Legislature(2001 - 2002)

04/09/2001 01:39 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 9, 2001                                                                                            
                         1:39 P.M.                                                                                              
                                                                                                                                
TAPE HFC 01 - 76, Side A                                                                                                        
TAPE HFC 01 - 76, Side B                                                                                                        
TAPE HFC 01 - 77, Side A                                                                                                        
TAPE HFC 01 - 77, Side B                                                                                                        
TAPE HFC 01 - 78, Side A                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:39 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Williams, Co-Chair                                                                                          
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Carl Moses                                                                                                       
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Richard Foster                                                                                                   
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Lisel  McGuire;  Representative  Fred  Dyson;                                                                   
Representative   Joe   Green;   Representative   Pete   Kott;                                                                   
Representative     Chenault;     Kevin    Jardell,     Staff,                                                                   
Representative Joe  Green; Rod Arno, Alaska  Outdoor Council,                                                                   
Palmer;  Pam  LaBolle,  President, Alaska  State  Chamber  of                                                                   
Commerce; Greg  Persson, Public Safety Employees  Association                                                                   
(PSEA);  Tim  Navarre,  President,  Kenai  Peninsula  Borough                                                                   
Assembly;  David Katzeek,  Juneau; Mako  Haggerdy, Homer;  Al                                                                   
McKinley,  Sr.,  Alaska Native  Brotherhood,  Juneau;  Vernon                                                                   
Marshall, Executive  Director, NEA  - Alaska; Kathryn  Kurtz,                                                                   
Attorney, Legislative  Affairs Agency; Craig  Persson, Public                                                                   
Safety  Employees  Association, Fairbanks;  Alfred  McKinley,                                                                   
Sr.,  Alaska   Native  Brotherhood,  Juneau;   Barbara  Huff-                                                                   
Tucknus, Director,  Legislative and Governmental  Affairs for                                                                   
the Teamsters, Juneau.                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
James  Jordan,  Executive  Director,   Alaska  State  Medical                                                                   
Board,  Anchorage;  Debbie Ossiander,  Chugach  High  School,                                                                   
Anchorage  School  Board,  Anchorage;  Brooke  Miles,  Alaska                                                                   
Public Officers  Commission (APOC),  Anchorage; Steven  Conn,                                                                   
Executive  Director, Alaska Public  Interest Research  Group,                                                                   
Anchorage;   James   Price,  Kenai;   Richard   Van   Hattan,                                                                   
President,  Correctional  Officers  Bargaining  Unit,  Kenai;                                                                   
Dwight Nissen,  Delta Junction; Roy Gilbertson,  Mayor, Delta                                                                   
Junction.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 99     An Act relating to school discipline and safety                                                                       
          programs; and providing for an effective date.                                                                        
                                                                                                                                
          CS HB 99 (HES) was reported out of Committee with                                                                     
          a  "do pass"  recommendation  and with  a new  zero                                                                   
          fiscal  note  by Department  of  Education &  Early                                                                   
          Development.                                                                                                          
                                                                                                                                
HB 113    An Act  relating to health care  insurance payments                                                                   
          for  hospital or  medical  services; and  providing                                                                   
          for an effective date.                                                                                                
                                                                                                                                
          CS HB 113 (HES) was reported out of Committee with                                                                    
          a  "do pass"  recommendation and  with zero  fiscal                                                                   
          notes  by   Department  of  Community   &  Economic                                                                   
          Development  dated 3/07/01  and  the Department  of                                                                   
          Administration.                                                                                                       
                                                                                                                                
HB 149    An Act relating to correctional  facility space and                                                                   
          to  authorizing the  Department  of Corrections  to                                                                   
          enter  into an  agreement to  lease facilities  for                                                                   
          the  confinement and care  of prisoners  within the                                                                   
          Kenai Peninsula Borough.                                                                                              
                                                                                                                                
          CS HB 149 (FIN) was reported out of Committee with                                                                    
          "individual recommendations"  and with fiscal notes                                                                   
          by the Department of  Corrections dated 3/22/01 and                                                                   
          the Department of Revenue.                                                                                            
                                                                                                                                
HB 177    An   Act    placing   certain   special    interest                                                                   
          organizations within  the definition of 'group' for                                                                   
          purposes  of  Alaska's campaign  finance  statutes;                                                                   
          providing a contingent  amendment to take effect in                                                                   
          case subjecting  these organizations to  all of the                                                                   
          statutory  requirements  pertaining  to  groups  is                                                                   
          held by  a court to be unconstitutional;  requiring                                                                   
          certain  organizations  to  disclose  contributions                                                                   
          made  to  them  and   expenditures  made  by  them;                                                                   
          requiring   disclosure  of   the  true  source   of                                                                   
          campaign   contributions;  and  providing   for  an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CS HB 177 (STA) was reported out of Committee with                                                                    
          "individual  recommendations"  and  with  a  fiscal                                                                   
          note by the Department of Administration dated                                                                        
          3/22/01.                                                                                                              
                                                                                                                                
HB 194    An  Act relating  to  fees for  commercial  fishing                                                                   
          licenses and permits; and providing for an                                                                            
          effective date.                                                                                                       
                                                                                                                                
          HB 194 was POSTPONDED for a hearing at a later                                                                        
          date.                                                                                                                 
                                                                                                                                
HCR 13    Relating  to the nonresident  fee differential  for                                                                   
          commercial fishing permits and licenses.                                                                              
                                                                                                                                
          HCR 13 was POSTPONDED for a hearing at a later                                                                        
          date.                                                                                                                 
                                                                                                                                
HOUSE BILL NO. 99                                                                                                             
                                                                                                                                
     An Act relating to school discipline and safety                                                                            
     programs; and providing for an effective date.                                                                             
                                                                                                                                
REPRESENTATIVE  LESIL  MCGUIRE  commented  that  violence  in                                                                   
Alaska's  schools   has  recently   been  brought   into  the                                                                   
community  spotlight   as  a   result  of  serious   physical                                                                   
altercations between students.   The fights have been violent                                                                   
resulting  in severe  bodily harm.    Education requires  our                                                                   
children  to  learn  how  to  live  in  society  through  the                                                                   
acceptance of rules and community values.                                                                                       
                                                                                                                                
Representative  McGuire stated  that HB  99 would  be a  tool                                                                   
available to schools  to help confront both  violent and non-                                                                   
violent conflicts.  HB 99 would  amend Title 14 of the Alaska                                                                   
Statutes  to include  policies  that would  initiate  student                                                                   
conflict-resolution    curriculum   providing    methods   of                                                                   
nonviolent  resolution and  mediation  for student  conflict.                                                                   
HB 99 would  seek to recognize and enforce  existing behavior                                                                   
standards  by   giving  students  alternatives   for  solving                                                                   
problems besides  the use of  violence.  By integrating  that                                                                   
way of  learning into the  schools core curriculum,  policies                                                                   
would  be  targeted  at  helping  students  resolve  problems                                                                   
before they escalate.                                                                                                           
                                                                                                                                
Representative  McGuire  pointed  out the  zero  fiscal  note                                                                   
submitted   by   the   Department  of   Education   &   Early                                                                   
Development.                                                                                                                    
                                                                                                                                
Representative  Harris asked if  the legislation  would cause                                                                   
unfounded   mandate   expenditures   to  the   local   school                                                                   
districts.  Representative  McGuire stated that  it would not                                                                   
have that  effect.   She noted the  direct contrast  with the                                                                   
language in  the previous  bill and  pointed out the  program                                                                   
requiring  the policies  had  been removed.    Representative                                                                   
McGuire  noted  that  three  of   the  schools  already  have                                                                   
policies  in place  pertaining  to  the reporting  of  school                                                                   
conflict.    That  inclusion  will  waive  them  out  of  the                                                                   
stipulation.                                                                                                                    
                                                                                                                                
Representative  McGuire  added  that there  would  be  policy                                                                   
manual updates distributed to  the school districts.  Schools                                                                   
would  use existing  resources  to  determine  if there  were                                                                   
problems in their areas.  She  noted that the bill would help                                                                   
individual  school  districts  to  obtain  grant  application                                                                   
funds.                                                                                                                          
                                                                                                                                
