Legislature(2001 - 2002)

04/30/2002 03:08 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 30, 2002                                                                                           
                          3:08 PM                                                                                               
                                                                                                                                
TAPE HFC 02 - 98, Side A                                                                                                        
TAPE HFC 02 - 98, Side B                                                                                                        
TAPE HFC 02 - 99, Side A                                                                                                        
TAPE HFC 02 - 99, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Mulder  called the  House Finance Committee  meeting                                                                   
to order at 3:08 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eldon Mulder, Co-Chair                                                                                           
Representative Bill Williams, Co-Chair                                                                                          
Representative Con Bunde, Vice-Chair                                                                                            
Representative Eric Croft                                                                                                       
Representative John Davies                                                                                                      
Representative Richard Foster                                                                                                   
Representative John Harris                                                                                                      
Representative Bill Hudson                                                                                                      
Representative Ken Lancaster                                                                                                    
Representative Carl Moses                                                                                                       
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Mary  Kaspner; Representative  Jeanette James;                                                                   
Representative Mike Chenault,  Sponsor; Representative Sharon                                                                   
Cissna;  Wendy Redman,  Vice President,  Statewide  Programs,                                                                   
University of Alaska; Richard  Schmitz, Staff, Representative                                                                   
James;  Eddy Jeans,  Manger,  School Finance  and  Facilities                                                                   
Section,  Department  of  Education  and  Early  Development;                                                                   
William  Craig,  AIRRES; John  Bitney,  Legislative  Liaison,                                                                   
Alaska Housing  Finance Corporation,  Department of  Revenue;                                                                   
Sue  Wright,  Staff, Representative  Chenault;  Janet  Seitz,                                                                   
Staff,  Representative Rokeberg;  Janet  Parker, Division  of                                                                   
Retirement  and Benefits, Department  of Administration;  Tom                                                                   
Turner,    President,    Alaska   Association    of    Health                                                                   
Underwriters, Anchorage; Bob Lohr,  Director, Alaska Division                                                                   
of Insurance.                                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Tom   Turner,  President,   Alaska   Association  of   Health                                                                   
Underwriters, Anchorage.                                                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 175    "An  Act  making  an appropriation  to  the  Alaska                                                                   
          Industrial  Development  and Export  Authority  for                                                                   
          power  projects;  and  providing for  an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
HB 315    "An Act  requiring a single insurance  provider for                                                                   
          all  state employees  and allowing small  employers                                                                   
          to join as a group;  and providing for an effective                                                                   
          date."                                                                                                                
                                                                                                                                
          CSSSHB 315 (FIN) was REPORTED out of Committee                                                                        
          with a  "do pass" recommendation and  with a fiscal                                                                   
          impact note by the Department of Administration.                                                                      
                                                                                                                                
HB 370    "An  Act   relating  to  the  issuance   of  state-                                                                   
          guaranteed  revenue  bonds  by the  Alaska  Housing                                                                   
          Finance   Corporation  to  finance   mortgages  for                                                                   
          qualifying   veterans;   and   providing   for   an                                                                   
          effective date."                                                                                                      
                                                                                                                                
          HB 370 was REPORTED out of Committee with a "do                                                                       
          pass"  recommendation   and  with   two  previously                                                                   
         published fiscal notes: REV #1 and GOV #2.                                                                             
                                                                                                                                
HB 464    "An  Act  relating  to  statewide  school  district                                                                   
          correspondence study programs."                                                                                       
                                                                                                                                
          CSHB 464 (EDU) was REPORTED out of Committee with                                                                     
          a "do  pass" recommendation  and with  a previously                                                                   
          published fiscal note: EED #2.                                                                                        
                                                                                                                                
HB 489    "An Act relating to cruelty to animals."                                                                              
                                                                                                                                
          CSHB 489  (JUD) was REPORTED out of  Committee with                                                                   
          a "do pass" recommendation  and with two previously                                                                   
         published fiscal notes: COR #1 and LAW #2.                                                                             
                                                                                                                                
HB 524    "An  Act  relating   to  the  issuance  of  general                                                                   
          obligation  bonds  for the  purpose  of paying  the                                                                   
          cost  of design, construction,  and maintenance  of                                                                   
          schools and state facilities;  and providing for an                                                                   
          effective date."                                                                                                      
                                                                                                                                
          HB 524 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 525    "An  Act  relating   to  the  issuance  of  general                                                                   
          obligation  bonds  for the  purpose  of paying  the                                                                   
          cost of deferred maintenance  of public facilities;                                                                   
          and providing for an effective date."                                                                                 
                                                                                                                                
          HB 525 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 528    "An   Act    relating   to   programs    of   state                                                                   
          reimbursement for debt payments for certain                                                                           
          capital projects; and providing for an effective                                                                      
          date."                                                                                                                
                                                                                                                                
          HB 528 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
GENERAL OBLIGATION BONDS                                                                                                      
                                                                                                                                
Co-Chair Mulder  noted that there  were $1.4 billion  dollars                                                                   
in  general  obligation  (GO) bond  requests.  The  attorneys                                                                   
indicated  that they  could not  be included  in one  ominous                                                                   
bond bill. The intent was to use  as few vehicles as possible                                                                   
and  identify  consistent themes.  He  observed  that HB  524                                                                   
contains   GO   bonds   for  new   schools   and   university                                                                   
construction. House  Bill 525 contains GO bonds  for deferred                                                                   
maintenance  of public  facilities.  Bond debt  reimbursement                                                                   
was  used for  projects  that  did not  fit  into  a GO  bond                                                                   
package,  because they  were previously  leveraged [HB  528].                                                                   
Representative Lancaster's energy  bill [HB 175] was utilized                                                                   
for the  final component.  House  Bill 524  and HB 525  would                                                                   
appear on the November general election ballot.                                                                                 
                                                                                                                                
Co-Chair Mulder observed that  projects were prioritized. The                                                                   
priority lists were strictly used  with one exception. In new                                                                   
school  construction, out  of  the first  six schools:  three                                                                   
were in  [Representative Kaspner's]  district and  three were                                                                   
in Representative  Foster's district. The  proposed committee                                                                   
substitute took  the first  two [in Representative  Kaspner's                                                                   
district] and the first two from Representative Foster's.                                                                       
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:                                                                            
                                                                                                                                
     Page 1, line 6, through page 3, line 28:                                                                                   
     Delete all material and insert:                                                                                            
                                                                                                                                
