Legislature(2001 - 2002)

04/11/2002 02:02 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 11, 2002                                                                                           
                         2:02 P.M.                                                                                              
TAPE HFC 02 - 82, Side A                                                                                                        
TAPE HFC 02 - 82, Side B                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:02 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 John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Richard Foster                                                                                                   
ALSO PRESENT                                                                                                                  
Representative   Joe  Hayes;   Representative  Drew   Scalzi;                                                                   
Representative  Peggy Wilson;  Vern Jones, Chief  Procurement                                                                   
Officer, Department  of Administration;  Kara Altman,  Travel                                                                   
Industry, Juneau; Cyndi Isaak,  Travel Industry, Juneau; Eric                                                                   
Yould,   Alaska  Rural   Electric   Cooperative   Association                                                                   
(ARECA), Anchorage;  Mary McDowell, Commissioner,  Commercial                                                                   
Fisheries  Entry  Commission;  Ed  Crane,  Alaska  Commercial                                                                   
Fishing & Agriculture Bank, Anchorage                                                                                           
PRESENT VIA TELECONFERENCE                                                                                                    
Yulanda Johansen, Northern Lights  Travel, Fairbanks; Danelle                                                                   
Kirschner,  Progressive   World  Travel,  Fairbanks;   Ramona                                                                   
Oxendine,  Vagabond  Travel,   Fairbanks;  Sara  Fisher-Goad,                                                                   
Alaska  Energy  Authority (AEA),  Anchorage;  Barb  Marifern,                                                                   
Petersburg;  Sue Moran,  Petersburg;  Marilyn Menish  Meucci,                                                                   
Petersburg; Leo  Steven Brown, Homer; Cora  Crome, Anchorage;                                                                   
Bruce Marifern, Petersburg                                                                                                      
HB 175    An  Act  making  an  appropriation  to  the  Alaska                                                                   
          Industrial  Development  and Export  Authority  for                                                                   
          power  projects;  and  providing for  an  effective                                                                   
          HB 175 was HEARD and HELD in Committee for further                                                                    
HB 287    An  Act relating  to  the exemption  of  commercial                                                                   
          fishing entry permits  from claims of creditors, to                                                                   
          loans to  satisfy past due federal  tax obligations                                                                   
          of commercial fishing  entry permit holders, and to                                                                   
          loan  origination  charges for  loans  made by  the                                                                   
          commercial  fishing  loan  program to  refinance  a                                                                   
          debt  obligation; and  providing  for an  effective                                                                   
          HB 287 was HEARD and HELD in Committee for further                                                                    
HB 300    An  Act  relating  to the  procurement  of  certain                                                                   
          travel services.                                                                                                      
          HB 300 was reported out of Committee with a "do                                                                       
          pass" recommendation  and with a  new indeterminate                                                                   
          fiscal note by Department of Administration.                                                                          
HB 504    An Act  relating to the wages of people  working in                                                                   
          the fisheries business.                                                                                               
          HB 504 was SCHEDULED but not HEARD.                                                                                   
HOUSE BILL NO. 175                                                                                                            
     An Act making an appropriation to the Alaska Industrial                                                                    
     Development and Export Authority for power projects;                                                                       
     and providing for an effective date.                                                                                       
Representative  Lancaster MOVED to  ADOPT Amendment  #1, #22-                                                                   
LS0705\X.4,  Kurtz/Utermohle,   3/26/02.    There   being  NO                                                                   
OBJECTION, Amendment #1 was adopted.                                                                                            
Representative  Hudson asked  if the  amendment had  included                                                                   
the entire bill.                                                                                                                
Representative  Lancaster replied that  it did and  explained                                                                   
what it  would accomplish.   The  amendment will establish  a                                                                   
new  funding  mechanism  and  will  remove  the  $76  million                                                                   
dollars that  is currently  in the  Railbelt Energy  Fund and                                                                   
moves that fund to an asset of  Alaska Industrial Development                                                                   
and Export Authority (AIDEA).   AIDEA then would use it as an                                                                   
asset base to issue revenue bonds  for projects in the amount                                                                   
of  $43 million  dollars.   AIDEA  would  invest $76  million                                                                   
dollars,  securitized  with the  corporation  and the  income                                                                   
stream from that would pay the bonds.                                                                                           
Representative Lancaster highlighted the amendment:                                                                             
     ·    Section 1 - $1 million dollars for a study and                                                                        