Vice-Chair Bunde stated that Chugiak  High School does have a                                                                   
mediation  program in  place.   He asked  if the  information                                                                   
that district  had gathered would  be available to  the other                                                                   
districts.   Additionally, Vice-Chair  Bunde questioned  what                                                                   
the  charge assessed  to each  high  school would  be if  the                                                                   
program language were to be added back.                                                                                         
                                                                                                                                
Representative  McGuire indicated that  there was  a movement                                                                   
to  create  a  database  and  that  the  materials  would  be                                                                   
available.   She noted  that through  her office budget,  she                                                                   
intended to put together a packet  addressing the "Peace-able                                                                   
School Project", which  would be sent to every  school in the                                                                   
State.  The  current costs of the Chugiak program  runs about                                                                   
$30 - $40 thousand  dollars per year.  The cost  to implement                                                                   
the mediation program would be  approximately $8 thousand per                                                                   
year.                                                                                                                           
                                                                                                                                
Representative  Lancaster   asked  if  there   would  be  any                                                                   
financial  responsibility  to  the  school  districts  should                                                                   
problems result.   Representative McGuire stated  there would                                                                   
not.  The districts would not  be punished and there would be                                                                   
no  ramifications.    She advised  that  through  the  policy                                                                   
letter  and  the  news  channels,  the  idea  has  been  well                                                                   
received.   She acknowledged that  an incentive exists.   The                                                                   
school districts want to start  talking about these concerns.                                                                   
                                                                                                                                
Vice-Chair Bunde  asked if mediation was  currently happening                                                                   
in the  Alaskan elementary  schools.  Representative  McGuire                                                                   
responded that most of the elementary  schools have some sort                                                                   
of mediation  control  happening.  However,  kids are  coming                                                                   
into the  high schools  and those  trained mediator  services                                                                   
are no  longer being used.   Representative McGuire  stressed                                                                   
that Chugiak  is an  exception.   Most high  schools are  not                                                                   
doing  it at  this  time.   She  noted that  the  legislation                                                                   
primarily targets the high school level.                                                                                        
                                                                                                                                
DEBBIE OSSIANDER,  (TESTIFIED VIA TELECONFERENCE),  ANCHORAGE                                                                   
SCHOOL  BOARD, CHUGIACH  HIGH SCHOOL,  ANCHORAGE, noted  that                                                                   
the  first  priority  of  every  school  district  is  school                                                                   
safety.   Ms. Ossiander  commented that  her school  district                                                                   
has been working  toward improving conflict resolution  for a                                                                   
number  of years.  Much of  the  work has  been done  through                                                                   
federal grant monies, specifically  the Federal Safe and Drug                                                                   
Free Schools.  She indicated that  the Anchorage School Board                                                                   
supports the  proposed legislation  and pointed out  that the                                                                   
legislation would help districts to access grant funding.                                                                       
                                                                                                                                
VERNON  MARSHALL,  EXECUTIVE   DIRECTOR,  NATIONAL  EDUCATION                                                                   
ASSOCIATION  (NEA)-ALASKA, noted  that NEA  does support  the                                                                   
passage of HB 99.  The issue of  school safety has been a top                                                                   
priority for  the Union's  agenda for many  years.   He noted                                                                   
that  HB  99  would  address  the  importance  of  developing                                                                   
strategies that hopefully would  lead to programs designed to                                                                   
help  students cope  with aggressive  thoughts and  feelings.                                                                   
There is  currently staff employed  to address  school safety                                                                   
concerns.   Mr. Marshal noted  that working with  children at                                                                   
an early age addressing these  issues of aggression, would be                                                                   
beneficial to all school age children.                                                                                          
                                                                                                                                
Mr. Marshall  distributed a packet  of material that  is used                                                                   
by teachers  at  in-service trainings  throughout the  State.                                                                   
[Copy on File].                                                                                                                 
                                                                                                                                
Vice-Chair  Bunde  MOVED to  report  CS HB  99  (HES) out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS  HB 99  (HES) was  reported out  of Committee  with a  "do                                                                   
pass"  recommendation and  with  a new  zero  fiscal note  by                                                                   
Department of Education & Early Development.                                                                                    
                                                                                                                                
HOUSE BILL NO. 113                                                                                                            
                                                                                                                                
     An Act relating to health care insurance payments for                                                                      
     hospital or medical services; and providing for an                                                                         
     effective date.                                                                                                            
                                                                                                                                
REPRESENTATIVE  JOE GREEN testified  that HB 113  would build                                                                   
upon  a national  trend to  develop  fair payment  provisions                                                                   
that would  enable health insurance  companies to  make sound                                                                   
business  decisions  while  ensuring  that  patients  receive                                                                   
benefit payments  in an appropriate time frame.   The concept                                                                   
of "prompt  pay"  legislation has  been successfully  adopted                                                                   
and implemented by 39 states.                                                                                                   
                                                                                                                                
HB  113  requires  health insurers  to  pay  benefits  within                                                                   
thirty  calendar days  of receiving  a "clean  claim".   If a                                                                   
payment is  not made  on time, the  insurer would  be charged                                                                   
interest  on  the  outstanding  claim.   HB  113  would  also                                                                   
establish a definition  for "clean claim" that  recognizes an                                                                   
insurance  company's need  to  make payment  decisions  based                                                                   
upon complete and accurate information.                                                                                         
                                                                                                                                
Vice-Chair Bunde  noted that since the  legislation indicates                                                                   
that  interest  would  be paid  for  delayed  payments,  that                                                                   
concept  indicates that  currently,  the insurance  companies                                                                   
are making money on those payments  delayed past thirty days.                                                                   
He asked if it was known what that amount was nationally.                                                                       
                                                                                                                                
Representative  Green explained that  there is a  presumption                                                                   
by the insurance  companies that if they delay  payment, they                                                                   
then have use of that money.                                                                                                    
                                                                                                                                
Representative  Croft  asked about  the  definition of  clean                                                                   
claim.  He asked if it had been "tested" in other states.                                                                       
                                                                                                                                
KEVIN  JARDELL, STAFF,  REPRESENTATIVE  JOE GREEN,  responded                                                                   
that the  definition of "clean  claim" has been  addressed by                                                                   
many states  and is  difficult to formulate.   He  noted that                                                                   
the definition  chosen, benefits  insurance companies  and is                                                                   
broadly  written.   Physicians  requested  that  "hard"  date                                                                   
lines be  established.   Clean claim  terminology comes  from                                                                   
the Medicare definition.                                                                                                        
                                                                                                                                
Representative  Croft asked an  alternative definition.   Mr.                                                                   
Jardell replied  that the American Medical  Association (AMA)                                                                   
is agreeable with the proposed  definition.  He stressed that                                                                   
the intent  was not to undermine  the viability  of insurance                                                                   
companies in Alaska.                                                                                                            
                                                                                                                                
Representative  Croft  asked where  the  procedures would  be                                                                   
outlined regarding  whether the  insurance companies  owe the                                                                   
claim or  not.  Mr. Jardell  replied that the  claimant would                                                                   
go through the Insurance Division  by filing a complaint.  It                                                                   
is  the intent  that  the  legislation would  make  insurance                                                                   
companies develop more efficient methods of paying claims.                                                                      
                                                                                                                                
Representative  Davies referenced  Page 4,  and asked  if the                                                                   
qualifier that precludes timely  payments on the claim, apply                                                                   
into  propriety  as  well  as  circumstances.    Mr.  Jardell                                                                   
understood that it would not apply  to language that resulted                                                                   
from a  technical or grammatical  error.  If  the information                                                                   
needed had been included on the  claim, then that claim would                                                                   
be a clean claim.  Representative  Green advised that most of                                                                   
the larger  insurance  companies insure  more than one  state                                                                   
and that  this language was used  by a significant  number of                                                                   
states.  He stated that it was reasonable.                                                                                      
                                                                                                                                
Representative  Hudson asked  if the  "clean claim"  would be                                                                   
impacted by Medicare's delay response.   Representative Green                                                                   
replied that the legislation would  apply between the insured                                                                   
and the insurance company.                                                                                                      
                                                                                                                                