     Section 1.  ALASKA ENERGY AUTHORITY. (a)  me unobligated                                                                 
     and  unencumbered balance  of the  Railbelt energy  fund                                                                   
     (AS  37.05.520) on  the effective  date of  this Act  is                                                                   
     appropriated   to  the  Alaska   Energy  Authority   for                                                                   
     investment  by  the  authority to  secure  repayment  of                                                                   
     bonds  issued by the  authority under  AS 44.83  for the                                                                   
     following power and intertie projects:                                                                                     
                                                                                                                                
          (1) the sum of $20,300,000 is allocated to                                                                            
          upgrade and extend the Anchorage-Fairbanks power                                                                      
          transmission intertie to the Teeland substation;                                                                      
                                                                                                                                
          (2) to make grants to the recipients named, for                                                                       
          the purposes described, and in the amounts set out                                                                    
          below:                                                                                                                
                                                                                                                                
          Homer Electric Association replacement power                                                                          
          supply for Seldovia $2,000,000                                                                                        
                                                                                                                                
          Anchorage Municipal Light and Power Ekiutna                                                                           
          project transmission line upgrade 19,300,000                                                                          
                                                                                                                                
           Golden Valley Electric Association line extension                                                                    
           872,000                                                                                                              
                                                                                                                                
         Matanuska Electric Association line extension 500,000                                                                  
                                                                                                                                
     (b) It is  the intent of the legislature  that, once the                                                                   
     bonds  described  in  (a)  of  this  section  have  been                                                                   
     repaid,  the Alaska  Industrial  Development and  Export                                                                   
     Authority will bring to the    legislature a prioritized                                                                   
     list  of energy  projects that  can be  funded from  the                                                                   
     revenue  stream from  the funds  appropriated in  (a) of                                                                   
     this section.                                                                                                              
                                                                                                                                
     *  Sec. 2.  LAPSE  OF APPROPRIATION.  The  appropriation                                                                   
     made by  sec. 1(a) of this  Act is to capitalize  a fund                                                                   
     and does not lapse.                                                                                                        
     * Sec.  3. This  Act takes  effect immediately  under AS                                                                 
     01.10.070(c)."                                                                                                             
                                                                                                                                
He  explained  that the  amendment  makes minor  changes.  He                                                                   
observed  that  the amendment  would  also allow  the  Alaska                                                                   
Industrial  Development  and   Export  Authority  (AIDEA)  to                                                                   
compile  a priority  list  for  future consideration  by  the                                                                   
legislature.  The  legislation  would still  be  $43  million                                                                   
dollars.  The legislation  utilizes the  revenue stream  from                                                                   
the securitization of the Rail  Belt Energy Fund, which would                                                                   
no longer exist if the legislation were adopted.                                                                                
                                                                                                                                
Representative John  Davies pointed out that  the legislation                                                                   
contains  a smorgasbord  of  projects in  terms  of size  and                                                                   
duration of the  debt repayment. He questioned  if the intent                                                                   
was  to wait  until the  last  project is  repaid before  the                                                                   
revenue  stream  could  be  utilized   again.  Representative                                                                   
Lancaster  responded  that  it  would  be a  function  and  a                                                                   
request of AIDEA.                                                                                                               
                                                                                                                                
Representative  John Davies  MOVED to  ADOPT an amendment  on                                                                   
page 2, line 2: insert "the."                                                                                                   
                                                                                                                                
Co-Chair Mulder  explained that $73 million dollars  would be                                                                   
securitized; $43 million dollars  would come off of the bonds                                                                   
sales to  pay for the projects.  The interest off of  the $73                                                                   
million dollars  pays for  the bonds.  The revenue  stream is                                                                   
driven from the interest on the bonds not the projects.                                                                         
                                                                                                                                
Representative  John   Davies  questioned  if   some  of  the                                                                   
projects  would be  paid off  quicker  than others.  Co-Chair                                                                   
Mulder  stated  that  they  would  not.  Representative  John                                                                   
Davies  stressed that  the intent  is not to  wait until  the                                                                   
last project is paid before there are new projects.                                                                             
                                                                                                                                
Representative  Lancaster  explained  that funds  would  flow                                                                   
immediately.  The revenue  stream,  through  AIDEA, from  the                                                                   
intertie fund would pay the bonds  back. He observed that $43                                                                   
million dollars would already be spent.                                                                                         
                                                                                                                                
Representative  Croft acknowledged that  AIDEA will  make the                                                                   
decision, but  expressed concern  with the deletion  of "with                                                                   
the assistance of AREAC and the Denali Commission."                                                                             
                                                                                                                                
Co-Chair Mulder observed that  the concern was that the focus                                                                   
of the Denali Commission has been  on economic development in                                                                   
rural Alaska. He  pointed out that the Rail  Belt Energy Fund                                                                   
centers on  the rail belt  energy grid.  He felt that  it was                                                                   
not  a  compatible  relationship.   Representative  Lancaster                                                                   
agreed.  Most  projects  are  discussed  through  the  Alaska                                                                   
Industrial Development  and Export Authority (AIDEA).  It was                                                                   
felt that  it would  be better to  collect the bonds  through                                                                   
AIDEA.                                                                                                                          
                                                                                                                                
Representative  Hudson   questioned  what  would   happen  to                                                                   
communities like Cordova. Representative  Lancaster explained                                                                   
that  Cordova is  included in  the  debt reimbursement  bond,                                                                   
which would not require a vote.                                                                                                 
                                                                                                                                
Representative  Lancaster MOVED to  ADOPT Amendment  1. There                                                                   
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
HB  175  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 524                                                                                                            
                                                                                                                                
     "An Act relating  to the issuance of  general obligation                                                                   
     bonds  for the  purpose of  paying the  cost of  design,                                                                   
     construction,  and  maintenance  of  schools  and  state                                                                   
     facilities; and providing for an effective date."                                                                          
                                                                                                                                
Co-Chair  Mulder  provided members  with  proposed  committee                                                                   
substitute,  work  draft  LS1725\C, dated  4/29/02  (copy  on                                                                   
file.) He observed that HB 524  contains the new construction                                                                   
component  of schools  and learning  facilities. He  observed                                                                   
that in order  to get the bonds  to pass there needs  to be a                                                                   
broad statewide perspective.                                                                                                    
                                                                                                                                