          construction   of  an  electrical   interconnection                                                                   
          between Juneau and Hoonah.                                                                                            
     ·    Sections 2 & 3 - allow revenue bonds to be sold                                                                       
          and  for  those funds  to  be appropriated  to  the                                                                   
     ·    #1, Page 2 - The sum of $11 million dollars                                                                           
          allocated  to  upgrade  and extend  the  Anchorage-                                                                   
          Fairbanks   power  transmission  intertie   to  the                                                                   
     ·    #2, Page 2 - Grant recipients from the power                                                                          
          transmission  inter-tie   fund  to  the  recipients                                                                   
          named,  for  the  purposes  described  and  in  the                                                                   
          amounts set out:                                                                                                      
               $2,000,000      Homer Electric Association                                                                       
              $11,000,000      Anchorage Muni. light & power                                                                    
               $5,000,000      Copper Valley Elec. Assn.                                                                        
               $5,000,000      Cordova Electric Assn.                                                                           
               $7,000,000      AK. Power & Telephone Co.                                                                        
               $2,000,000      Kodiak Electric Assn.                                                                            
     ·    (f) - The intent language explains that once the                                                                      
          revenue  bonds  are   paid  off,  the  $76  million                                                                   
          dollars  would  again would  be  available to  have                                                                   
          bonds  issued  against  them  and use  that  income                                                                   
          stream  from  the  fund to  address  a  prioritized                                                                   
Co-Chair Williams  noted, it  was not his  intent to  move HB                                                                   
175 from Committee.                                                                                                             
Representative  Croft  inquired why  there  was a  difference                                                                   
between #1 and #2.                                                                                                              
Representative  Lancaster  explained  that  was the  way  the                                                                   
drafter  had prepared  it,  adding that  there  is no  "real"                                                                   
difference  between the  two.   The  money will  move to  the                                                                   
project as outlined in Section C.                                                                                               
Representative Croft asked how  long would it take before the                                                                   
State paid  off the bonds and  if the collective  bonds would                                                                   
be sufficient to fund all for whatever term was left.                                                                           
Representative  Lancaster  assumed   they  would  be  15-year                                                                   
bonds.  He pointed  out  that $76  million  dollars would  be                                                                   
securitized and would remain an asset of AIDEA.                                                                                 
Representative  Croft  understood  that  when the  bonds  are                                                                   
paid, the money  would be unencumbered and available  for use                                                                   
as collateral for different projects.   He asked if there was                                                                   
a list of State project needs.                                                                                                  
Representative  Lancaster  replied  the list  had  originated                                                                   
from the industry.                                                                                                              
Representative  Hudson  asked  the amount  remaining  in  the                                                                   
Railbelt Energy Fund.                                                                                                           
Representative  Lancaster advised  that  $76 million  dollars                                                                   
was  remaining  which  would  need to  be  transferred.    He                                                                   
pointed out that  the fund had been the Governor's  idea, and                                                                   
that  it   would  perpetuate  Representative   Barnes  (fund)                                                                   
concept forever.                                                                                                                
SARA  FISHER-GOAD,  (TESTIFIED  VIA  TELECONFERENCE),  ALASKA                                                                   
ENERGY  AUTHORITY  (AEA),  ANCHORAGE, spoke  to  concerns  of                                                                   
Representative   Davies   regarding    how   the   bill   was                                                                   
ERIC YOULD, ANCHORAGE RURAL ELECTRIC  COOPERATIVE ASSOCIAITON                                                                   
(ARECA),  ANCHORAGE,  offered  to  answer  questions  of  the                                                                   
Co-Chair  Williams  noted  that  HB  175  would  be  HELD  in                                                                   
Committee for further consideration.                                                                                            
HOUSE BILL NO. 300                                                                                                            
     An Act relating to the procurement of certain travel                                                                       
SENATOR  JOE   HAYES,  SPONSOR,  spoke  in  support   of  the                                                                   
legislation.   He commented that  HB 300 would allow  for the                                                                   
exemption of  contacts for certain  types of travel  services                                                                   
including  airplane travel, hotel  accommodations and  travel                                                                   
agency services from the procurement  procedures of AS 36.30.                                                                   
He  pointed out  that  travel agencies  are  facing a  dismal                                                                   
situation.   All  major  airlines excluding  Alaska  Airlines                                                                   