JAMES  JORDAN,  (TESTIFIED  VIA   TELECONFERENCE),  EXECUTIVE                                                                   
DIRECTOR,  ALASKA   STATE  MEDICAL  ASSOCIATION,   ANCHORAGE,                                                                   
testified  that the  Alaska  State Medical  Association  does                                                                   
support  the proposed  legislation.   He  stated that  "clean                                                                   
claim"  definition   included  in   the  bill  is   based  on                                                                   
Medicare's  definition.   Currently,  there  are  regulations                                                                   
being  adopted on  the  federal level,  which  deal with  the                                                                   
confidentiality  of medical records  and information  for the                                                                   
payment of health  insurance claims.  In enacting  that bill,                                                                   
Mr.  Jordan  stated that  there  would  be an  activation  of                                                                   
regulations.   It is anticipated  that the State  Division of                                                                   
Insurance will adopt regulations  defining what a clean claim                                                                   
is.                                                                                                                             
                                                                                                                                
Representative  Davies asked how  to read Subsection  K, Page                                                                   
4, the qualifier of timely payments.   He asked if that would                                                                   
be  in  reference  to all  three  clauses,  the  defect,  the                                                                   
impropriety and  the circumstance.   Mr. Jordan  replied that                                                                   
it would.                                                                                                                       
                                                                                                                                
Representative Hudson MOVED to  report CS HB 113 (HES) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal note.  Representative  Harris OBJECTED in                                                                   
order  to ask  about all  the fiscal  notes.   Representative                                                                   
Green stated that they were all  zero.  Representative Harris                                                                   
WITHDREW his OBJECTION.                                                                                                         
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CS HB  113 (HES)  was reported  out of  Committee with  a "do                                                                   
pass"  recommendations   and  with   zero  fiscal   notes  by                                                                   
Department of  Administration and  Department of  Community &                                                                   
Economic Development dated 3/07/01.                                                                                             
                                                                                                                                
HOUSE BILL NO. 177                                                                                                            
                                                                                                                                
     An Act  placing certain  special interest  organizations                                                                   
     within  the  definition   of  'group'  for  purposes  of                                                                   
     Alaska's   campaign   finance  statutes;   providing   a                                                                   
     contingent amendment  to take effect in  case subjecting                                                                   
     these   organizations   to    all   of   the   statutory                                                                   
     requirements pertaining to  groups is held by a court to                                                                   
     be unconstitutional; requiring  certain organizations to                                                                   
     disclose  contributions made  to  them and  expenditures                                                                   
     made by  them; requiring  disclosure of the  true source                                                                   
     of  campaign   contributions;   and  providing   for  an                                                                   
     effective date.                                                                                                            
                                                                                                                                
REPRESENTATIVE  PETE  KOTT  pointed  out that  in  1999,  the                                                                   
Alaska  Supreme  Court  in  American  Civil  Liberties  Union                                                                   
(ACLU)  versus   State  upheld  Alaska's  ban   on  political                                                                   
contributions  and independent  expenditures by  corporations                                                                   
and labor unions.  The Court also  held that entities must be                                                                   
allowed to make independent expenditures if:                                                                                    
                                                                                                                                
     ·    They could not participate  in business activities;                                                                   
     ·    They  have  no shareholders  who  have  a claim  on                                                                   
          corporate earnings; and                                                                                               
     ·    They are independent from the influence of                                                                            
          business corporations.                                                                                                
                                                                                                                                
The  Court   suggested  that   entities,  which   meet  those                                                                   
criteria, must be permitted to  make political contributions.                                                                   
                                                                                                                                
Representative  Kott stated  that CS  HB 177 (STA)  clarifies                                                                   
that non-group  entitities that  meet that criteria  may make                                                                   
contributions and independent  expenditures.  The legislation                                                                   
would  subject  those groups  to  the same  rules,  including                                                                   
contribution  limits  and  reporting  requirements  as  other                                                                   
groups that participate in political campaigns.                                                                                 
                                                                                                                                
Representative  Whitaker  inquired  who  would  be  excluded.                                                                   
Representative Kott  replied that it would only  exclude non-                                                                   
group  entities  that  fall into  the  categories  listed  in                                                                   
Subsection 2.                                                                                                                   
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 77, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
Representative  Kott  noted  that  the only  group  that  the                                                                   
legislation  excludes now  would be  the Alaska  Conservation                                                                   
Voters (ACV).                                                                                                                   
                                                                                                                                
Representative  Whitaker  asked   the  intent  of  the  bill.                                                                   
Representative  Kott  replied  that it  was  specifically  to                                                                   
preclude ACV from  making the contributions they  made in the                                                                   
past  and  to preclude  any  other  non-group  entities  from                                                                   
"falling  into"  that  category.     Representative  Whitaker                                                                   
understood  that  the  bill would  create  a  "level  playing                                                                   
field" and close an existing loophole.                                                                                          
                                                                                                                                
Representative Davies asked if  Subsection 5 would be amended                                                                   
to  AS 15.13.400.   He  asked the  operational sentence  that                                                                   
precedes that reference.                                                                                                        
                                                                                                                                
KATHRYN  KURTZ,  ATTORNEY,  LEGISLATIVE  LEGAL  AND  RESEARCH                                                                   
SERVICES,  LEGISLATIVE  AFFAIRS  AGENCY, explained  that  the                                                                   
first sentence  of paragraph 5  would be the  definition that                                                                   
currently exists for "group".   That section provides all the                                                                   
definitions of that area of the  campaign finance law.  Every                                                                   
time "group"  is used, it  would mean  what it used  to mean,                                                                   
plus the  language added  in the  legislation.  The  language                                                                   
would add that group entity to met the criteria.                                                                                
                                                                                                                                
Representative J.  Davies understood that language  would not                                                                   
exclude  the  Alaska Oil  and  Gas  Association (AOGA)  as  a                                                                   
special interest organization.                                                                                                  
                                                                                                                                
Ms.  Kurtz  responded  that  the  bill  would  include  those                                                                   
entities.   She noted that  the case driving  the legislation                                                                   
is  the  case   of  the  Massachusetts  Citizens   for  Life.                                                                   
Entities that fit into that category  would be included.  The                                                                   
definition   appears  elsewhere   in  interpreting   judicial                                                                   
decisions.     She  stated   that  the   language  was   very                                                                   
restrictive about  the types of groups that  would fit within                                                                   
it.                                                                                                                             
                                                                                                                                
Representative Davies  asked how "C" was different  than "B".                                                                   
Representative  Kott replied that  "C" had been  derived from                                                                   
case  law and  clearly identifies  those groups  that can  be                                                                   
included  as  long  as  they  do  not  meet  the  categories.                                                                   
Outside of that, he did not know the difference.                                                                                
                                                                                                                                
Representative  J.  Davies asked  the  types  of groups  that                                                                   
would not be "swept in" by the language of Section C.                                                                           
                                                                                                                                
BROOKE MILES,  (TESTIFIED VIA TELECONFERENCE),  ALASKA PUBLIC                                                                   
OFFICIERS  CCOMMISSION (APOC),  ANCHORAGE,  advised that  the                                                                   
Campaign   Disclosure   Law  prohibits   contributions   from                                                                   
corporations  and business  education partnerships.   In  the                                                                   
ACLU  case, the  Alaska Supreme  Court  declined to  prohibit                                                                   
non-group  entities  that  met  the  three-part  arrangement.                                                                   
Last summer,  APOC delegated  regulations permitting  certain                                                                   
non-profit   corporations  to   qualify  for  activities   in                                                                   
election campaigns.   To date, only one group  has qualified,                                                                   
and that is the Alaska Conservation Voters (ACV).                                                                               
                                                                                                                                
Ms.  Miles  continued,  the  legislation   would  change  and                                                                   
override   APOC's  current   regulation   in   a  couple   of                                                                   
significant ways.   The first  way concerns disclosure.   The                                                                   
legislation   would  require   groups  that  participate   to                                                                   
disclose   their  contribution   activity  differently   than                                                                   
current regulations require.   They could still transfer to a                                                                   
political account;  it would have to meet all  the filters in                                                                   
Alaska State  law.   The contributions  coming into  the non-                                                                   
group entity would have to be  from individuals in the amount                                                                   
of  $500 dollars  or  less or  from another  political  group                                                                   
giving  $1,000 dollars.   She continued  that the  disclosure                                                                   
reports  would require  that they  show what  money had  been                                                                   
transferred.                                                                                                                    
                                                                                                                                