Finance Committee Substitute for  House Bill 524 authorizes a                                                                   
vote of the people on general  obligation bonds issued by the                                                                   
state  of   Alaska  for   the  construction  of   educational                                                                   
facilities.  The  proposal,  totaling  $149,795,595  dollars,                                                                   
provides for new  schools, University of Alaska  projects and                                                                   
a portion of a museum expansion  in Anchorage. The new school                                                                   
projects include facilities in  Tuluksak, Akiak, Scammon Bay,                                                                   
Teller  and  Anchorage.  The  University  of  Alaska  funding                                                                   
includes projects  on campuses  in Fairbanks, Juneau,  Homer,                                                                   
Valdez, Anchorage,  Kenai, Sitka,  Homer, and Ketchikan.  The                                                                   
bond question  would be on  the November ballot.  If approved                                                                   
by the voters, projects could commence early in 2003.                                                                           
                                                                                                                                
Representative  Croft observed that  the third school  on the                                                                   
priority  list,   Akiachak,  was  skipped.   Co-Chair  Mulder                                                                   
explained that the  intent was to balance the  two districts.                                                                   
Representative Croft  observed that Anchorage  schools, which                                                                   
were ranked 48,  49, 53, and 54, were added.  Co-Chair Mulder                                                                   
pointed out  that they were  schools passed by  the Anchorage                                                                   
voters. He stressed  the need to assure the  greatest support                                                                   
for passage  of the bond  package. The Anchorage  schools are                                                                   
partially funded.  He observed that there was a  error on the                                                                   
Bartlett  High School  appropriation,  which  should be  $1.9                                                                   
million dollars.  The Chugiak  High School appropriation  was                                                                   
also   in   error   and   should   be   $3.655,728   dollars.                                                                   
Representative Croft  noted that Chugiak would  be completely                                                                   
funded,  but Barlett  High School  would only  be funded  for                                                                   
phase 2  and 3. He noted  that parts of several  schools were                                                                   
being funded. Co-Chair Mulder  explained that the legislation                                                                   
contains  the  state  share  for  projects  proposed  by  the                                                                   
Anchorage School Board and accepted by the voters.                                                                              
                                                                                                                                
WENDY REDMAN, VICE PRESIDENT,  STATEWIDE PROGRAMS, UNIVERSITY                                                                   
OF ALASKA,  provided information  on HB  524. She noted  that                                                                   
the Board approved  the projects and rankings.  The Fairbanks                                                                   
and  Anchorage classroom  projects  represent  board-approved                                                                   
phases  for  the  facilities.  The Lena  Point  facility  was                                                                   
originally $18 million dollars,  which was reduced in half in                                                                   
order to fit  into the appropriation amount.  The project was                                                                   
not designed  to be phased. Other  projects are as  they were                                                                   
on the  Board's priority list.  She explained that  pieces of                                                                   
their  deferred  maintenance  needs are  contained  in  other                                                                   
legislation.  The University's  top  $50  million dollars  in                                                                   
capital    requests   were    funded,   excluding    deferred                                                                   
maintenance, which might show  up in the capital budget bill.                                                                   
She  did  not  know where  the  University  Center  would  be                                                                   
funded. Delay in  funding would be a problem  for the Center,                                                                   
which was not in any of the funding bills.                                                                                      
                                                                                                                                
Vice-Chair Bunde  questioned if the University  of Alaska had                                                                   
discussed local  contribution for the expansions.  Ms. Redman                                                                   
noted that  the Fairbanks  campus would  be contributing  $30                                                                   
million  dollars.  Overhead  on the  science  and  laboratory                                                                   
facilities would also be contributed in Anchorage.                                                                              
                                                                                                                                
Representative  Hudson  questioned   if  the  University  has                                                                   
dropped  the   joint  University  of  Alaska   Southeast  and                                                                   
Military and Veterans Affairs  readiness facility. Ms. Redman                                                                   
noted that the  project is a high priority  but was submitted                                                                   
in the  Military and  Veterans Affairs  budget. She  stressed                                                                   
that the joint  use/recreational facility is  a high priority                                                                   
for  the  Alaska  National  Guard  and  University.  Co-Chair                                                                   
Mulder   stated   that   he  was   willing   to   work   with                                                                   
Representative  Hudson   and  the  University   to  fund  the                                                                   
project.                                                                                                                        
                                                                                                                                
Ms.  Redman  referred  to the  University  Center,  Anchorage                                                                   
campus.  Co-Chair   Mulder  observed   that  the   University                                                                   
indicated that the funding was  needed earlier than later and                                                                   
bonding  might  be  problematic.  The intent  is  to  provide                                                                   
funding through another vehicle.                                                                                                
                                                                                                                                
Representative   Croft   clarified   that  Tuluksak   is   in                                                                   
Representative Morgan's district.                                                                                               
                                                                                                                                
Representative Hudson  referred to section  5. There is  a $5                                                                   
million dollar  appropriation in the Department  of Community                                                                   
and Economic  Development for an educational  museum facility                                                                   
design. He  observed that  the state  has the opportunity  to                                                                   
acquire several acres of land  from the Alaska Electric Light                                                                   
and  Power Company  (AELP). The  cost would  be $1.9  million                                                                   
dollars, which covers the land  acquisition and $500 thousand                                                                   
dollars  to  design   a  multi-facility  that   would  be  an                                                                   
expansion  of the state  museum and  archives; both  of which                                                                   
are  in tough  shape. He  emphasized that  the purchase  must                                                                   
occur in the current year.                                                                                                      
                                                                                                                                
HB  524  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 525                                                                                                            
                                                                                                                                
     "An Act relating  to the issuance of  general obligation                                                                   
     bonds  for the purpose  of paying  the cost of  deferred                                                                   
     maintenance of  public facilities; and providing  for an                                                                   
     effective date."                                                                                                           
                                                                                                                                
Co-Chair  Mulder  provided members  with  proposed  committee                                                                   
substitute,  work  draft  LS1735\C, dated  4/29/02  (copy  on                                                                   
file.)  The  proposal, totaling  $203,744,270,  provides  for                                                                   
repair of:  schools, University  of Alaska facilities,  state                                                                   
owned   docks  and   harbor  facilities,   and  state   owned                                                                   
buildings.                                                                                                                      
                                                                                                                                
The  proposal provides  $121,269,770  dollars  for 90  school                                                                   
projects around  the state. The  list includes  those schools                                                                   
approved   by  the   department   of  Education   and   Early                                                                   
Development for major maintenance.                                                                                              
                                                                                                                                
The  $5,560,000  dollars  designated for  the  University  of                                                                   
Alaska includes  repair to facilities on campuses  in Valdez,                                                                   
Palmer,  Ketchikan, Kodiak,  Fairbanks,  Kotzebue, Nome,  and                                                                   
Bethel.                                                                                                                         
                                                                                                                                
