
Co-Chair Therriault advised that he would not offer the                                                                         
committee substitute.  He noted that the Legislature would                                                                      
continue to work with the Department on the expenditure side                                                                    
of the fiscal note through the Conference Committee.                                                                            
                                                                                                                                
Co-Chair Mulder MOVED to report CS HB 325 (JUD) out of                                                                          
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS HB 325 (JUD) was reported out of Committee with a "do                                                                        
pass" recommendation and with a fiscal note by Department of                                                                    
Health and Social Services dated 2/2/00.                                                                                        
                                                                                                                                
(TAPE CHANGE, HFC 00 - 100, Side 2).                                                                                            
CS FOR SENATE BILL NO. 281(FIN) am                                                                                              
                                                                                                                                
An Act relating to missions and measures to be applied                                                                          
to certain expenditures by the executive branch of                                                                              
state government and the University of Alaska from the                                                                          
state operating budget for the fiscal year ending June                                                                          
30, 2001; and providing for an effective date.                                                                                  
                                                                                                                                
Representative Phillips MOVED to adopt Amendment #2, 1-                                                                         
LS1392\GA.1, Cramer, 4/4/00.  [Copy on File].  Co-Chair                                                                         
Therriault OBJECTED.                                                                                                            
                                                                                                                                
Representative Phillips stated that the amendment would                                                                         
address all concerns of the House and of the Senate to                                                                          
become briefer.  Co-Chair Therriault noted that he objected                                                                     
for the purpose of an amendment to the amendment.  The                                                                          
change offers a compromise of new language as suggested by                                                                      
the University in regards to the mission.                                                                                       
                                                                                                                                
Representative Phillips spoke against the change.  She noted                                                                    
that training has nothing to do with vocational education.                                                                      
She added that she had cleared the language of the amendment                                                                    
through the University and that they supported it.                                                                              
                                                                                                                                
Representative Phillips stated that if vocational education                                                                     
were not included, it would be lost at the University level.                                                                    
Representative Phillips stated that she was not willing to                                                                      
let the University do away with vocational education.                                                                           
                                                                                                                                
Co-Chair Therriault WITHDREW the amendment to the amendment.                                                                    
He stated that he would propose a technical change to Line                                                                      
2, adding "vocational".  Co-Chair Therriault MOVED the new                                                                      
amendment to the amendment.  [Copy on File].                                                                                    
                                                                                                                                
Co-Chair Mulder noted that in conversations with President                                                                      
Hamilton, he was a "big" supporter of the vocational                                                                            
training.                                                                                                                       
                                                                                                                                
Vice Chair Bunde noted that he would be more comfortable                                                                        
including it in the mission statement.                                                                                          
                                                                                                                                
Representative J. Davies pointed out there are other                                                                            
concerns and that it would not limit it to post-secondary                                                                       
education.  He stated that there are two types of research                                                                      
not being recognized, both basic and applied.    It is                                                                          
important to acknowledge both of these types of research. In                                                                    
context of the University, the Representative Phillips'                                                                         
amendment is important because it shows that research driven                                                                    
needs are crucial to the program.  He did not understand the                                                                    
argument being proposed regarding the mission statement.                                                                        
                                                                                                                                
Representative Phillips added that Co-Chair Therriault's                                                                        
amendment does not take into consideration the impact that                                                                      
the University has on the State economy as a whole.  She                                                                        
believed that the language of the amendment was more                                                                            
inclusive.                                                                                                                      
                                                                                                                                
A roll call vote was taken on the motion to adopt the                                                                           
amendment to Amendment #2.                                                                                                      
                                                                                                                                
IN FAVOR:  Bunde, G. Davis, Therriault, Mulder                                                                                  
OPPOSED: Austerman, J. Davies, Foster, Grussendorf,                                                                             
Moses, Phillips, Williams                                                                                                       
                                                                                                                                
The MOTION FAILED (4-7).                                                                                                        
                                                                                                                                
Co-Chair Mulder commented that there remains a couple areas                                                                     
in Amendment #2 which are "flowery".                                                                                            
                                                                                                                                
Representative J. Davies MOVED a "friendly" change to                                                                           
Amendment #2 on Page 1, Line 4, deleting "ensure education                                                                      
opportunities to meet the" and inserting "respond to the                                                                        
educational".  Additionally, a change to Page 1, Line 6,                                                                        
deleting "the highest" and replacing it with "high".                                                                            
                                                                                                                                
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY OF ALASKA,                                                                             
FAIRBANKS, noted support for the change.  There being NO                                                                        
OBJECTION, the change was adopted.                                                                                              
                                                                                                                                
There being NO OBJECTION to the amended Amendment #2, it was                                                                    
adopted.                                                                                                                        
                                                                                                                                
Representative Austerman explained Amendment #3.  [Copy on                                                                      
File].  He commented that there are no guidelines for the                                                                       
Alaska Regional Development Organization (ARDOR) program.                                                                       
He believed that it would be a good idea to address through                                                                     
the legislation.                                                                                                                
                                                                                                                                
Co-Chair Therriault referenced sub-Section (3).  He                                                                             
recommended a change, which would clarify an increase in                                                                        
non-State funds being leveraged by the ARDOR's.                                                                                 
                                                                                                                                
Representative Austerman noted that the sentence would read:                                                                    
"(3) the increase of non-state funds leveraged by ARDOR                                                                         
grants".                                                                                                                        
                                                                                                                                
Representative J. Davies recommended changing "increase" to                                                                     
"amount".  Committee members agreed.                                                                                            
                                                                                                                                
Representative Austerman MOVED Amendment #3 with the                                                                            
language change.  There being NO OBJECTION, it was adopted.                                                                     
                                                                                                                                
Vice Chair Bunde MOVED to report HCS CS SB 281 (FIN) out of                                                                     
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.                                                                                                       
                                                                                                                                
HCS CS SB 281 (FIN) was reported out of Committee with a "do                                                                    
pass" recommendation and with a zero fiscal note by the                                                                         
Office of the Governor dated 3/17/00.                                                                                           
HOUSE BILL NO. 265                                                                                                              
                                                                                                                                
An Act extending the termination date of the Alaska                                                                             
regional economic assistance program; and providing for                                                                         
an effective date.                                                                                                              
                                                                                                                                
CHARLES PARKER, (TESTIFIED VIA TELECONFERENCE), MATSU, spoke                                                                    
in support of the ARDOR program and offered to answer                                                                           
questions of the Committee.                                                                                                     
                                                                                                                                
Representative Austerman noted that last year, the                                                                              
Legislature passed HB 40 which contained a number of changes                                                                    
identified in Section #1.                                                                                                       
                                                                                                                                
Co-Chair Therriault noted that there were two fiscal notes                                                                      
in member's packets.  The House Finance Committee fiscal                                                                        
note proposes phasing out State funding over a three-year                                                                       
period.  The Department of Community & Economic Development                                                                     
fiscal note proposes action to happen within a five-year                                                                        
period.                                                                                                                         
                                                                                                                                
(TAPE CHANGE HFC 00 - 101, Side 1).                                                                                             
                                                                                                                                
Co-Chair Therriault commented that adoption of the fiscal                                                                       
note would send a message regarding the fund during the out                                                                     
years.                                                                                                                          
                                                                                                                                
Representative Austerman advised that there has been several                                                                    
discussions regarding the need for the State of Alaska to                                                                       
become a player in the economic development of the State.                                                                       
He noted that the "small" amount placed into the ARDOR's                                                                        
budget is something that the State should be doing.                                                                             
Representative Austerman stated that he would not support                                                                       
the new note.                                                                                                                   
                                                                                                                                
Representative J. Davies echoed concerns registered by                                                                          
Representative Austerman. He addressed the need of                                                                              
diversifying the economy within the State.  He agreed that                                                                      
the State should determine if these dollars spent are being                                                                     
effective and recommended that the mechanism that the bill                                                                      
be determined by the measures.                                                                                                  
                                                                                                                                
Co-Chair Therriault stated that for the next year, it is                                                                        
important to begin the weaning process from State monies.                                                                       
Co-Chair Therriault noted that he would not oppose the                                                                          
original fiscal note submitted by the Department.                                                                               
                                                                                                                                
Representative Austerman MOVED to report HB 265 out of                                                                          
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.  There being NO OBJECTION, it was                                                                     
so ordered.                                                                                                                     
                                                                                                                                
HB 265 was reported out of Committee with a "do pass"                                                                           
recommendation and with a fiscal note by Department of                                                                          
Community & Economic Development dated 3/1/00.                                                                                  
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 4:30 P.M.                                                                                              
                                                                                                                                
                                                                                                                                
H.F.C. 17 4/04/00                                                                                                               

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