Ms.  Miles advised  that it  is APOC's  expectation that  the                                                                   
legislation  would result  in  a proliferation  of  entities.                                                                   
She  stated that  they  would not  be  limited to  non-profit                                                                   
corporations.                                                                                                                   
                                                                                                                                
Representative Davies  questioned what other groups  would be                                                                   
affected.  Ms.  Miles replied that there have  been inquiries                                                                   
from other groups such as "Common  Sense Alaska".  She stated                                                                   
that the bill would result in  more disclosure to the public.                                                                   
                                                                                                                                
Vice-Chair  Bunde  understood   that  the  bill  would  limit                                                                   
current  participants  to  the same  limitations  that  other                                                                   
political people  have to abide  by and would allow  for more                                                                   
expansion.  Ms. Miles replied that was correct.                                                                                 
                                                                                                                                
Vice-Chair  Bunde pointed  out that  his constituents  wanted                                                                   
more  campaign exposure,  rather  than less.    He noted  his                                                                   
support of the bill.                                                                                                            
                                                                                                                                
Representative Harris  voiced concern with the  fiscal notes.                                                                   
Representative  Kott believed that  only a minimal  amount of                                                                   
applications would be submitted.   He suggested that the note                                                                   
might be a little high.                                                                                                         
                                                                                                                                
Ms. Miles  explained that  the fiscal  note provides  for the                                                                   
first  year funding  for a  Regulation Specialist  to get  on                                                                   
line.   Groups  cannot  walk in  to  the office  without  the                                                                   
changes in place.   She pointed out that  current regulations                                                                   
"go out  the door"  as soon as  the legislation becomes  law.                                                                   
APOC believes that there will be a lot of these groups.                                                                         
                                                                                                                                
Representative  Harris recommended  zeroing  the fiscal  note                                                                   
out.                                                                                                                            
                                                                                                                                
Vice-Chair Bunde  referenced the travel aspect  of the fiscal                                                                   
note to  be used to educate  staff.  He asked  why individual                                                                   
areas should  come to Anchorage to  be educated.    Ms. Miles                                                                   
replied that  the common  practice is for  APOC to go  to the                                                                   
communities   to  educate  people   regarding  the   campaign                                                                   
changes.    She  predicted that  there  will  be  substantial                                                                   
impact and it would  be difficult for APOC to  stay on top of                                                                   
the legislation.                                                                                                                
                                                                                                                                
Representative Croft  spoke about those groups  that fit into                                                                   
Subsection  "B".   He asked  about  "groups, individuals  and                                                                   
special  interest organizations".    Ms.  Kurtz advised  that                                                                   
"person"  could  be  used  to   describe  a  labor  union  or                                                                   
partnership and  that the primary difference  between "B" and                                                                   
"C" is the phrase  "principle purpose".  In  "C", there could                                                                   
exist an entity whose purpose is educational.                                                                                   
                                                                                                                                
Representative Croft believed  that it was appropriate to use                                                                   
"person"  rather  than individual.    Person  is a  "broader"                                                                   
usage  of the  concept.   Previously,  groups  were asked  to                                                                   
register whose  major purpose  was to influence  an election.                                                                   
He asked  how would  those persons,  whose major concern  was                                                                   
not   to   influence   elections,  register.      Ms.   Kurtz                                                                 
acknowledged that was correct  if that person was going to be                                                                   
making expenditures regulated under statute.                                                                                    
                                                                                                                                
Representative   Croft   asked    where   "special   interest                                                                   
organization" would  be defined.  Ms. Kurtz  advised that the                                                                   
bill does  not include that  definition.  All  the references                                                                   
to that are included in "C".                                                                                                    
                                                                                                                                
Representative  Croft asked  how it  could be  characterized.                                                                   
Ms. Kurtz  noted that the Court  did not want to  define that                                                                   
either.   A negative definition  exists.  The  prohibition is                                                                   
concerned that it  would exclude some groups  that should not                                                                   
be excluded  based  on the three  criteria.   She noted  that                                                                   
there are a  few different types of tax-exempt  organizations                                                                   
under  federal code.    Ms. Kurtz  understood  that a  501C-4                                                                   
organization could engage in some  sort of political activity                                                                   
without jeopardizing their tax-exempt  status.  The Court has                                                                   
stated that  the statutes have  to be read to  allow entities                                                                   
that fit the definition.                                                                                                        
                                                                                                                                
Representative Croft  stated that by definition,  it would be                                                                   
a  group of  people that  are  grouped together  to do  other                                                                   
things  and that  end  up "grouping"  together  to engage  in                                                                   
political  activity.   He asked  if  that was  the source  of                                                                   
ACLU's  discretion opinion.   Ms.  Kurtz agreed  that was  an                                                                   
accurate summary of where the ACLU case went.                                                                                   
                                                                                                                                
Vice-Chair Bunde  noted that under "B", groups  organized for                                                                   
the  principle   purpose  of   influencing  the   outcome  of                                                                   
elections.   He asked what  the percentage of  their activity                                                                   
would be  and when  the principle purpose  would be  cut off.                                                                   
Ms.  Kurtz  explained  that  the  Courts  had  not  precisely                                                                   
defined percentage.   She added that there  was a prohibition                                                                   
elsewhere driving the statutes,  which prohibits corporations                                                                   
and unions from  contributing.  There could  be a corporation                                                                   
under "C", that met the criteria,  which would not be able to                                                                   
otherwise  contribute because  it was  a corporation.   Vice-                                                                   
Chair  Bunde  stated that  the  State  needs "C"  to  address                                                                   
activity  in political  campaigning.    The  public would  be                                                                   
better served by knowing know who is active.                                                                                    
                                                                                                                                
Representative  Davies asked  for a description  of  the ACLU                                                                   
case.    Ms.   Kurtz  advised  that  the  ACLU   case  was  a                                                                   
comprehensive  challenge  to   the  Alaska  Campaign  Finance                                                                   
statutes as  they were  recorded in 1996.   The Court  upheld                                                                   
virtually  all the  activities  so that  these  organizations                                                                   
could be  included.   That definition was  used in  couple of                                                                   
cases.    There  are federal  cases  indicating  the  federal                                                                   
election  and the  direct prohibition  of corporations.  That                                                                   
law was challenged.                                                                                                             
                                                                                                                                
Ms. Kurtz stated  that the statutes have to be  read to allow                                                                   
the  particular  class  of  entities   to  contribute.    The                                                                   
prohibition  on corporate  giving has  been justified  in the                                                                   
positive.   There is a concern  of corruption  that justifies                                                                   
the  restrictions  on  free  speech  in  campaign  financing.                                                                   
There  is a  concern about  the ability  to accumulate  large                                                                   
quantities  of  funds  that go  with  corporations  that  the                                                                   
Courts did  not appeal.  It  applies to groups like  those in                                                                   
the federal challenge.                                                                                                          
                                                                                                                                
Representative Whitaker  questioned if the bill  would "level                                                                   
the playing field".  Representative Kott replied it would.                                                                      
                                                                                                                                
STEVEN  CONN,   (TESTIFIED  VIA  TELECONFERENCE),   EXECUTIVE                                                                   
DIRECTOR, ALASKA PUBLIC INTEREST  RESERARCH GROUP, ANCHORAGE,                                                                   
spoke  in  opposition  to  the   proposed  legislation.    He                                                                   
submitted that  to have  a level playing  field, it  would be                                                                   
important to address campaign  finance reform, which would be                                                                   
to  protect  the  political  process   from  an  overwhelming                                                                   
influence  by corporations.   He  spoke to  the potential  of                                                                   
corrupting   the  process  by   exacting  from   politicians,                                                                   
political debts.  The Court sought  to protect those entities                                                                   
that were explicitly  not engaged in "business"  activity and                                                                   
with  no shareholders.   Mr.  Conn  stated that  it would  be                                                                   
those      entities whose singular purpose and  ideas are not                                                                   
connected  to  business.   Those  entities  would  deserve  a                                                                   
special exemption  if there  was a level  playing field.   He                                                                   
believed  that  there  would   be  many  groups  seeking  the                                                                   
exclusion.  He  submitted that there is no  question that the                                                                   
Court thought  long and hard about the  exemption recognizing                                                                   
the powerful impact  of business on that process.   The Court                                                                   
did define it in the negative.                                                                                                  
                                                                                                                                