have completely  cut commissions.  That action  is presenting                                                                   
a dire situation for Alaska travel agents.                                                                                      
Currently,  Alaska only allows  the use  of agencies  that do                                                                   
not charge fees.   That action has excluded  many agencies in                                                                   
the State from  competing for State travel.   It is difficult                                                                   
to provide  travel without charging  a fee, especially  since                                                                   
those businesses already operate on a 1-2% margin.                                                                              
The passage of  the bill would eliminate the  requirement for                                                                   
competitive procurement  in order to  pay fees, but  it would                                                                   
not prevent establishing future  travel agency contracts when                                                                   
in the  State's best interest.   It would  have no  effect on                                                                   
the   current  travel   agency  contracts   since  they   are                                                                   
preexisting and legally binding.                                                                                                
Representative   Hayes  noted  that   passing  HB   300  from                                                                   
Committee  would give  all travel  agencies in  the State  an                                                                   
opportunity  to provide State  travel.  He  added that  it is                                                                   
time that  the State  pay for services  rendered.   Since the                                                                   
airlines  have   cut  commissions,  any  travel   the  agency                                                                   
arranges  for  the State  will  essentially cost  the  agency                                                                   
Senator Hayes pointed out that  the fiscal note was listed as                                                                   
an  indeterminate note.   He  hoped  that the  note would  be                                                                   
absorbed by the State's overall travel budget.                                                                                  
Vice-Chair  Bunde  questioned  if the  State  currently  uses                                                                   
travel agents that do not charge fees.                                                                                          
Representative Hayes stated they do.                                                                                            
Vice-Chair Bunde asked why the  State would want to eliminate                                                                   
that  arrangement  for  one  in  which  the  State  would  be                                                                   
Representative  Hayes  explained  that  it  is  an  issue  of                                                                   
fairness.  He added that it would  be a cost savings to allow                                                                   
those travel agencies  to charge the fee, as  they are trying                                                                   
to find  the best deal  for the traveler.   When  an employee                                                                   
looks on  the Internet,  they might  not be  able to  come up                                                                   
with the best price.                                                                                                            
Representative  Lancaster asked  why rented  cars were  being                                                                   
Representative Hayes responded  that interest already carries                                                                   
a contract with the State.                                                                                                      
Representative   Hudson  asked   if  the  legislation   would                                                                   
preclude the State  from having new exclusive  contracts with                                                                   
a travel agency.   He inquired what the benefit  to the State                                                                   
would be.                                                                                                                       
Representative  Hayes explained  that  the legislation  would                                                                   
allow the State to negotiate with  individual travel agencies                                                                   
to determine a uniform fee.  It  would not preclude the State                                                                   
from having a single source dollar amount.                                                                                      
Representative Hudson  asked if it  would be similar  to what                                                                   
the airlines are now doing.                                                                                                     
Representative Hayes said it was.                                                                                               
VERN  JONES,   CHIEF  PROCURMENT   OFFICIER,  DEPARTMENT   OF                                                                   
ADMINISTRATION,  advised  that   in  the  past,  most  travel                                                                   
agencies did  not charge fees  to the State because  they got                                                                   
compensated 100%  from travel  service providers.   Recently,                                                                   
all  major airlines  have reduced  commission  fees to  zero,                                                                   
with the exception  of Alaska Airlines.  It  is expected that                                                                   
they  will follow  suit soon.    Because of  this, no  travel                                                                   
agencies can  be expected to  provide their services  free of                                                                   
charge to  the State any longer.   The airlines  are shifting                                                                   
the costs to the consumer, driving  the consumer to their web                                                                   
sites where it is cheaper for the airlines to do business.                                                                      
Mr. Jones  stated that  travel related  procurements  are not                                                                   
exempt  from the  procurement  code.   Since travel  agencies                                                                   
have not  charged the State for  their services in  the past,                                                                   
the  State  has  not  had  to  go  out  and  get  competitive                                                                   
procurements resulting  in contracts  for that service.   The                                                                   
policy  was  to  take advantage  of  the  free  travel  agent                                                                   
services when available.   When no travel agency  was willing                                                                   
to provide free services in a  community, the State then went                                                                   
out and established procurement  contracts in that community.                                                                   
The  policy resulted  in single  providers for  the State  in                                                                   
Juneau,  Wrangell, Petersburg,  Haines,  Cordova, Seward  and                                                                   
Dillingham.    The bill  would  not  prevent the  State  from                                                                   
continuing that  practice.   The intent of  the bill  is that                                                                   
the State no longer continues that practice.                                                                                    
Mr.  Jones  commented  that  if   the  bill  is  passed,  the                                                                   
Department plans  to meet with representatives  of the travel                                                                   
agent industry  to establish a  benchmark fee schedule.   Fee                                                                   
rates  would then  be  eligible for  State  business.   State                                                                   
employees  would be  given authority  to  utilize any  travel                                                                   
agencies  who have  agreed to  provide services  that do  not                                                                   
exceed those benchmark rates.                                                                                                   
Mr. Jones added that the existing  State travel contracts now                                                                   
in  place would  not  be affected  by  the  legislation.   He                                                                   
mentioned that the fee is not  without cost.  The fiscal note                                                                   
indicates  the   difference  between  competitively   awarded                                                                   
contracts  and  some  sort of  a  negotiated  universal  fee,                                                                   
estimated to  be around $8 dollars  a ticket or  roughly $229                                                                   
thousand  dollars   a  year.    He  emphasized   that  was  a                                                                   
conservative number.                                                                                                            
Vice-Chair  Bunde  asked the  volume  of the  State  agencies                                                                   
using travel services versus the number ten years ago.                                                                          
Mr.  Jones  replied  that  he did  not  have  the  historical                                                                   
figures  but  on an  average,  last  year, the  State  bought                                                                   
around 49,000  tickets.  About  11,000 of those  tickets were                                                                   
purchased  directly  from  a   web  site  or  airline.    The                                                                   
remaining  38,000 tickets  were  purchased  through a  travel                                                                   
agent.  That number helped to determine the fiscal note.                                                                        
Representative  Hudson asked  if passage  of the  legislation                                                                   
would provide  for greater competition  and fairer  fares for                                                                   
the State.                                                                                                                      
Mr. Jones  replied  that a competitive  award  is the way  to                                                                   
obtain the cheapest price.  Continuing  the current practice,                                                                   
more travel agents will go out of business.                                                                                     
Representative   Hudson  noted  that   the  agents   are  not                                                                   
receiving fees back from the airlines and the industry.                                                                         
Mr. Jones  advised  that Alaska  Airlines is  one of the  two                                                                   
major airlines that still do provide  commissions.  The State                                                                   
expects  that will  end soon.   In the  State of  Washington,                                                                   
over thirty  travel agents have  gone out of business  in the                                                                   
last two weeks.  The proposed  bill will not necessarily keep                                                                   
the travel agents in business, but it will help.                                                                                
Representative  Lancaster  asked  why rental  cars  had  been                                                                   
Mr.  Jones  stated  that  rental  cars  fall  into  the  same                                                                   
categories  as hotels,  airlines  and travel  agencies.   The                                                                   
Department requested the change  because it is only fair that                                                                   
all  segments  of  the  industry  be  treated  alike.      He                                                                   
explained that  it would include  rental cars in the  list of                                                                   
industries excluded from the procurement code.                                                                                  
YULANDA  JOHANSEN, (TESTIFIED  VIA TELECONFERENCE),  NORTHERN                                                                   
LIGHTS   TRAVEL,  FAIRBANKS,   spoke   in   support  of   the                                                                   
legislation.  She  advised that her travel agency  has had to                                                                   
discontinue  service to the  State of  Alaska.  Ms.  Johansen                                                                   
advised  that it would  be well  worth the  State to  pay the                                                                   
travel agent's  cost and not have  to pay the  State employee                                                                   
their salary on  time spent making travel arrangements.   She                                                                   
urged passage of the bill.                                                                                                      
Representative Hudson clarified  the incentive was for travel                                                                   
agents  now   that  the  airlines  have   discontinued  their                                                                   
payments fee.                                                                                                                   
Ms. Johansen replied  that they would be using  service fees,                                                                   
and that  they had been using  those fees for  several years,                                                                   
however, the State had been excluded from that charge.                                                                          
DANELLE    KIRSCHNER,   (TESTIFIED    VIA    TELECONFERENCE),                                                                   
PROGRESSIVE  WORLD TRAVEL, FAIRBANKS,  echoed the  sentiments                                                                   
voiced  by Ms.  Johansen.   She  urged  that  the State  come                                                                   
forward and pay the service fee.                                                                                                
RAMONA  OXENDINE,  (TESTIFIED VIA  TELECONFERENCE),  VAGAGOND                                                                   
TRAVEL, FAIRBANKS,  advised that  her travel agency  has been                                                                   
charging service  fees for  many years.   Ms. Oxendine  urged                                                                   
that the Committee consider the  repercussions if the service                                                                   
fees are not paid.   She pointed out that it  is not uncommon                                                                   
to be on hold for a long time when making reservations.                                                                         
KARA ALTMAN, TRAVEL INDUSTRY,  JUNEAU, commented that she had                                                                   
spent  fourteen  years  in the  travel  industry  in  Juneau,                                                                   
working for Southeast  Alaska Executive Travel.   That agency                                                                   
had to  close their doors  a year ago  due to the  commission                                                                   
cuts and the State's refusal to pay the fee.                                                                                    
Ms.  Altman added  that  the cut  to  zero  would force  more                                                                   
agents to  close.   If the  travel agents  are forced  out of                                                                   
business, it will affect all Alaskans.   All Alaskans will be                                                                   
forced to accept  whatever the airlines decide  to tell them.                                                                   
She stated that  it costs around $30 to $35  dollars to issue                                                                   
a  ticket  to cover  overhead  costs  and salaries.    Travel                                                                   
agents cannot afford to subsidize the State of Alaska.                                                                          
Ms. Altman  added that  in Juneau,  the State  does pay  a $5                                                                   
dollar  fee to  US Travel  as part  of their  contract.   The                                                                   
State of  Alaska has had  a contract  in place with  Avis Car                                                                   
Rental for three years.                                                                                                         
In  response to  comments  by  Vice-Chair Bunde,  Ms.  Altman                                                                   
noted that  she is no longer  doing business with  the State.                                                                   
At  present time,  there  are only  four  travel agencies  in                                                                   
Juneau, while a couple years ago,  there were ten.  She added                                                                   
that she  does not do any  State business because of  the low                                                                   
CYNDI ISAAK,  TRAVEL INDUSTRY,  JUNEAU,  spoke in support  of                                                                   
the legislation.   She noted that she worked out  of her home                                                                   
and that  she was before  the Committee  as a "voice"  of her                                                                   
customers.   Those  customers  would like  to  have a  choice                                                                   
again.  She added that she supported the agreed fee.                                                                            
Ms.  Isaak pointed  out  that the  Internet  does not  always                                                                   
guarantee  that the  person can  get the best  fare.   Travel                                                                   
agents  have  the  customer's  best interest  at  stake  when                                                                   
making travel  arrangements.  Travel agents have  been forced                                                                   
by  the airlines  and have  no choice  but to  charge a  fee.                                                                   
With zero commissions, fees were raised.                                                                                        
Vice-Chair  Bunde  asked  if the  State  currently  pays  the                                                                   
service fees.                                                                                                                   
Mr. Jones  replied that for a  typical ticket from  Juneau to                                                                   
Anchorage,  there  is a  $5  dollar service  fee;  currently,                                                                   
Alaska Airlines  kicks in $15  dollars for a commission.   As                                                                   
soon as  the commission  is cut  to zero,  the State  will be                                                                   
back at  the bargaining  table  for the contract.   He  noted                                                                   
that  it is  a fixed  fee and  that  the other  fares are  $8                                                                   
dollars for a flat fee.                                                                                                         
Vice-Chair Bunde asked  if it was fair to assume  with Alaska                                                                   
Airlines reducing  their fee that the fee would  drop to $20-                                                                   
$28 dollars.                                                                                                                    
Mr. Jones  explained that  the maximum  that the State  would                                                                   
pay would  increase  that fee  to $20 dollars,  which is  the                                                                   
highest negotiated contract.                                                                                                    
Vice-Chair Bunde inquired how  many tickets were written last                                                                   
Mr. Jones  reiterated  that 30,000 tickets  had been  written                                                                   
last year.                                                                                                                      
Vice-Chair  Bunde  calculated  that would  total  about  $750                                                                   
thousand dollars.                                                                                                               
Mr. Jones  responded that  was not  the cost associated  with                                                                   
the bill  before the  Committee.   The State anticipates  the                                                                   
cost to be approximately $229  thousand dollars, which is the                                                                   
difference  between competing  for a  fare and attempting  to                                                                   
set a negotiated fare.  All travel  agents would have to live                                                                   
with that  price.  The $500  thousand difference  between the                                                                   
two numbers would be the cost  shifting by the airlines.  The                                                                   
State would  be paying that  cost regardless, no  matter what                                                                   
the change is.  The question before  the Committee is whether                                                                   
to continue  to use  the procurement  code or establish  some                                                                   
threshold fee that everyone can live with.                                                                                      
Vice-Chair  Bunde asked  how  the $500,000  would  be a  cost                                                                   
Mr. Jones replied  that it would not be a cost  effective use                                                                   
of the State  employees time to be shopping  airlines and the                                                                   
Internet  for tickets.   From  the  11,000 tickets  currently                                                                   
being purchased from  the airlines, there would  be no change                                                                   
in  price; however,  it is  the 38,000  tickets being  bought                                                                   
from the  travel agents that there  would be a  cost shifting                                                                   
and fee increase.   The State will be paying  additional fees                                                                   
if what  is currently  being done,  is continued.   He  added                                                                   
that the State  would have to make travel  agent commissions.                                                                   
If it were opened up, there would be a premium fee.                                                                             
Mr. Jones  clarified that the  bill does allows the  State to                                                                   
do  something other  than  competitively  award contracts  by                                                                   
location.  He claimed this would  be the cheapest way for the                                                                   
State to go.                                                                                                                    
Vice-Chair Bunde  thought that  a competitive bid  would have                                                                   
one agency  handle the  entire State  and cautioned  that the                                                                   
bill would not limit it to one agency location.                                                                                 
Mr. Jones agreed that was possible.                                                                                             
Representative Croft asked why  this is not currently allowed                                                                   
in the procurement code.                                                                                                        
Mr.  Jones  explained  that  the  procurement  code  requires                                                                   
competitive  bidding   over  $5,000  dollars,   but  it  also                                                                   
encourages the State to consider  the "whole".  If there is a                                                                   
service that  is going to be  needed over time,  that service                                                                   
should be aggregated into a larger procurement.                                                                                 
TAPE HFC 02 - 82, Side B                                                                                                      
Mr.  Jones  added  that  as the  travel  agent  industry  has                                                                   
changed, no one is willing to  waive fees in their community.                                                                   
Competitive   contracts  are   being   established  in   each                                                                   
Representative Croft  asked why the  State could not  set the                                                                   
fee at $20 dollars by regulation.                                                                                               
Mr. Jones replied that the State  does not have the authority                                                                   
to establish rates.                                                                                                             
Vice-Chair  Bunde   asked  if  there  would   be  Legislative                                                                   
oversight over the contracts.                                                                                                   
Mr.  Jones responded  that it  should  be Legislative  intent                                                                   
that the  State not  establish just one  contract.   The bill                                                                   
intents the State  to do business with as many  travel agents                                                                   
as reasonable.                                                                                                                  
Vice-Chair Bunde  interjected that will not be  the most cost                                                                   
effective way to buy airline tickets.                                                                                           
Representative  Hudson  asked  if  there  were  any  on-going                                                                   
evaluations, which could help  reduce the State's air travel.                                                                   
He recommended purchasing mass certificates.                                                                                    
Mr.  Jones   interjected  that  there  have   been  attempts,                                                                   
however, when there is an airline  monopoly and that industry                                                                   
"calls the shots".  Mr. Jones  noted that the State of Alaska                                                                   
is a  "very good" customer  and that  they should be  able to                                                                   
get  at least  the best-unrestricted  fare  with no  advanced                                                                   
fee.     Alaska   Airlines  has   not   been  interested   in                                                                   
Representative  Hayes wrapped  up the  discussion on  HB 300.                                                                   
He  stressed that  the purpose  of  the bill  was to  address                                                                   
fairness.   The State  of Alaska  is using  a service  and at                                                                   
this time  is not paying a fee  for that service.   There are                                                                   
many small  businesses and industries  that will  be shutting                                                                   
down  their   doors  because   of  the  current   atmosphere.                                                                   
Representative Hayes  advised that Alaska should  be filing a                                                                   
fee for State travel services.                                                                                                  
Representative  Hayes noted  the advantages  that the  travel                                                                   
business brings  into the  community.   He believed  that the                                                                   
State  should  not receive  compensation.   By  using  travel                                                                   
agencies, there should be an overall cost savings.                                                                              
Representative Whitaker asked  if the bill would allow for an                                                                   
acceptable  fee threshold  for  the State  and/or any  agency                                                                   
that  could  afford  to  do business.    The  Department  has                                                                   
indicated that it  will cost $238 thousand dollars  more than                                                                   
currently is being paid.                                                                                                        
Representative Hayes acknowledged that was correct.                                                                             
Representative Davies  pointed out the "other"  savings, such                                                                   
as the employee's amateur attempt to find the lowest costs.                                                                     
Co-Chair  Mulder noted  the indeterminate  fiscal  note.   He                                                                   
assumed that the  actual number would be less  than projected                                                                   
in the note.                                                                                                                    
Co-Chair Mulder MOVED to report  HB 300 out of Committee with                                                                   
individual recommendations  and with the  accompanying fiscal                                                                   
note.  Vice-Chair Bunde OBJECTED.                                                                                               
Vice-Chair  Bunde agreed that  the State  should pay  for the                                                                   
receipts, however,  the travel industry is currently  in flux                                                                   
and he anticipated  that there would be more  changes coming.                                                                   
He did  not think that the  legislation would be  helping the                                                                   
"mom & pop"  companies.  He  added, it is important  that the                                                                   
Legislature determine what is  most important, to shore up an                                                                   
industry  that is  in a  state  of flux  or to  get the  most                                                                   
economic travel  advantage.  Vice-Chair Bunde  commented that                                                                   
the  legislation would  favor  the larger  agencies over  the                                                                   
smaller  ones.   He  thought  that  it  was  the job  of  the                                                                   
legislature to reduce the costs of travel.                                                                                      
A roll call vote was taken on the motion.                                                                                       
IN FAVOR:      Harris,    Hudson,     Lancaster,    Whitaker,                                                                   
               Williams, Mulder, Davies, Moses, Croft                                                                           
OPPOSED:       Bunde                                                                                                            
Representative Foster was not present for the vote.                                                                             
The MOTION PASSED (9-1).                                                                                                        
HB  300  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and with an indeterminate  fiscal note  #1 by                                                                   
Department of Administration.                                                                                                   
HOUSE BILL NO. 287                                                                                                            
     An Act relating  to the exemption of  commercial fishing                                                                   
     entry  permits from  claims  of creditors,  to loans  to                                                                   
     satisfy past  due federal tax obligations  of commercial                                                                   
     fishing  entry permit holders,  and to loan  origination                                                                   
     charges for  loans made by  the commercial  fishing loan                                                                   
     program  to refinance a  debt obligation; and  providing                                                                   
     for an effective date.                                                                                                     
Co-Chair Williams noted that the  Committee would take public                                                                   
testimony  on HB  287  and then  the bill  would  be HELD  in                                                                   
Committee for further consideration.                                                                                            
MARY  MCDOWELL,  COMMISSIONER,   COMMERCIAL  FISHERIES  ENTRY                                                                   
COMMISSION,  spoke  to the  provisions  of bill  intended  to                                                                   
clarify  the legal  status  of  limited entry  permits  under                                                                   
Alaska law.                                                                                                                     
She  noted that  the  State of  Alaska  has  always held  the                                                                   
position  that limited  entry  permits are  not property  and                                                                   
cannot be seized by creditors.                                                                                                  
     "An entry  permit constitutes  a use privilege  that may                                                                   
     be  modified  or  revoked  by  the  legislature  without                                                                   
Ms. McDowell added that State  law provides the only entities                                                                   
that may  treat limited entry  permits as collateral  are the                                                                   
two state-created  fishery loan  programs.  The  legal status                                                                   
of  permits  is   an  important  element  of   the  fisheries                                                                   
management  system as  it ensures  that  the State  maintains                                                                   
control of fishing privileges.   She noted that the State has                                                                   
consistently fought  against attempted seizure  of permits by                                                                   
the IRS  and other  creditors.  Some  of the Alaska  statutes                                                                   
are not clear on  that point and leaving the  legal status of                                                                   
permits open in  any way to varying interpretation,  could be                                                                   
detrimental to the interests of the State.                                                                                      
If anyone  could argue  that permits can  be construed  to be                                                                   
property,  Alaska's fishery  management  system could  become                                                                   
Ms.   McDowell  added   that  with   some  Alaska   fisheries                                                                   
struggling economically  right now,  it is important  to make                                                                   
sure statutes are  as clear and consistent as  possible about                                                                   
the legal status of permits.                                                                                                    
She  listed specific  provisions  of  the bill,  which  could                                                                   
clarify the permit status.                                                                                                      
     ·    Section 1 revises a section in Title 9 and current                                                                    
          law  includes  entry permits  in  the  list of  the                                                                   
          types  of  property   to  which  an  individual  is                                                                   
          entitled to exemption.                                                                                                
The legislative intent was to  show the special exempt status                                                                   
of permits.   There might be  risks that someone  could argue                                                                   
that  the fact  the permits  show  up implies  that they  are                                                                   
"property."    Thus,  the  bill  removes  permits  from  that                                                                   
section of  Title 9, and in  place of that  language, inserts                                                                   
precise language in the Limited Entry Act.                                                                                      
     ·    Section 6 inserts language in the Limited Entry                                                                       
          statutes to make it  absolutely clear that the only                                                                   
          time  a  person  may   request  the  commission  to                                                                   
          transfer  an entry  permit due  to an execution  on                                                                   
          the permit is if that  execution is for the purpose                                                                   
          of  enforcing a lien  recorded with the  commission                                                                   
          under   the   statutes   of   the   Child   Support                                                                   
          Enforcement Division.                                                                                                 
     ·    Section 7 spells out that fishing privileges are                                                                      
          exempt  from the  claims of  all creditors,  making                                                                   
          exceptions  only for fishing loans under  the State                                                                   
          Division of Investments  and Commercial Fishing and                                                                   
          Agriculture  Bank (CFAB) and for the  Child Support                                                                   
          Division's authority to place a lien on a permit.                                                                     
Ms. McDowell maintained that these  provisions were being put                                                                   
forward at a critical time:                                                                                                     
     ·    Hard times in the salmon industry are likely to                                                                       
          push more fishing families  into financial trouble;                                                                   
     ·    Additionally, a recent federal maritime case has                                                                      
          heightened the need  to firm up the legal status of                                                                   
          limited entry permits.                                                                                                
Federal  legislation may  be introduced  soon in response  to                                                                   
the ruling  in that  case, stating  clearly  in law that  the                                                                   
federal  government shall  honor  the legal  status  bestowed                                                                   
upon fishing  privileges by  the governmental entity  issuing                                                                   
the  privilege.    Ms.  McDowell   stated  that  clarity  and                                                                   
consistency in  State law is  more important and  significant                                                                   
than ever.   Passage of the bill  would put Alaska  in a much                                                                   
better   position  to   fully  benefit   from  such   federal                                                                   
Ms. McDowell  noted that  the Commission  fully supports  the                                                                   
Fisheries  Committee substitute  and  urges  passage of  that                                                                   
Co-Chair Mulder requested that Ed Crane, Alaska Commercial                                                                      
Fishing and Agriculture Bank, describe the substance behind                                                                     
the committee substitute.                                                                                                       
Following a brief at-ease, Co-Chair Williams advised that HB                                                                    
287 would be held in Committee.                                                                                                 
HB 287 was HELD in Committee for further consideration.                                                                         
The meeting was adjourned at 3:12 P.M.                                                                                          

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