The 31,887,500  dollars allocated for docks  and harbors will                                                                   
refurbish   facilities   in   Whittier,   Seldovia,   Juneau,                                                                   
Ketchikan, Sitka, Cordova, Wrangell, Yakutat and Kiawock.                                                                       
                                                                                                                                
In   addition  there   is   $48,500,000   dollars  for   dire                                                                   
maintenance needs throughout the  state. He observed that the                                                                   
governor introduced a bill for  Certificate of Participations                                                                   
deferred maintenance  for state  facilities at  approximately                                                                   
$200  million dollars.  He explained  that  he was  concerned                                                                   
that  a  straight   state  facilities  deferred   maintenance                                                                   
general obligation bond would  fail to be pass by the public.                                                                   
The intent  was to create a  category that could  satisfy the                                                                   
most  urgent  concerns.  He  observed  that  the  list  could                                                                   
change.  The Administration  indicated  that  there might  be                                                                   
items  that  are  higher  in  the  prioritization.  The  list                                                                   
provided  by  the state  director  was  used to  compile  the                                                                   
legislation and might change as  a response to submissions by                                                                   
the Governor's Office.                                                                                                          
                                                                                                                                
Co-Chair  Mulder added  that funding for  the Juneau  Douglas                                                                   
High  school   remodel  was   added.  Representative   Hudson                                                                   
observed  that the  low  bid was  $3 million  dollars  higher                                                                   
[than the previously appropriated amount].                                                                                      
                                                                                                                                
Representative  Croft noted  that  the list  was followed  to                                                                   
item 81  and Anchorage,  Kenai, Juneau  and Nome were  picked                                                                   
up. He referred to item 51, Kenai  school fire alarm upgrade.                                                                   
He questioned the funding level.  There were some life health                                                                   
and  safety  code  violation  concerns.  The  funds  for  the                                                                   
Juneau-Douglas High school would complete the project.                                                                          
                                                                                                                                
Co-Chair  Mulder  reviewed  section   4  and  noted  that  it                                                                   
contains deferred maintenance  projects as brought forward by                                                                   
the University.                                                                                                                 
                                                                                                                                
Co-Chair Mulder  referred to  section 5.  He observed  that a                                                                   
bond debt  reimbursement  for ports and  harbors, which  many                                                                   
communities did  not want to  participate in had  been passed                                                                   
in a previous  year. They are included as  general obligation                                                                   
bonds under  deferred maintenance. Ports and  harbor projects                                                                   
fail  into two  categories. He  explained  that projects  for                                                                   
existing  ports   and  harbors  are  listed   under  deferred                                                                   
maintenance.   Other   ports   and  harbors   in   the   debt                                                                   
reimbursement package are for new design and planning.                                                                          
                                                                                                                                
Representative Croft  observed that the state  had offered to                                                                   
turn certain  ports and harbors  to local communities,  which                                                                   
did not  want to assume  responsibility because they  had not                                                                   
been maintained. This  raised the issue of how  they could be                                                                   
raised to  a level where  the municipalities could  take them                                                                   
over. Co-Chair Mulder  clarified that there are  a variety of                                                                   
mechanisms  that could  be used.  He stressed  that there  is                                                                   
nothing  more important  to  economic development  in  costal                                                                   
communities  than ports  and  harbors. The  intent  is to  be                                                                   
sympathetic  to fishing  communities  that  are having  tough                                                                   
times.                                                                                                                          
                                                                                                                                
Vice-Chair  Bunde referred  to subsection  (4) in section  6:                                                                   
Mt.  Edgecumbe High  School and  Alaska Vocational  Technical                                                                   
Center major deferred maintenance.  Co-Chair Mulder explained                                                                   
that the Department  of Transportation and  Public Facilities                                                                   
manages  the  deferred maintenance  program.  State  rankings                                                                   
were  taken,   but  projects   were  listed   alphabetically.                                                                   
Representative  Hudson clarified  that the Alaska  Vocational                                                                   
Technical Center is in Seward; both are state facilities.                                                                       
                                                                                                                                
Co-Chair  Mulder   noted  that   section  6,  statewide   ADA                                                                   
compliance might need to be modified.                                                                                           
                                                                                                                                
Representative John Davies asked  if the maintenance stations                                                                   
had been addressed.  Co-Chair Mulder did not  know. He stated                                                                   
that they  would be considered.  The intent is to  stay below                                                                   
$400 million dollars.                                                                                                           
                                                                                                                                
Representative John  Davies observed that there  was a public                                                                   
facility in  Ketchikan with  major maintenance concerns.  Co-                                                                   
Chair Mulder thought that it had been included.                                                                                 
                                                                                                                                
HB  525  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 528                                                                                                            
                                                                                                                                
     "An Act relating to programs of state reimbursement for                                                                    
     debt payments for certain capital projects; and                                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
Co-Chair  Mulder  reviewed  House Bill  528,  which  provides                                                                   
state reimbursement  to local entities for debt  incurred for                                                                   
schools   and   projects   that    contribute   to   economic                                                                   
development.   The  legislation   would   replace  the   debt                                                                   
reimbursement  package  (adopted   two  years  earlier)  with                                                                   
Unalaska,  Akutan, Chignik  and False  Pass and expansion  of                                                                   
the Port  of Anchorage. The  total cost would  be $70,405,000                                                                   
dollars.  The legislation  also  contains  funding for  power                                                                   
projects,  which  have  been  previously  leveraged  and  are                                                                   
therefore not eligible for GO  bonding. The legislation would                                                                   
provide   debt  reimbursement   for   the  following   energy                                                                   
projects: Nyman Combined Cycle  Cogeneration Plant in Kodiak;                                                                   
the   Power  Creek   Hydropower  Project   in  Cordova;   the                                                                   
Cogeneration  Project in Valdez;  and the Southeast  Intertie                                                                   
(Swan  Lake to  Lake Tyee).  Debt  reimbursement would  allow                                                                   
Cordova Electric  Cooperative  to end its  draw on  the power                                                                   
cost equalization program.                                                                                                      
                                                                                                                                
Representative John Davies referred  to section 1, line 7. He                                                                   
noted  that  the  authorization  would be  increased  to  $10                                                                   
million dollars,  but the school only anticipates  a need for                                                                   
$7 - $8 million dollars.                                                                                                        
                                                                                                                                
Co-Chair Mulder noted that the  combined state/local share is                                                                   
$10 million  dollars. The state  share for the  Ambler School                                                                   
is $7 million dollars.                                                                                                          
                                                                                                                                
Representative Davies referred to section 2 on page 4.                                                                          
                                                                                                                                
TAPE HFC 02 - 98, Side B                                                                                                      
                                                                                                                                
Co-Chair  Mulder clarified  that  Valdez and  Nome are  still                                                                   
authorized;  these two  communities are  still going  forward                                                                   
with debt reimbursement.                                                                                                        
                                                                                                                                
Representative  Croft  questioned if  the  Akutan Small  Boat                                                                   
Harbor request is  $3 or $4 million dollars.  Co-Chair Mulder                                                                   
noted that  it was  originally submitted at  $3 but  that the                                                                   
backup  indicated  that  the  amount  needed  is  $4  million                                                                   
dollars.                                                                                                                        
                                                                                                                                
Co-Chair Mulder  clarified that the Anchorage  port needs $14                                                                   
- $16 million dollars.                                                                                                          
                                                                                                                                
HB  528  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
HOUSE BILL NO. 370                                                                                                            
                                                                                                                                
     "An  Act relating  to the  issuance of  state-guaranteed                                                                   
     revenue bonds by the Alaska  Housing Finance Corporation                                                                   
     to  finance  mortgages  for   qualifying  veterans;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
JOHN  BITNEY,  LEGISLATIVE LIAISON,  ALASKA  HOUSING  FINANCE                                                                   
CORPORATION, DEPARTMENT  OF REVENUE, spoke in  support of the                                                                   
legislation. He explained that  the legislation would provide                                                                   
authorization  on  the  general   election  ballot  for  $500                                                                   
million dollars in mortgage-backed,  guaranteed revenue bonds                                                                   
through  the  Alaska  Housing   Finance  Corporation  (AHFC).                                                                   
Alaska is one of five states that  are able to take advantage                                                                   
of these tax-exempt  bonds. The requirement for  the state to                                                                   
capture  the tax exemption  is  that the bonds  must have  an                                                                   
unconditional guarantee by the  state in which the program is                                                                   
administered.   The  state  Constitution   requires   that  a                                                                   
guarantee  of that  nature have  a  vote of  the people.  The                                                                   
bonds are  structured to  only relate  to the mortgages  that                                                                   
the bond proceeds  are used to purchase. The  state's general                                                                   
obligation   capacity  would   not   be  affected.   Congress                                                                   
authorized  the tax exemption  in 1978  and 1979. Alaska  was                                                                   
one of  five states  that issued bonds  when the  program was                                                                   
first  made  available.  Congress   subsequently  closed  the                                                                   
window in  the early  1980's; those states  that were  in the                                                                   
program were grandfathered.  The bond proceeds  would be used                                                                   
to fund the  Veterans Mortgage Program. To  qualify, veterans                                                                   
would  have to  have been  in  active duty  service prior  to                                                                   
January 1,  1977 and not been  discharged more than  30 years                                                                   
prior to the  application date of their loan.  There would be                                                                   
a diminishing pool  of qualified veterans. This  would be the                                                                   
fifth and last time that AHFC  would anticipate coming before                                                                   
the  legislature  for this  type  of bond  authorization.  He                                                                   
pointed out that the bonds are  well supported by the general                                                                   
public.                                                                                                                         
                                                                                                                                
Co-Chair Mulder  questioned what  would happen if  the ballot                                                                   
issue  did not  pass. Mr.  Bitney explained  that AHFC  would                                                                   
finish with  the authorization from  1986, which is  close to                                                                   
$50 million dollars; this would  allow them to finish out the                                                                   
year.                                                                                                                           
                                                                                                                                
Co-Chair  Mulder questioned  if they  would need  to be  on a                                                                   
statewide  general election  or could  they be  on a  primary                                                                   
election. Mr. Bitney did not know.                                                                                              
                                                                                                                                
Co-Chair  Mulder  stressed that  too  many questions  on  the                                                                   
ballot may lead  to the downfall of one of the  questions and                                                                   
suggested that it  may behooved the legislation to  be on the                                                                   
primary ballot.  Mr. Bitney clarified that  the authorization                                                                   
is needed in the current year.                                                                                                  
                                                                                                                                
In response  to a question  by Representative  Lancaster, Mr.                                                                   
Bitney  observed that  there is  a generous  cap. He did  not                                                                   
think  that  all  of the  authorization  beyond  the  30-year                                                                   
timeframe  would  be  needed.  There  are  bills  pending  in                                                                   
Congress,  which could  require  additional authorization  if                                                                   
passed.                                                                                                                         
                                                                                                                                
Co-Chair Mulder stressed  that the ballot issue  should be on                                                                   
the primary election where it  would not be confused with any                                                                   
other ballot question.                                                                                                          
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   370  out  of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
HB  370  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation  and  with  two  previously  published  fiscal                                                                   
notes: REV #1 and GOV #2.                                                                                                       
                                                                                                                                
RECESSED:                                                                                                                     
                                                                                                                                
The Committee Recessed at 4:00 p.m.                                                                                             
                                                                                                                                
TAPE HFC 02 - 99, Side A                                                                                                      
                                                                                                                                
RECONVENED:                                                                                                                   
                                                                                                                                
The Committee Reconvened at 4:45 p.m.                                                                                           
HOUSE BILL NO. 464                                                                                                            
                                                                                                                                
     "An Act relating to statewide school district                                                                              
     correspondence study programs."                                                                                            
                                                                                                                                
RICHARD SCHMITZ,  STAFF, REPRESENTATIVE  JAMES, testified  in                                                                   
support  of the  legislation  on behalf  of  the sponsor.  He                                                                   
explained that the legislation  would address school district                                                                   
correspondence  study  programs.  The first  school  district                                                                   
correspondence study program was  the Alyeska Central School,                                                                   
which delivers public  education to students that  are not in                                                                   
"brick  and mortar"  schools.  Correspondence study  programs                                                                   
have  been  successful  and  are  popular  with  parents  and                                                                   
students. This  year, the Department  of Education  and Early                                                                   
Development instituted  regulations that were  distressing to                                                                   
a number of the parents. The intent  of the legislation is to                                                                   
give the department direction in writing regulations.                                                                           
                                                                                                                                
Mr.  Schmitz observed  that the  legislation  provides for  a                                                                   
five-year review.  The original provision was  for a one-year                                                                   
review, which  was felt  to be onerous.  He pointed  out that                                                                   
charter  schools are reviewed  and approved  every 10  years.                                                                   
The  legislation  also  places   in  statute  parameters  for                                                                   
monitoring students. Monitoring  would not be so strict as to                                                                   
be restrictive. Quarterly review  by certified teachers would                                                                   
be required.  Under the proposed regulations,  a certificated                                                                   
teacher would be  involved in every aspect of  monitoring the                                                                   
student's progress. The legislation  would allow [parents and                                                                   
students] the freedom to operate as they feel works best.                                                                       
                                                                                                                                
Mr.   Schmitz   observed   that  parents   taking   part   in                                                                   
correspondence study  programs have received  funding through                                                                   
stipends  or  reimbursements   for  textbooks  or  curriculum                                                                   
materials.  Due  to  the  separation  of  state  and  church,                                                                   
materials  were not allowed  to have  a religious content.  A                                                                   
question  arose   regarding  the   parents  ability   to  use                                                                   
materials  with a religious  nature if  the parent  purchased                                                                   
the materials without state funds.  The issue was resolved by                                                                   
adding: "Nothing  in this section precludes  a correspondence                                                                   
study student, or the parent or  guardian of a correspondence                                                                   
study student,  from privately  obtaining or using  textbooks                                                                   
or curriculum material not provided  by the school district."                                                                   
                                                                                                                                
Vice-Chair  Bunde  summarized  that  the  legislation  is  an                                                                   
attempt to hold correspondence  students to the same standard                                                                   
as other schools. Mr. Schmitz agreed.                                                                                           
                                                                                                                                
Mr. Schmitz observed that the  sponsor did not agree with the                                                                   
accompanying fiscal  note by the Department of  Education and                                                                   
Early Development.                                                                                                              
                                                                                                                                
EDDY JEANS,  MANGER, SCHOOL  FINANCE AND FACILITIES  SECTION,                                                                   
DEPARTMENT  OF  EDUCATION AND  EARLY  DEVELOPMENT,  clarified                                                                   
that  the department  requested  funding  for  a position  to                                                                   
assist school  districts with  monitoring and compliance  for                                                                   
the statewide  correspondence programs.  He noted  that there                                                                   
is  a  substantial  amount  of work  with  the  program.  The                                                                   
department  went  through  a   regulatory  process  with  the                                                                   
expectations  of   providing  clarity  on   family  allotment                                                                   
accounts. Through  the regulatory process  persons associated                                                                   
with the program  were heard. The department  worked with the                                                                   
Galena and Nenana  school districts to amend  the regulations                                                                   
to their  satisfaction. He  referred to page  2, line  7: "An                                                                   
enrolled  student  shall  be   monitored  by  a  certificated                                                                   
teacher or  appropriately trained  personnel employed  by the                                                                   
governing  body."  The  department  feels  that  a  certified                                                                   
teacher  is  the appropriate  person  to  evaluate  student's                                                                   
work.                                                                                                                           
                                                                                                                                
REPRESENTATIVE JEANETTE  JAMES, SPONSOR, spoke  in support of                                                                   
the legislation, which includes  most of the regulations. She                                                                   
emphasized  that correspondence  schools  are satisfied  with                                                                   
the process. She  discussed the fiscal note,  which was added                                                                   
when the  regulations were included  in the legislation.  She                                                                   
pointed out  that the legislation  does not require  any more                                                                   
work  than  what  was required  under  the  regulations.  The                                                                   
department indicated that they  are short-funded. She pointed                                                                   
out that the need  is not the result of the  legislation. She                                                                   
emphasized that the  funding should be placed  in the budget.                                                                   
She is  sympathetic to  the department's  needs, but  did not                                                                   
think it  was appropriate for  the funding to be  attached to                                                                   
the legislation because  the legislation is not  the cause of                                                                   
shortage.                                                                                                                       
                                                                                                                                
Mr. Jeans  thought that there  was a fiscal note  attached to                                                                   
the original legislation,  which was taken out  in a previous                                                                   
committee. Co-Chair  Mulder noted that the department  is not                                                                   
being  asked  to  do  anything  new.  He  questioned  if  the                                                                   
workload  was being  expanded.  Mr. James  observed that  the                                                                   
programs  are  relatively new  and  have been  expanded.  The                                                                   
department  is  attempting  to  ensure that  the  program  is                                                                   
working.  The  program  has  taken a  large  portion  of  the                                                                   
department's time.  Staff is needed  in order to  provide the                                                                   
legislature with information.                                                                                                   
                                                                                                                                
Co-Chair  Mulder  observed  that  the fiscal  note  could  be                                                                   
considered in the conference committee.                                                                                         
                                                                                                                                
Representative  John  Davies  MOVED  to  ADOPT  Amendment  1:                                                                   
delete "or appropriately trained  personnel". Co-Chair Mulder                                                                   
OBJECTED.  Representative  Davies  spoke  in support  of  the                                                                   
amendment. He supported the department's  position that it is                                                                   
appropriate  to have  certification by  a certified  teacher.                                                                   
Co-Chair Mulder  spoke against  the amendment. He  noted that                                                                   
there   are  instances   where  supervision   is  not   by  a                                                                   
certificated teacher. He did not  see the necessity of having                                                                   
a certified teacher if the child is hitting the mark.                                                                           
                                                                                                                                
In  response  to  a  question   by  Representative  Whitaker,                                                                   
Representative  James  explained that  appropriately  trained                                                                   
personnel would be  employed by the governing  body, which is                                                                   
the school.                                                                                                                     
                                                                                                                                
Co-Chair Mulder  pointed out that  grading is  done quarterly                                                                   
by certified  teachers. Representative  Bunde noted  that the                                                                   
day  to day  corrections  would  not have  to  be  made by  a                                                                   
certified teacher  and emphasized  that the quarterly  review                                                                   
by certified teachers would allow mid course corrections.                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Davies                                                                                                                
OPPOSED:  Bunde,    Foster,   Harris,   Hudson,    Lancaster,                                                                   
          Whitaker, Williams, Mulder                                                                                            
                                                                                                                                
Representatives Moses and Croft were absent from the vote.                                                                      
                                                                                                                                
The MOTION FAILED (1-8).                                                                                                        
                                                                                                                                
Representative Foster  MOVED to report CSHB 464  (EDU) out of                                                                   
Committee with  the accompanying fiscal note.  There being NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
CSHB  464 (EDU)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation  and with a previously  published fiscal                                                                   
note: EED #2.                                                                                                                   
HOUSE BILL NO. 489                                                                                                            
                                                                                                                                
     "An Act relating to cruelty to animals."                                                                                   
                                                                                                                                
REPRESENTATIVE  MIKE CHENAULT, SPONSOR,  spoke in  support of                                                                   
the legislation.  He pointed out  that it is well  documented                                                                   
that  animal abuse  is a  precursor to  child abuse.  Studies                                                                   
suggest that if  animal cruelty is identified  and treated as                                                                   
a juvenile problem that a great  deal of adult domestic abuse                                                                   
could be  avoided. The legislation  would allow  a prosecutor                                                                   
to charge a person  with cruelty for each animal  found to be                                                                   
neglected  or abused.  The legislation  encourages courts  to                                                                   
mandate behavioral  counseling and makes it a  duty to report                                                                   
abuse to  an authority, while  holding harmless a  person who                                                                   
in good faith makes the report.                                                                                                 
                                                                                                                                
Representative  Chenault  noted   that  the  legislation  was                                                                   
modified in  previous committees.  He expressed concern  with                                                                   
the Department of Corrections'  indeterminate fiscal note. He                                                                   
pointed  out   that  cruelty   to  animals  would   remain  a                                                                   
misdemeanor  and  did  not  think  that  it  would  cost  the                                                                   
department to implement the policy.                                                                                             
                                                                                                                                
SUE   WRIGHT,  STAFF,   REPRESENTATIVE   CHENAULT,   provided                                                                   
information on the fiscal cost.  She observed that there have                                                                   
been no added  costs that they could determine  to the states                                                                   
that have implemented  similar policies. She  noted that only                                                                   
extreme cases  would trigger the  provision, such as  the one                                                                   
in Sterling,  where a women had  64 dogs, many of  which were                                                                   
frozen to  the ground. In  that case, under the  legislation,                                                                   
she could be  charged with 64 cases of animal  cruelty. Under                                                                   
the current law  she could only be charged with  a maximum of                                                                   
eight counts of animal cruelty.                                                                                                 
                                                                                                                                
Vice-Chair   Bunde  questioned   if  the  legislation   would                                                                   
negatively  impact  Alaskan  kennels  that  operate  under  a                                                                   
reasonable  standard. Representative  Chenault  noted it  was                                                                   
not  the intent  of the  legislation to  interfere with  dog-                                                                   
mushing activities  or farm practices. He explained  that the                                                                   
animal  control   staff  would  make  the   determination  of                                                                   
cruelty.                                                                                                                        
                                                                                                                                
Representative Lancaster  MOVED to report CSHB  489 (JUD) out                                                                   
of Committee with  the accompanying fiscal note.  There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
CSHB  489 (JUD)  was REPORTED  out  of Committee  with a  "do                                                                   
pass"  recommendation  and  with   two  previously  published                                                                   
fiscal notes: COR #1 and LAW #2.                                                                                                
HOUSE BILL NO. 315                                                                                                            
                                                                                                                                
     "An Act requiring a single insurance provider for all                                                                      
     state employees and allowing small employers to join as                                                                    
     a group; and providing for an effective date."                                                                             
                                                                                                                                
JANET  SEITZ, STAFF,  REPRESENTATIVE  ROKEBERG, testified  in                                                                   
support of HB 315,  on behalf of the sponsor.  She noted that                                                                   
the legislation  permits the Department of  Administration to                                                                   
obtain a  policy or policies  of group health  insurances for                                                                   
four entities:                                                                                                                  
                                                                                                                                
     Small businesses - 2 to 5 employees,                                                                                       
                                                                                                                                
     Non-profit  organizations  -  no  floor  or  ceiling  on                                                                   
     employees,                                                                                                                 
                                                                                                                                
     Special  service  organizations  -  which  can  be  sole                                                                   
     proprietors,     including     childcare     facilities,                                                                   
     residential   childcare   facilities,  child   placement                                                                   
     agencies,  foster  home   or  maternity  home,  assisted                                                                   
     living home, community based  center for adult day care,                                                                   
     or home care services                                                                                                      
                                                                                                                                
     Small   associations  for   insurance  -  described   as                                                                   
     Businesses   or  nonprofits   or   both  organized   and                                                                   
     operating in Alaska.                                                                                                       
                                                                                                                                
Ms.  Seitz explained  that the  Division  of Retirements  and                                                                   
Benefits would  survey interested  parties to determine  what                                                                   
benefits and deductibles are wanted  and to arrange premiums.                                                                   
The Division would offer a RFP  that could be a single policy                                                                   
from a  single private  insurance carrier  or a multitude  of                                                                   
policies covering  a "cafeteria  plan". The legislation  does                                                                   
not permit  the entities to  joint the state  employee health                                                                   
insurance  pool.  The state  may  not self-insure  the  pool.                                                                   
Providers would be private.                                                                                                     
                                                                                                                                
Ms. Seitz  discussed the fiscal  note. She observed  that the                                                                   
Alaska Mental Health  Trust Authority would fund  part of the                                                                   
up-front cost.  The Trust  Authority feels  that many  of the                                                                   
non-profit  organizations  that would  profit  from the  bill                                                                   
provide services to mental health  beneficiaries. Other first                                                                   
year funding  would come  from the  General Fund.  Subsequent                                                                   
funding  would come  from  payments of  premiums.  Applicants                                                                   
would be certified by the Department of Administration.                                                                         
                                                                                                                                
Ms. Seitz  noted that a  proposed committee substitute,  work                                                                   
draft  22-LS1177\X, dated  4/25/02, allows  for recapture  of                                                                   
the up-front costs and indicates  that the recapture of costs                                                                   
could be spread over a three-year period.                                                                                       
                                                                                                                                
Vice-Chair   Bunde   MOVED  to   ADOPT   proposed   committee                                                                   
substitute,   work   draft   22-LS1177\X,    dated   4/25/02.                                                                   
Representative  John  Davies  OBJECTED  for  the  purpose  of                                                                   
discussion.  He questioned why  the costs would be recaptured                                                                   
and why a  three-year period was chosen. Ms.  Seitz explained                                                                   
that  discussion occurred  in  the House  Labor and  Commerce                                                                   
Committee concerning  the state  fiscal situation and  use of                                                                   
the General Fund. A recommendation  was made to recapture the                                                                   
funds.  The Alaska  Mental Health  Trust Authority  indicated                                                                   
that they  would also  like to  recapture funds. The  sponsor                                                                   
did  not have  an  objection  to lengthening  the  three-year                                                                   
period. She clarified  that the first year costs  of $132,800                                                                   
dollars would be recaptured.   Representative Davies WITHDREW                                                                   
his OBJECTION.                                                                                                                  
                                                                                                                                
In  response to  a  question  by Representative  Hudson,  Ms.                                                                   
Seitz  explained  that  there  is no  floor  or  ceiling  for                                                                   
employees  of non-profits. The  Department of  Administration                                                                   
would administer  and issue a  RFP for the policy.  A private                                                                   
third party  would administer  the policy with  Department of                                                                   
Administration  oversight. It would  not be a  government run                                                                   
program.  The  relationship  would  be  between  the  private                                                                   
insurance  company or  companies  and the  participates.  The                                                                   
department would issue a new RFP  every five years and review                                                                   
the situation. The state would serve as a collection point.                                                                     
                                                                                                                                
Representative  Davies noted  that he  had received  letters,                                                                   
concerned  with   the  loss  of   groups  with   small  claim                                                                   
histories. Ms.  Seitz did  not think that  there would  be an                                                                   
exodus problem,  because non-profits  are having such  a hard                                                                   
time  getting  and retaining  adequate  insurance  to  retain                                                                   
employees. The  provision would provide a stable  source. The                                                                   
sponsor feels  that the larger  the group the less  the risk.                                                                   
She reiterated  that policies  would be  reviewed every  five                                                                   
years. There  would be no constraint  on who is in  or out of                                                                   
the pool.                                                                                                                       
                                                                                                                                
JANET   PARKER,   DIVISION  OF   RETIREMENT   AND   BENEFITS,                                                                   
DEPARTMENT  OF  ADMINISTRATION,  explained  that  legislation                                                                   
would  allow the  formation  of  group policies  for  private                                                                   
employees. The  Division hopes to develop several  plans that                                                                   
would  meet  the needs  of  groups  that are  having  trouble                                                                   
finding insurance  in the current market. The  Division would                                                                   
begin  by  surveying  persons  eligible for  the  program  to                                                                   
determine  needs.  She  was  not aware  of  any  other  pools                                                                   
consisting of small non-profits.                                                                                                
                                                                                                                                
BOB LOHR, DIRECTOR,  ALASKA DIVISION OF  INSURANCE, testified                                                                   
in support. He  stressed that the bill would  be an important                                                                   
first  step  toward  providing  access  to  health  insurance                                                                   
coverage  for  groups  that  find   it  difficult  to  obtain                                                                   
coverage in the current market.  He acknowledged that adverse                                                                   
selection is always  a concern in the design  of an insurance                                                                   
plan. He noted  that problems could arise if  a plan attracts                                                                   
high-risk  participants and  the healthy  do not enroll.  The                                                                   
design will have to address the issue.                                                                                          
                                                                                                                                
In response to a question by Representative  Hudson, Mr. Lohr                                                                   
stated  that Division  of Insurance does  not have  authority                                                                   
over union  organized  groups that have  decided to  purchase                                                                   
their own coverage. Union Trusts  are preempted under federal                                                                   
legislation.                                                                                                                    
                                                                                                                                
TOM   TURNER,  PRESIDENT,   ALASKA   ASSOCIATION  OF   HEALTH                                                                   
UNDERWRITERS,  ANCHORAGE,  testified  via  teleconference  in                                                                   
opposition to the legislation.  He expressed concern but that                                                                   
the legislation  would have  a negative  impact on  the small                                                                   
group/employer  health  insurance  market  and the  state  of                                                                   
Alaska  employee health  plan. He appreciated  the effort  to                                                                   
bring affordable health insurance  access to small employers,                                                                   
but noted  that other  states with  similar programs  did not                                                                   
reduce  costs over  time, but  that  it did  lead to  adverse                                                                   
selection problems.                                                                                                             
                                                                                                                                
Mr.  Turner  noted  that  employer  groups  in  Alaska  might                                                                   
initially benefit  from the lower rate, but  claimed that the                                                                   
state pool  would eventually  be forced to  react to  the bad                                                                   
claims  experience from  increased  premiums. Elimination  of                                                                   
some administration  costs for small businesses  would be one                                                                   
timesavings.  He  observed that  small  group/small  employer                                                                   
premiums would  still be  subject to  the factors that  drive                                                                   
health  insurance  premiums: provider  costs,  pharmaceutical                                                                   
costs, mandates,  technology,  increased utilization,  and an                                                                   
aging   population,   which   are  not   addressed   by   the                                                                   
legislation.  Other states  have tried  to implement  similar                                                                   
legislation with  limited success.  He referred to  the state                                                                   
of Kentucky's Alliance plan.                                                                                                    
                                                                                                                                
TAPE HFC 02 - 99, Side B                                                                                                      
                                                                                                                                
Mr. Turner expressed concern that  the provision could result                                                                   
in a depletion of options and  significant costs to the state                                                                   
of Alaska.                                                                                                                      
                                                                                                                                
Representative  Hudson questioned  how the legislation  would                                                                   
negatively  impact  the  state's   program,  which  would  be                                                                   
segregated.                                                                                                                     
                                                                                                                                
Mr. Turner acknowledged that he  misunderstood. He maintained                                                                   
that the  legislation would have  an impact on the  number of                                                                   
carriers and the competition of  the carriers in the state of                                                                   
Alaska.                                                                                                                         
                                                                                                                                
Representative  Bunde  pointed out  that  the initial  set-up                                                                   
costs would be recaptured.                                                                                                      
                                                                                                                                
REPRESENTATIVE  SHARON  CISSNA testified  in  support of  the                                                                   
legislation. She  explained that  a work group  on affordable                                                                   
health insurance  led to the legislation. Many  people cannot                                                                   
afford  insurance.  In  some  cases  the  cost  of  insurance                                                                   
exceeded the cost of the insured's  home mortgages. Many were                                                                   
working  for non-profits  or were self-employed,  but  due to                                                                   
preexisting  conditions  were  unable  to  obtain  affordable                                                                   
policies.  She has received  numerous  letters in support  of                                                                   
the concept of  affordable insurance. An Anchorage  survey in                                                                   
December  2000,   demonstrated  that  people  are   going  to                                                                   
hospital emergency rooms because  they cannot afford to go to                                                                   
doctors. Many Alaskans cannot find insurance carriers.                                                                          
                                                                                                                                
Representative  John  Davies  MOVED  to  ADOPT  Amendment  1:                                                                   
change  "3" to  "5".  There being  NO  OBJECTION,  it was  so                                                                   
ordered.                                                                                                                        
                                                                                                                                
Representative John Davies MOVED to report CSHB 315 (FIN)                                                                       
out of Committee with the accompanying fiscal note. There                                                                       
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
CSSSHB 315 (FIN) was REPORTED out of Committee with a "do                                                                       
pass" recommendation and with a fiscal impact note by the                                                                       
Department of Administration.                                                                                                   
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 5:44 PM                                                                                            

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