Mr. Conn  added, that a concern  exists that those  who chose                                                                   
to participate  in the non-business  entity might  be subject                                                                   
to retaliation  with sanctions  leveled.   There are  certain                                                                   
reasons why the Court awarded  immunities.  He encouraged the                                                                   
Committee  to  contemplate  those   concerns.    The  Court's                                                                   
decisions should  not be modified.  The exclusion  is focused                                                                   
on one specific group.                                                                                                          
                                                                                                                                
ROD ARNO, ALASKA OUTDOOR COUNCIL,  PALMER, voiced support for                                                                   
the proposed  legislation.   He noted  that there are  groups                                                                   
who  advocate against  the Alaska  Outdoor Council.   One  of                                                                   
those groups  is the Alaska  Conservation Foundation  and its                                                                   
umbrella  groups, the  Alaska Conservation  Alliance and  the                                                                   
Alaska Conservation  Voters.   He pointed  out that  APOC has                                                                   
indicated  that  there  is  no  regulations  making  the  ACV                                                                   
register  disclosures.   He stated  that  the Alaska  Outdoor                                                                   
Council would like a "level playing field".                                                                                     
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 77, Side A                                                                                                      
                                                                                                                                
                                                                                                                                
PAM  LABOLLE, PRESIDENT,  ALASKA STATE  CHAMBER OF  COMMERCE,                                                                   
spoke in support of the legislation.   She maintained that it                                                                   
would  require  certain  special  interest  organizations  to                                                                   
disclose  contributions received  and  expenditures made  for                                                                   
campaigns,   and  to   disclose  the   true  source   of  the                                                                   
campaigning contributions.                                                                                                      
                                                                                                                                
Ms. LaBolle  stated that  Alaska voters  deserve to  know who                                                                   
the contributors  are and in  which states those  individuals                                                                   
reside who are  trying to persuade Alaskans  to support their                                                                   
cause.    She  maintained  that   there  is  no  reason  that                                                                   
promoters should hide behind their funding sources.                                                                             
                                                                                                                                
Vice-Chair  Bunde  MOVED to  report  CSHB  177 (STA)  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal notes.                                                                                                      
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
CS  HB  177   (STA)  was  reported  out  of   Committee  with                                                                   
"individual  recommendations"  and  with  a  fiscal  note  by                                                                   
Department of Administration dated 3/22/01.                                                                                     
                                                                                                                                
HOUSE BILL NO. 149                                                                                                            
                                                                                                                                
     An Act  relating to correctional  facility space  and to                                                                   
     authorizing the Department  of Corrections to enter into                                                                   
     an  agreement to  lease facilities  for the  confinement                                                                   
     and  care  of  prisoners   within  the  Kenai  Peninsula                                                                   
     Borough.                                                                                                                   
                                                                                                                                
Co-Chair  Mulder  noted  that  the Subcommittee  had  met  to                                                                   
discuss  HB 149 and  the proposed  committee substitute,  22-                                                                   
LS0436\R,    Luckhaupt,    4/03/01,   resulted    from    the                                                                   
Subcommittee's work.                                                                                                            
                                                                                                                                
Representative Hudson  MOVED to ADOPT  the work draft  as the                                                                   
document before the Committee.   There being NO OBJECTION, it                                                                   
was adopted.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  CHENAULT, the sponsor  of the bill,  spoke in                                                                   
support of the proposed committee  substitute.  He noted that                                                                   
there had been modifications made to the original bill.                                                                         
                                                                                                                                
Co-Chair  Mulder  stated that  the  bill would  provide  some                                                                   
certainty  in relationship to  the size,  scope and  costs of                                                                   
the project.   The status  quo in Arizona  was $65  dollars a                                                                   
day.   In order to provide  a comparable facility  in Alaska,                                                                   
the  cost would  be approximately  $135 a  day.   Recognizing                                                                   
that this would result in additional  costs, the State wanted                                                                   
to make sure that  jobs would be well paying,  the care would                                                                   
be comparable,  and that the  Borough was satisfied  with the                                                                   
proposal.   He stated that it  was anticipated that  the cost                                                                   
would be 20%  less than the average in  all-State facilities,                                                                   
ranging somewhere  around $89 dollars per day.   The per diem                                                                   
cost excludes  the contracts outside  the State.   He pointed                                                                   
out that it would be 18 - 20 percent below the State rate.                                                                      
                                                                                                                                
Representative  Lancaster  referred  to  the  level  of  care                                                                   
compared to Arizona.  Co-Chair  Mulder felt that the level of                                                                   
care and custody would be comparable.                                                                                           
                                                                                                                                
Representative  Lancaster understood  that the  site had  not                                                                   
yet been selected.   Representative Chenault  stated that the                                                                   
site  selection  would  not hinder  the  project.    Co-Chair                                                                   
Mulder noted  that there  is a  tentative contract  signed at                                                                   
this  point.   He  noted that  he  was comfortable  with  the                                                                   
numbers and emphasized that there  was support from the Kenai                                                                   
Borough.                                                                                                                        
                                                                                                                                
TIM  NAVARRE, PRESIDENT,  KENAI  PENINSULA BOROUGH  ASSEMBLY,                                                                   
discussed the  Boroughs participation in the  site selection.                                                                   
He stressed  that the majority  of the Kenai  Assembly favors                                                                   
the site at Wildwood.                                                                                                           
                                                                                                                                
Representative Hudson  questioned if there had  been a public                                                                   
process  to discuss  concerns.     Mr. Navarre  noted that  a                                                                   
resolution  had  been adopted.    The landowner  brought  the                                                                   
consideration  before the  public  and the  Assembly.   There                                                                   
were no  objections to the  request for qualification  (RFQ),                                                                   
the competitive bid process award.   He noted that there have                                                                   
been three  hearings and that  the Planning Commission  has a                                                                   
hearing  scheduled.    The  issue will  be  back  before  the                                                                   
Assembly on April 17, 2001.                                                                                                     
                                                                                                                                
Co-Chair  Mulder noted  that there have  been some  questions                                                                   
regarding  the bid process.   Mr.  Navarre stated that  there                                                                   
were four bids on the RFQ and  an evaluation team to evaluate                                                                   
the proposals.   He stated that  the top two  proposals tied.                                                                   
The  team  recommended   a  meeting  with  the   Assembly  in                                                                   
Executive  Session.    The  Assembly  was  unanimous  in  its                                                                   
selection.   After  30 days, there  was no  objection to  the                                                                   
process.   He reiterated that  the process had been  fair and                                                                   
equitable.                                                                                                                      
                                                                                                                                
Representative  Harris asked if  Mr. Navarre was  comfortable                                                                   
that $89 dollars  a day per bed could be achieved.   He asked                                                                   
if the  majority of local  residents were comfortable  with a                                                                   
private prison.   Mr. Navarre  affirmed the price.   He added                                                                   
that some locals  would prefer a State  institution, however,                                                                   
felt  that  the public  would  be  satisfied with  a  private                                                                   
facility as long  as the mitigation issues had  been "flushed                                                                   
out"  to assure  adequately  trained  staff  at a  comparable                                                                   
wage.  At that point, the citizens  would support the prison.                                                                   
                                                                                                                                
Representative  Harris questioned  if this  would be  a pilot                                                                   
project.  He asked if there would  be an open bidding process                                                                   
that would allow  unions and local companies  to participate.                                                                   
Mr. Navarre  stressed that  the Borough  supports the  use of                                                                   
local union labor.                                                                                                              
                                                                                                                                
Representative  Hudson  noted that  there  would  be a  State                                                                   
lease amortized over time and  questioned if there would be a                                                                   
tax benefit  for the Borough to  have a private  versus State                                                                   
facility.  Mr.  Navarre responded that negotiations  are open                                                                   
for lease acquisition.   The Borough would own  the building,                                                                   
but it could be  sold to the State of Alaska  after 20 years.                                                                   
There is a  Borough ordinance that projects  over $10 million                                                                   
dollars  would  receive  a  50%  percent  break  discount  on                                                                   
property  tax.    He  added that  there  could  be  some  low                                                                   
interest loans.   He  stated that the  Borough has  agreed to                                                                   
take less in lieu of taxes.                                                                                                     
                                                                                                                                
In response  to a question  by Representative  Lancaster, Mr.                                                                   
Navarre  discussed liability.   He noted  that liability  has                                                                   
two issues:                                                                                                                     
                                                                                                                                
     ·    The building and revenue bonds; and                                                                                   
     ·    Prisoner escape.                                                                                                      
                                                                                                                                
If the  State defaulted,  the lenders  would be  responsible.                                                                   
Then  the  investors  could  end up  with  the  facility  and                                                                   
prisoner  security  would  then  be negotiated.    The  final                                                                   
contract would require insurance to indemnify.                                                                                  
                                                                                                                                
CRAIG   PERSSON,   PUBLIC   SAFETY   EMPLOYEES   ASSOCIATION,                                                                   
FAIRBANKS, testified  in opposition to  HB 149.  He  spoke in                                                                   
support  of minimal hiring  and training  standards  equal to                                                                   
the Department of Corrections.                                                                                                  
                                                                                                                                
JAMES   PRICE,   (TESTIFIED   VIA   TELECONFERENCE),   KENAI,                                                                   
testified  in opposition  to the  legislation.   He  stressed                                                                   
that the Borough would be responsible  for financial support.                                                                   
He  stated that  it  was premature  to  say  that the  public                                                                   
supported  the concept,  as there  have not  been any  public                                                                   
hearings to date.  He recommended  that there is a need for a                                                                   
feasibility  study  and  that  the project  should  not  move                                                                   
forward without  that study, as it  would not be in  the best                                                                   
interest of the public or the State.                                                                                            
                                                                                                                                
Vice-Chair  Bunde asked if  Mr. Price  would oppose  a public                                                                   
financed  prison in  that  area.   Mr.  Price commented  that                                                                   
there  would be  better  "safe guards"  with  a public  State                                                                   
prison.  He  noted that he would  not be opposed to  a public                                                                   
prison.                                                                                                                         
                                                                                                                                
Representative  Harris  suggested  that  Page 3,  Section  3,                                                                   
addressed Mr. Price's concern.                                                                                                  
                                                                                                                                
RICHARD   VAN   HATTAN,   (TESTIFIED   VIA   TELECONFERENCE),                                                                   
PRESIDENT,  CORRECTIONAL  OFFICERS  BARGAINING  UNIT,  KENAI,                                                                   
testified in opposition  to the legislation.   He pointed out                                                                   
that the  intent was to  save the State  money.   He stressed                                                                   
that the legislation limits the  contract to a third party in                                                                   
the Kenai  Peninsula.  He believed  that there would  be more                                                                   
support if it was not limited to a third party.                                                                                 
                                                                                                                                
Mr. Van Hatten did not think it  was fair to compare the cost                                                                   
of running a prison in Kenai to  one in Nome.  He pointed out                                                                   
that  the  Department  of  Corrections  is  currently  having                                                                   
difficulty obtaining  qualified personnel.  He  did not think                                                                   
it  would  be possible  to  hire  qualified people  with  the                                                                   
lowered standards.   Mr. Van Hatten thought  that issues such                                                                   
as  the   sewage  treatment  and   the  water   service  were                                                                   
questionable.                                                                                                                   
                                                                                                                                
DWIGHT   NISSEN,   (TESTIFIED  VIA   TELECONFERENCE),   DELTA                                                                   
JUNCTION, identified  his concern with the $19  dollars a day                                                                   
difference, the  $5.5 million dollars with no  guarantee that                                                                   
the rate  would stay.  He  added that the whole  State should                                                                   
be  consulted  if the  citizens  of  Alaska want  prisons  to                                                                   
become private industry.                                                                                                        
                                                                                                                                
ROY GILBERTSON, (TESTIFIED VIA  TELECONFERENCE), MAYOR, DELTA                                                                   
JUNCTION, voiced  concern that the State of  Alaska currently                                                                   
has an obligation to the City  of Delta Junction.  He pointed                                                                   
out that the State needs to help  Delta Junction get out from                                                                   
under the lawsuit currently pending because of HB 53.                                                                           
                                                                                                                                
Representative   Hudson  asked   what  was   pending.     Mr.                                                                   
Gilbertson explained  that there was a lawsuit  filed against                                                                   
the City  of Delta  Junction.   The property  has never  been                                                                   
available  at Fort  Greeley  and  they were  not  able to  go                                                                   
offsite.  The City  is suing for funds in the  amount of $2.4                                                                   
million  dollars.   He requested  that these  costs be  taken                                                                   
care of.                                                                                                                        
                                                                                                                                
Representative  Davies asked  if the  City of Delta  Junction                                                                   
could build  an 800-bed facility  under the $89  dollar terms                                                                   
proposed in HB 149.  He asked  if they would be interested in                                                                   
doing  that  and  would  it  eliminate   the  lawsuit.    Mr.                                                                   
Gilbertson  responded that  it could  be built, however,  was                                                                   
not sure of the support.                                                                                                        
                                                                                                                                
Co-Chair  Mulder noted  that testimony  had  been taken  from                                                                   
Delta  Junction.   He observed  that there  had not been  any                                                                   
consensus for  a facility to be  built there.  He  noted that                                                                   
the lawsuit is  the greatest concern.  Co-Chair  Mulder noted                                                                   
that  financial  relief  could  not be  provided  within  the                                                                   
confines of the  legislation.   Co-Chair Mulder  advised that                                                                   
he would  speak with Senator  Stevens about the  debt concern                                                                   
for the City  of Delta Junction.  Mr.  Gilbertson interjected                                                                   
that  Cornell is  a participant  in the  lawsuit against  the                                                                   
City of  Delta Junction because  of Allvest, Inc.,  and noted                                                                   
that they would appreciate any help they could get.                                                                             
                                                                                                                                
DAVID KATZEEK,  JUNEAU, spoke in support of  the legislation.                                                                   
He pointed  out that rehabilitation  reduces recidivism.   He                                                                   
addressed  the  amount that  the  State of  Alaska  currently                                                                   
spends on sending their prisoners to Arizona.                                                                                   
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 77, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
Mr. Katzeek stressed  the hardship of sending  Alaska Natives                                                                   
to  Arizona where  they cannot  benefit from  the support  of                                                                   
their families  for rehabilitation.   He felt that  the State                                                                   
of Alaska would benefit from the  legislation.  He emphasized                                                                   
that money flows to other states.                                                                                               
                                                                                                                                
Representative  Davies   shared  the  speaker's   concern  in                                                                   
regards to moving  prisoners out of State, but  stressed that                                                                   
the  legislation would  replace  the smaller  State  operated                                                                   
prisons  with  one  large  private facility  in  Kenai.    He                                                                   
inquired  if  the  legislation  would  result  in  additional                                                                   
rehabilitation treatment.                                                                                                       
                                                                                                                                
Mr. Katzeek believed  that the bill would be  the first step.                                                                   
He  acknowledged  that  a  community  effort  was  needed  to                                                                   
address  the issues  of concern.    He stressed  that if  the                                                                   
facility is  located in Alaska,  it will require  a community                                                                   
effort in getting involved.                                                                                                     
                                                                                                                                
MAKO  HAGGERDY,  HOMER, stated  that  he disagreed  with  Mr.                                                                   
Navarre.    He stated  that  only  40  percent of  the  local                                                                   
residents  want a  private prison  and that  60 percent  feel                                                                   
that it is the  State's responsibility to house  and care for                                                                   
prisoners.  He  acknowledged the need to return  prisoners to                                                                   
the State of Alaska and recommended  the removal of the third                                                                   
party debate.   He believed that the third  party contractors                                                                   
have complicated the issue.                                                                                                     
                                                                                                                                
ALFRED  MCKINLEY,  SR., ALASKA  NATIVE  BROTHERHOOD,  JUNEAU,                                                                   
spoke in support of bringing the  prisoners back to the State                                                                   
of  Alaska.   He observed  that building  the facility  would                                                                   
provide jobs and  infrastructure for the State.   He asked if                                                                   
the  State  of   Alaska  could  be  reimbursed   for  medical                                                                   
expenses.                                                                                                                       
                                                                                                                                
Representative  Croft questioned  if  the federal  government                                                                   
would be  paying for  the Native inmate  medical costs.   Mr.                                                                   
McKinley thought that the federal  government would reimburse                                                                   
the  State for  Native  medical  expenses.   Co-Chair  Mulder                                                                   
pointed  out  that  the  State  currently  does  not  receive                                                                   
reimbursement.                                                                                                                  
                                                                                                                                
BARBARA HUFF-TUCKNUS, DIRECTOR,  LEGISLATIVE AND GOVERNMENTAL                                                                   
AFFAIRS  FOR THE TEAMSTERS  UNION, JUNEAU,  pointed out  that                                                                   
this  is a  philosophical  issue  and one  that  needs to  be                                                                   
debated.   She stressed  that the  legislation would  address                                                                   
issues regarding bringing the  prisoners back to the State of                                                                   
Alaska.    Ms.   Tucknus  noted  for  the  record   that  the                                                                   
construction  issue   should  be  addressed  and   asked  for                                                                   
assurance that  the construction of  the building would  be a                                                                   
union  project and  that jobs  would be brought  back to  the                                                                   
State of Alaska.                                                                                                                
                                                                                                                                
Representative  Whitaker   referred  to  the   Department  of                                                                   
Corrections  "Cost of  Care" sheet.   He  commented that  the                                                                   
numbers  indicate that  the State is  spending an  additional                                                                   
$12  million dollars  per year.    The legislation  indicates                                                                   
that  the  State  is  spending  an  additional  $7.7  million                                                                   
dollars per  year.  Co-Chair  Mulder advised that  the number                                                                   
was $7 million dollars.                                                                                                         
                                                                                                                                
Representative Whitaker  asked if it was in  the State's best                                                                   
interest  to spend  an additional  $7.7  million dollars  per                                                                   
year for the next 20 years.  Co-Chair  Mulder stated that the                                                                   
issue was whether  it was better to bring the  prisoners home                                                                   
or not.                                                                                                                         
                                                                                                                                
Representative Croft  MOVED to ADOPT Amendment #1.   [Copy on                                                                   
File].  Co-Chair Mulder OBJECTED.                                                                                               
                                                                                                                                
Representative  Croft  commented  that  the  amendment  would                                                                   
provide for a  competitive process between anyone  that would                                                                   
like to be a  part of that bidding process.   He acknowledged                                                                   
that it  was complicated.   He  noted that  he had  rewritten                                                                   
Section 2.   The amendment would "holdout" for  each area the                                                                   
price of $89 million dollars.   Representative Croft admitted                                                                   
that there is a thread of concern  regarding the way the bill                                                                   
is  approaching   the  project.     He  agreed  that   it  is                                                                   
appropriate  that the prisoners  come home.   He stated  that                                                                   
Amendment #1 would open up a competitive bidding process.                                                                       
                                                                                                                                
Co-Chair Mulder reiterated his  objection.  He stated that if                                                                   
it  works in  Alaska,  there is  greater  potential down  the                                                                   
road.   He  stated  that the  first  focus  would be  further                                                                   
marketing.   He added  that the  project would  be a  venture                                                                   
opportunity  for  Kenai.    There  is  concern  in  providing                                                                   
culturally relative  activities.   He pointed out  the letter                                                                   
of support from the Alaska Federation of Natives (AFN).                                                                         
                                                                                                                                
Co-Chair  Mulder commented  that it  would be  less than  the                                                                   
State alternative.   He asked at what price  is it worthwhile                                                                   
to bring  our inmates home.   The Kenai Borough  is satisfied                                                                   
that they will be able to track those people.                                                                                   
                                                                                                                                
Representative  Davies  spoke  to  the  issue  of  culturally                                                                   
appropriate care.   The State  system has not been  either in                                                                   
the way of or prohibiting the  culturally active care for the                                                                   
inmates.   He stressed that  the fundamental problem  is with                                                                   
alcohol treatment.                                                                                                              
                                                                                                                                
Representative J.  Davies asked, "What does it  mean to bring                                                                   
the  prisoners  home".    The   legislation  will  bring  the                                                                   
prisoners from  out of  state to Alaska,  but what  about the                                                                   
prisoners that are  spread throughout the State  and not near                                                                   
their support structures.  He  noted his support for the idea                                                                   
that other  areas throughout  the State bid.   He  voiced his                                                                   
concern  that   the  proposal  had  been  subjected   to  the                                                                   
competitive pressures of the market place.                                                                                      
                                                                                                                                
Co-Chair  Williams commented  that the  legislation would  be                                                                   
good for  the State.  He  acknowledged that it would  be good                                                                   
to get the  prisoners closer to their family  areas; however,                                                                   
local areas are  often hesitant to discuss  building prisons.                                                                   
He projected that the State is going to need more prisons.                                                                      
                                                                                                                                
Representative  Hudson  voiced  his  support  for  the  Kenai                                                                   
Prison project.  He pointed out  that one facility already is                                                                   
located  in  that  area.   He  suggested  that  it  would  be                                                                   
"special"  to have  a pre-sentencing  facility  and a  prison                                                                   
facility  with  "special"  programs  for  the  inmates.    He                                                                   
reiterated that  that legislation is  the "right way  to go".                                                                   
He noted that he opposed Amendment #1.                                                                                          
                                                                                                                                
Representative  Whitaker asked the  process that lead  to the                                                                   
proposal.   Co-Chair Mulder replied  that the  Kenai Assembly                                                                   
was  contacted by  KNA with  the idea  and asked  for a  sole                                                                   
source.  The Borough  said no and went out for  an RFQ.  They                                                                   
received four  responses back.   The  full assembly  made the                                                                   
single  selection.   The  process has  been  ongoing for  one                                                                   
month.                                                                                                                          
                                                                                                                                
Representative  Whitaker stated  that  it is  clear that  the                                                                   
Borough  followed a  procedure,  which was  appropriate.   He                                                                   
questioned,  however,  the  procedure   that  the  State  has                                                                   
followed in the  process.  He noted that this  is a matter of                                                                   
public trust and that the State should be cautious.                                                                             
                                                                                                                                
Representative  Croft  expressed  that  the  Kenai  Peninsula                                                                   
Borough did  a great job for what  they had been asked  to do                                                                   
as  a  borough.   They  were  not  representing  the  State's                                                                   
interest; they represented Kenai's  interests.  Page 11 lists                                                                   
what  the points  were awarded  for  and that  none of  those                                                                   
points encompass  any aspect of  costs.  He did  not question                                                                   
Kenai's choice of  a partner; however, that  differs from the                                                                   
State determining  who is the  best and the cheapest.   Kenai                                                                   
will contract with the State for  beds.  The Legislature must                                                                   
make sure that the process is competitive.                                                                                      
                                                                                                                                
Representative Croft  stressed that this is  "sole sourcing".                                                                   
He spoke  to the  advantages to  competition.  He  emphasized                                                                   
that this  is "government  defining what  might be  the right                                                                   
price".  He did not know if the  partnerships could happen in                                                                   
other areas.                                                                                                                    
                                                                                                                                
                                                                                                                                
TAPE HFC 01 - 78, Side A                                                                                                      
                                                                                                                                
                                                                                                                                
Representative  Croft  stated  that the  fundamental  problem                                                                   
with the  legislation assumes  that South Central  is "home".                                                                   
The  amendment would  allow  all  other areas  to  bid.   The                                                                   
amendment would bring competition to State government.                                                                          
                                                                                                                                
Vice-Chair Bunde  noted that people  throughout the  State do                                                                   
not  want to  have  prisons in  their area.    There will  be                                                                   
opportunities to  have more prisons  located in  other places                                                                   
of the State in the future if this one works.                                                                                   
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Davies, Moses, Croft, Whittaker                                                                                  
OPPOSED:       Harris, Hudson, Lancaster, Bunde, Williams,                                                                      
               Mulder                                                                                                           
                                                                                                                                
Representative Foster was not present for the vote.                                                                             
                                                                                                                                
The MOTION FAILED (4-6).                                                                                                        
                                                                                                                                
Representative Croft  MOVED to ADOPT Amendment #2.   [Copy on                                                                   
File].   Representative  Croft explained  that the  amendment                                                                   
would add the language:                                                                                                         
                                                                                                                                
     "This   applicability  section   does  not  affect   the                                                                   
     authority   of  the  commissioner   of  Corrections   to                                                                   
     designate the correctional  facility to which a prisoner                                                                   
     is assigned" to Page 3, Line 16."                                                                                          
                                                                                                                                
There being NO OBJECTION, the amendment was adopted.                                                                            
                                                                                                                                
Representative Croft  MOVED to ADOPT Amendment #3.   [Copy on                                                                   
File].     Co-Chair   Mulder  OBJECTED   for  the   sponsor's                                                                   
explanation.                                                                                                                    
                                                                                                                                
Representative  Croft  explained  that  the  amendment  would                                                                   
insert the language:                                                                                                            
                                                                                                                                
     "But including the capital costs for construction of                                                                       
     the facility, including debt service" to Page 2, Line                                                                      
     3."                                                                                                                        
                                                                                                                                
Co-Chair Mulder WITHDREW his OBJECTION.                                                                                         
                                                                                                                                
Representative Davies MOVED to  ADOPT Amendment #4.  [Copy on                                                                   
File].  Co-Chair Mulder OBJECTED.                                                                                               
                                                                                                                                
Representative Davies  commented that he was  concerned about                                                                   
the  standards   contained  in   the  committee   substitute,                                                                   
specifically the  capitalization and the per diem  costs.  He                                                                   
assumed that the  State would be 10% above  for construction.                                                                   
He referenced  Page 2 of  the Amendment, which  indicates the                                                                   
per  diem rate  if  18% was  saved  over the  State's  costs.                                                                   
Representative J. Davies noted  that until the capitalization                                                                   
costs  are known,  the State  does  not know  how much  money                                                                   
would be left on the table.  He  requested that the Committee                                                                   
determine the numbers before awarding the contract.                                                                             
                                                                                                                                
Co-Chair Mulder stated that the  amendment addresses the work                                                                   
and deliberations  of  the Subcommittee.   He commented  that                                                                   
the  State's interest  is to  "get the  best deal  possible",                                                                   
while at  the same time providing  for a comparable  level of                                                                   
care  and the  culturally relevant  programs.   Understanding                                                                   
that fact, if the State achieves  a 10% savings, then that is                                                                   
considered  a "good deal".   He  argued that the  spreadsheet                                                                   
provided  by  Department  of  Corrections  numbers  could  be                                                                   
questioned into eternity.                                                                                                       
                                                                                                                                
Co-Chair Mulder advised that the  Subcommittee determined the                                                                   
closed comparison  with the  Anchorage facility,  which costs                                                                   
about  $135 dollars  per day.    He suggested  that it  would                                                                   
amount to approximately a 30%  savings.  He believed that was                                                                   
sufficient to  base bringing the  inmates home.   He reminded                                                                   
members that there  is a desire for economic  activity on the                                                                   
Kenai Peninsula  and the  concept would  provide good  paying                                                                   
jobs.                                                                                                                           
                                                                                                                                
Representative Croft advised that  Amendment #4 was the "flip                                                                   
side" to  Amendment #1.  He  voiced concern with  the process                                                                   
that is being established.  He  believed that there should be                                                                   
a  process   of  determining   what  the   price  should   be                                                                   
competitively.   He stated  that there needs  to be  a market                                                                   
place   comparison   including   the  ethics   of   business.                                                                   
Otherwise,    those    numbers    should    be    "rigorous".                                                                   
Representative   Croft   stated  that   there   has  been   a                                                                   
superficial discussion  regarding the  issue and  he believed                                                                   
that the Committee had not chosen the "best" number.                                                                            
                                                                                                                                
Co-Chair Williams  advised that  two numbers  are known.   He                                                                   
reiterated  that  people in  Alaska  are concerned  with  the                                                                   
costs;  however,  they want  to  get  the prisoners  back  to                                                                   
Alaska and  the facility built.   Co-Chair Williams  surmised                                                                   
that where  ever the facility  is built,  it will be  full as                                                                   
soon as it is  completed.  He believed that  other facilities                                                                   
would need to be built in the near future.                                                                                      
                                                                                                                                
Representative   Davies  emphasized   that   most  of   these                                                                   
prisoners belong  in treatment  programs and not  in prisons.                                                                   
He reiterated  that the  process has  not been a  competitive                                                                   
one.   He questioned  why there  has not  been greater  House                                                                   
Finance Committee scrutiny for the State of Alaska.                                                                             
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Davies, Moses, Croft, Hudson                                                                                     
OPPOSED:       Harris, Lancaster, Whitaker, Bunde, Williams,                                                                    
               Mulder                                                                                                           
                                                                                                                                
Representative Foster was not present for the vote.                                                                             
                                                                                                                                
The MOTION FAILED (4-6).                                                                                                        
                                                                                                                                
Representative  Davies  WITHDREW  Amendment  #5.    [Copy  on                                                                   
File].                                                                                                                          
                                                                                                                                
Representative Croft  MOVED to ADOPT Amendment #6.   [Copy on                                                                   
File].  Co-Chair Mulder OBJECTED.                                                                                               
                                                                                                                                
Representative  Croft  stated that  the  amendment would  add                                                                   
language to Page 2, Line 7, after "index,":                                                                                     
                                                                                                                                
     "It  is also  the  intent of  the  Legislature that  the                                                                   
     Department of  Corrections not sign any  agreement for a                                                                   
     private prison until the  litigation regarding the Delta                                                                   
     prison has been finally resolved".                                                                                         
                                                                                                                                
Representative  Croft  believed  that  the  language  of  the                                                                   
amendment  would  provide  the  State with  a  "clean  slate"                                                                   
before moving forward.                                                                                                          
                                                                                                                                
Co-Chair Mulder  suggested that  the amendment would  confuse                                                                   
two separate issues.   He maintained that Cornell,  Inc., has                                                                   
no  interest in  Allvest, Inc.  and  has no  interest in  the                                                                   
lawsuit.   It is purely  Allvest, Inc.  that has  the lawsuit                                                                   
with Delta Junction.  The issue is not tied to Kenai.                                                                           
                                                                                                                                
Representative  Harris agreed  that the  issues are  separate                                                                   
and  did  not  think that  the  legislation  should  be  tied                                                                   
together.   He spoke in  support of resolving  the litigation                                                                   
and believed  that the  amendment could  "kill" the  proposed                                                                   
bill.                                                                                                                           
                                                                                                                                
Representative Lancaster asked  if the State was named in any                                                                   
of the lawsuits.  Co-Chair Mulder replied it was not.                                                                           
                                                                                                                                
Representative  Whitaker  asked  if Section  4  repealed  the                                                                   
agreement  with  Delta  Junction,  would the  State  be  held                                                                   
harmless.   Co-Chair Mulder  stated the  State would  be held                                                                   
harmless.    He understood  the  relationship  that  Cornell,                                                                   
Inc., and Allvest, Inc., had in  Delta Junction, was that the                                                                   
contact between  Delta and Allvest, Inc., existed.   Cornell,                                                                   
Inc., had an option  to operate the facility.   They were not                                                                   
a signer on that contract.                                                                                                      
                                                                                                                                
Representative Whitaker  questioned if all  parties including                                                                   
Delta  would  hold  the  State  harmless.    Co-Chair  Mulder                                                                   
replied it would  because the State was not a  signer on that                                                                   
contract.                                                                                                                       
                                                                                                                                
Representative Croft  discussed that there is  a relationship                                                                   
with  that  entity.   He  stated  that  whether  Cornell  was                                                                   
involved  or not was  not important,  as it  was only  intent                                                                   
language.  Before the new operations  are started, there must                                                                   
be clarification.                                                                                                               
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Davies, Moses, Croft, Whittier                                                                                   
OPPOSED:       Harris, Hudson, Lancaster, Bunde, Williams,                                                                      
               Mulder                                                                                                           
                                                                                                                                
Representative Foster was not present for the vote.                                                                             
                                                                                                                                
The MOTION FAILED (4-6).                                                                                                        
                                                                                                                                
Co-Chair  Mulder  noted the  fiscal  notes by  Department  of                                                                   
Revenue and Department of Corrections.                                                                                          
                                                                                                                                
Co-Chair  Mulder MOVED  to  report  CS HB  149  (FIN) out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying  fiscal notes.   There being  NO OBJECTION,   it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
CS  HB  149   (FIN)  was  reported  out  of   Committee  with                                                                   
"individual recommendations"  and with  a fiscal note  by the                                                                   
Department of Revenue and a note  dated 3/22/01 by Department                                                                   
of Corrections.                                                                                                                 
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 5:25 P.M.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects