Legislature(2003 - 2004)

04/23/2003 01:36 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 23, 2003                                                                                           
                          1:36 PM                                                                                               
                                                                                                                                
TAPE HFC 03 - 61, Side A                                                                                                        
TAPE HFC 03 - 61, Side B                                                                                                        
TAPE HFC 03 - 62, Side A                                                                                                        
TAPE HFC 03 - 62, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:36 PM.                                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Carl Moses                                                                                                       
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Reggie Joule                                                                                                     
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Cheryll Heinze;  Representative Lesil McGuire;                                                                   
David Brewster,  Staff, Representative  Mike Hawker;  John A.                                                                   
Barnes, Alaska  Business Unit Manager, Marathon  Oil Company;                                                                   
Chuck  Logsdon,  Chief  Petroleum  Economist,  Department  of                                                                   
Revenue;  Mark Meyers,  Director,  Division of  Oil and  Gas,                                                                   
Department of Natural Resources;  Jill Geering, O.D., Juneau;                                                                   
David  Katzeek,  ANB,  Juneau;  Eddy  Jeans,  Manger,  School                                                                   
Finance and  Facilities Section, Department of  Education and                                                                   
Early Development.                                                                                                              
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Sarah Fisher-Goad,  Alaska Industrial Development  and Export                                                                   
Authority;  Valerie Walker, Deputy-Director,  Finance, Alaska                                                                   
Industrial   Development    and   Export    Authority;   Erik                                                                   
Christianson,  O.D.,   Ketchikan;  Bob  Palmer,   Academy  of                                                                   
Ophthalmology,   D.C.;  Carl   Buznego,   M.D.,  Academy   of                                                                   
Ophthalmology, Florida;  Cheryl Lentfer, O.D.  Anchorage; Dr.                                                                   
Carl  Rosen, M.D.;  Gary Jackson,  Patient; Douglas  Griffin,                                                                   
Director,  Alcoholic  Beverage   Control  Board;  Bob  Klein,                                                                   
Alcoholic  Beverage  Control Board;  Mike  Gordon,  Alcoholic                                                                   
Beverage   Control  Board;   Matt   Larry  Jones,   Executive                                                                   
Director,  Parole Board, Department  of Corrections,  Moose's                                                                   
Tooth, Anchorage.                                                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 61     "An   Act    establishing   an    exploration   and                                                                   
          development   incentive  tax  credit   for  persons                                                                   
          engaged in  the exploration for and  development of                                                                   
          less  than 150 barrels  of oil or  of gas  for sale                                                                   
          and  delivery without  reference to  volume from  a                                                                   
          lease or  property in the state; and  providing for                                                                   
          an effective date."                                                                                                   
                                                                                                                                
          HB   61   was   HEARD    and   HELD   for   further                                                                   
          consideration.                                                                                                        
                                                                                                                                
HB 142    "An  Act relating  to  provider responsibility  for                                                                   
          ocular  postoperative  care; and  providing for  an                                                                   
          effective date."                                                                                                      
                                                                                                                                
          HB 142 was heard and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 165    "An   Act  relating   to  community  schools;   and                                                                   
          providing for an effective date."                                                                                     
                                                                                                                                
          CSHB 165  (HES) was REPORTED out of  Committee with                                                                   
          "no  recommendation"  and a  new  zero fiscal  note                                                                   
          from   the  Department   of  Education  and   Early                                                                   
          Development.                                                                                                          
                                                                                                                                
HB 203    "An  Act  relating   to  the  definitions  of  'net                                                                   
          income' and 'unrestricted  net income' for purposes                                                                   
          of  calculating the  dividends  to be  paid to  the                                                                   
          state  by  the Alaska  Industrial  Development  and                                                                   
          Export  Authority; and  providing for an  effective                                                                   
          date."                                                                                                                
                                                                                                                                
          HB  203 was REPORTED  out of  Committee with  a "do                                                                   
          pass" recommendation  and one previously  published                                                                   
          zero fiscal  note from the Department  of Community                                                                   
          and Economic Development.                                                                                             
                                                                                                                                
HB 234    "An  Act relating to  brewpubs, and continuing  the                                                                   
          existence of the Alcoholic  Beverage Control Board;                                                                   
          and providing for an effective date."                                                                                 
                                                                                                                                
          CSHB 234  (FIN) was REPORTED out of  Committee with                                                                   
          individual recommendations,  a previously published                                                                   
          zero  fiscal note  from the  Department of  Revenue                                                                   
          (#1)  and  a  new  fiscal   impact  note  from  the                                                                   
          Department of Public Safety.                                                                                          
                                                                                                                                
                                                                                                                                
HOUSE BILL NO. 203                                                                                                            
                                                                                                                                
     "An Act relating to the definitions  of 'net income' and                                                                   
     'unrestricted  net income'  for purposes of  calculating                                                                   
     the  dividends to  be paid  to the state  by the  Alaska                                                                   
     Industrial   Development  and   Export  Authority;   and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
Representative Hawker MOVED to  report HB203 out of Committee                                                                   
with individual  recommendations and the  accompanying fiscal                                                                   
note.                                                                                                                           
                                                                                                                                
There being NO OBJECTION it was so ordered.                                                                                     
                                                                                                                                
HB  203  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation and one previously  published zero fiscal note                                                                   
from the Department of Community and Economic Development.                                                                      
                                                                                                                                
HOUSE BILL NO. 61                                                                                                             
                                                                                                                                
     "An  Act  establishing an  exploration  and  development                                                                   
     incentive  tax   credit  for  persons  engaged   in  the                                                                   
     exploration  for  and  development   of  less  than  150                                                                   
     barrels of oil  or of gas for sale and  delivery without                                                                   
     reference  to volume  from a  lease or  property in  the                                                                   
     state; and providing for an effective date."                                                                               
                                                                                                                                
Representative Chenault MOVED  to ADOPT Committee Substitute,                                                                   
Work Draft 23-LS0270\Q  (4/15).  There being  NO OBJECTION it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
REPRESENTATIVE MIKE  CHENAULT, SPONSOR, provided  information                                                                   
about the bill.   He read from a shortened  Sponsor Statement                                                                   
as follows:                                                                                                                     
                                                                                                                                
        HR 61 creates  a new income  tax credit to  encourage                                                                   
        increased exploration and development  of natural gas                                                                   
        reserves south  of the  Brook Range.  To qualify  for                                                                   
        the credit,  operators  must successfully  drill  and                                                                   
        develop reserves  that produce  natural gas for  sale                                                                   
        and delivery.  This  is  a successful  efforts  bill,                                                                   
        which means  that no  credits will  be given for  dry                                                                   
        holes or for exploration that is not developed.                                                                         
                                                                                                                                
        Currently, the  Cook Inlet  continues  to have  great                                                                   
        potential  for  additional  natural  gas  development                                                                   
        Other Alaska basins  outside of the North  Slope have                                                                   
        similar  potential.   However,  the  combination   of                                                                   
        exploration   risk,  high   development   costs   and                                                                   
        historic  low  natural  gas  prices   has  created  a                                                                   
        disincentive to  drill for new  reserves as  compared                                                                   
        to other areas  of the world.  By providing  a credit                                                                   
        for successful efforts,  more exploration  will occur                                                                   
        in  Southern  Alaska  leading  to   much  needed  new                                                                   
        natural  gas   reserves.   This  will   benefit   all                                                                   
        residents and  businesses at  no direct  cost to  the                                                                   
        state.                                                                                                                  
                                                                                                                                
        In addition  to  the benefit  of  developing new  gas                                                                   
        reserves, increased  Cook  Inlet drilling  will  also                                                                   
        aid  the  general   economic  status  on   the  Kenai                                                                   
        Peninsula and in Anchorage as well  as other areas of                                                                   
        Alaska.  Moreover,   increased   tax   revenue   from                                                                   
        additional  hydrocarbon  production  will  more  than                                                                   
        offset any fiscal impact from the proposed credit.                                                                      
                                                                                                                                
                                                                                                                                
JOHN A. BARNES, ALASKA BUSINESS UNIT MANAGER, MARATHON OIL                                                                      
Discussed slides from a power point presentation as follows:                                                                    
                                                                                                                                
     HB 61 - What does it Do?                                                                                                 
                                                                                                                                
     •Draws more E&P Investments to Alaska                                                                                      
     •Creates income tax credit  to encourage exploration and                                                                   
     development of gas reserves south of Brooks Range                                                                          
     •Primary focus  is on Cook  Inlet, but applies  to other                                                                   
     Alaska basins                                                                                                              
     •Focus is on natural gas.                                                                                                  
     •Levels   the   playing   field  somewhat   with   other                                                                   
     exploration opportunities around the world.                                                                                
                                                                                                                                
     HB 61 - How Does it Work?                                                                                                
                                                                                                                                
     •Applies to 10% of Qualified Capital Investment                                                                            
     •Applies to 10% of Qualified Expense                                                                                       
     •May offset no more than  50% of corporate income tax in                                                                   
     any one year (up to five additional years)                                                                                 
     •Only applies to successful efforts.                                                                                       
     •Incentive can be factored into project economics.                                                                         
                                                                                                                                
     HB 61 - Why is it needed?                                                                                                
                                                                                                                                
     •Currently there is not enough Alaska E&P Activity                                                                         
     •Natural Gas  Reserves have  been and are  continuing to                                                                   
     decline in the Cook Inlet.                                                                                                 
     -Current  Cook Inlet  proven  natural  gas reserves  are                                                                   
     estimated at 2 TCF                                                                                                         
     •(Based on DNR DOG 2002 report, less 2002 production)                                                                      
     •Despite  recent  increase  in  Cook  Inlet  exploration                                                                   
     activity, reserves  are not being replaced  on an annual                                                                   
     basis                                                                                                                      
     •Cook  Inlet  deliverability   has  declined  over  last                                                                   
     several years.                                                                                                             
                                                                                                                                
Mr. Barnes referred to a graph illustrating the relationship                                                                    
between Cook Inlet supply and demand (copy on file).                                                                            
                                                                                                                                
     •Supply and demand rationalization is occurring.                                                                           
     -Not enough gas to feed low price consumer.                                                                                
     -Gas price increasing                                                                                                      
     •Enstar average gas cost (WACOG) $2.55/mcf                                                                                 
     •Most recent  Enstar contract  gas price $2.75  to Henry                                                                   
     Hub                                                                                                                        
     •Henry Hub recently over $9.00/mcf                                                                                         
                                                                                                                                
     Cook Inlet Reserves & Resources                                                                                          
                                                                                                                                
     •Current proven reserves - 2000 BCF                                                                                        
     -Approximately  10  year  production life,  assuming  no                                                                   
     decline.                                                                                                                   
     •Potential Gas Committee Resource Estimates                                                                                
     -Probable Reserves - 1050 BCF                                                                                              
     -Possible Reserves - 2100 BCF                                                                                              
                                                                                                                                
     Impacts to the State of Alaska                                                                                           
                                                                                                                                
     •Stimulates  Cook  Inlet,  and potentially  other  basin                                                                   
     exploration.                                                                                                               
     •Aids   in   maintaining   Cook  Inlet   200+   BCF/year                                                                   
     production.                                                                                                                
                        th                                                                                                      
     -Equivalent to a 13 month of North Slope Production.                                                                       
     •Provides  gas for  Cook  Inlet utilities,  industrials,                                                                   
     jobs, royalties, taxes.                                                                                                    
                                                                                                                                
     Fiscal Impact to the state of Alaska                                                                                     
                                                                                                                                
     •Incentive will be clearly  positive to State of Alaska,                                                                   
     factors are...                                                                                                             
     -How many developments will be incentivized?                                                                               
     -How much gas will be discovered?                                                                                          
     -What will be the gas sales price (royalty value)?                                                                         
     -How   much   will   be  spent   for   exploration   and                                                                   
     development?                                                                                                               
     -Successful  efforts  driven  - no  incentives  for  dry                                                                   
     holes                                                                                                                      
     •Conceptual  Estimate of Impact, assumptions:                                                                              
     -Varied field size from 0 to 500 BCF                                                                                       
     -Development Cost $0.50/mcf                                                                                                
     -Royalty - 12.5%                                                                                                           
     -Severance Tax - 7.5%                                                                                                      
     -Ad valorem - 2.7%                                                                                                         
     -Gas sales price - $2.50/mcf                                                                                               
                                                                                                                                
Mr. Barnes  referred to a  table on  page 13 (copy  on file),                                                                   
which illustrates the relationship  between field size (BCF),                                                                   
tax  credit, gross  revenue,  royalties,  and severance  tax.                                                                   
The table gives total tax per field size.                                                                                       
                                                                                                                                
     Conclusions                                                                                                                
                                                                                                                                
     •Based on conceptual model, State of Alaska receives                                                                       
     from $3 to $10 additional revenue for each $1 of tax                                                                       
     credit.                                                                                                                    
     •Credit is needed now!                                                                                                     
     -Not enough exploration in Cook Inlet to meet demand.                                                                      
     -Other areas of state need exploration and development.                                                                    
     -New discoveries will take a minimum of 3 years to                                                                         
     bring to first gas                                                                                                         
     -                                                                                                                          
     Success Measures                                                                                                         
                                                                                                                                
     •Increased Lease Activity                                                                                                  
     •Increased Drilling Rig Activity                                                                                           
     •Increased Construction Activity                                                                                           
     •Increased Production and Deliverability                                                                                   
     •Credits Applied to Income Tax                                                                                             
     -For every dollar of credit approximately ten dollars                                                                    
     were spent successfully developing new reserves, and                                                                       
     ultimately paying new taxes!                                                                                               
                                                                                                                                
Representative Croft  referred to the sponsor  statement that                                                                   
noted "historic  low natural gas  prices".  He  then compared                                                                   
this with page 8 of the presentation,  which noted "gas price                                                                   
increases".   He  asked why  the increased  prices would  not                                                                   
create a natural incentive for exploration.                                                                                     
                                                                                                                                
Mr. Barnes  acknowledged that  price increases provided  some                                                                   
incentive.  He  noted that exploration was a  risky business,                                                                   
and offered  no guarantees of  success.  He pointed  out that                                                                   
the  time  lag between  price  shifts  and discovery  of  new                                                                   
supplies could cause potential  damage to local industry.  He                                                                   
drew  the  analogy   that  stores  run  sales   to  encourage                                                                   
activity.                                                                                                                       
                                                                                                                                
Representative  Croft acknowledged  the potential benefit  of                                                                   
the bill if it created activity  that would not occur without                                                                   
it.  He observed  that it was difficult to  determine whether                                                                   
the  company would  have  increased exploration  without  the                                                                   
incentive,  but conceded  that  if only  one out  of ten  new                                                                   
reserves  were developed  due to  the bill,  the state  would                                                                   
"break even".                                                                                                                   
                                                                                                                                
Representative Stoltze  asked if a "double dip"  was possible                                                                   
if a  company took  a reduction  for royalties  and also  for                                                                   
Agrium [Company].                                                                                                               
                                                                                                                                
Representative  Chenault  maintained that  the  bill did  not                                                                   
allow for multiple incentives.                                                                                                  
                                                                                                                                
Representative  Croft asked for  clarification, and  observed                                                                   
that a  producer might qualify  for the tax credit,  and then                                                                   
not have  to pay the royalty  that they would have  passed on                                                                   
to Agrium.                                                                                                                      
                                                                                                                                
Representative  Whitaker  suggested  that any  double  credit                                                                   
would be very minimal.                                                                                                          
                                                                                                                                
Co-Chair Harris referred  to sub section (g)  "A taxpayer who                                                                   
obtains  a credit  under this  section  may not  claim a  tax                                                                   
credit or royalty  modification provided for  under any other                                                                   
title."  He observed  that the  bill  pertained to  corporate                                                                   
income tax,  no more than 50 percent  of the tax owed  to the                                                                   
State in  any year,  and that  to qualify  a project  must be                                                                   
producing gas or oil for the state  of Alaska.  He speculated                                                                   
that the potential  risk for the State might be  a portion of                                                                   
corporate  income tax,  but that  this would  be offset  by a                                                                   
greater amount of royalties and  severance.  He asked whether                                                                   
the risk was minimal compared to the potential gain.                                                                            
                                                                                                                                
Mr.  Barnes  concluded  that   successful  exploration  would                                                                   
reward  the  producer  with corporate  tax  credit,  and  the                                                                   
higher  production   level  would   reward  with   additional                                                                   
revenue.                                                                                                                        
                                                                                                                                
Co-Chair Harris  noted that the  bill provided  incentive for                                                                   
producers to invest into Alaska  as opposed to other areas or                                                                   
countries.                                                                                                                      
                                                                                                                                
Representative  Hawker  referred  to the  successful  efforts                                                                   
restriction  in  the  bill and  asked  whether  the  proposed                                                                   
investment tax  credit would apply to expenditures  that were                                                                   
for an existing reserve, rather than a new reserve.                                                                             
                                                                                                                                
Mr.  Barnes  commented   that  the  intent  was   to  qualify                                                                   
expenditures  for bringing to  production new reservoirs.  He                                                                   
defined those new  reservoirs as those in which  no sales had                                                                   
previously occurred, whether a new or existing reserve.                                                                         
                                                                                                                                
In  response to  a  question  by Representative  Hawker,  Mr.                                                                   
Barnes  confirmed that  if  a producer  found  product in  an                                                                   
existing well, those development  expenditures would qualify.                                                                   
                                                                                                                                
Representative    Hawker   referred    to   the    qualifying                                                                   
expenditures language.   He asked if the bill  accommodated a                                                                   
situation when  money was expended  in a particular  year and                                                                   
the reserve  produced after  the end  of that  tax year.   He                                                                   
suggested  that  an accounting  problem  might  exist in  the                                                                   
language.                                                                                                                       
                                                                                                                                
Mr. Barnes  observed that  this accounting  question  had not                                                                   
been  previously  addressed.   He  assumed  that, in  such  a                                                                   
progressive project, expenditures  were held in aggregate and                                                                   
accounted for when product was sold.                                                                                            
                                                                                                                                
Representative  Hawker referred  to page  2, line 7,  stating                                                                   
that qualifying  expenditures must be "made  for assets first                                                                   
placed in service  in the state during the tax  year in which                                                                   
the  credit is  claimed".   He  speculated that  if a  credit                                                                   
could not  be claimed  until a reserve  was proven,  it would                                                                   
exclude  any expenditures  made  in the  exploration  process                                                                   
prior to the year in which the reserve was proven.                                                                              
                                                                                                                                
In response  to a  question by  Representative Whitaker,  Mr.                                                                   
Barnes reiterated  that the credit would apply  to production                                                                   
from either an  existing well or a new reserve  that produced                                                                   
new gas sales.                                                                                                                  
                                                                                                                                
Representative  Whitaker  referred to  page  2,  line 7,  and                                                                   
asked  if  Mr.   Barnes  was  satisfied  with   the  existing                                                                   
language.                                                                                                                       
                                                                                                                                
CHUCK  LOGSDON,  CHIEF  PETROLEUM  ECONOMIST,  DEPARTMENT  OF                                                                   
REVENUE testified  via teleconference.   He  was not  able to                                                                   
comment  on the  language.   He  stated that  he assumed  the                                                                   
credit could be  taken after an asset was placed  in service,                                                                   
but noted that this may not be the correct interpretation.                                                                      
                                                                                                                                
MARK MEYERS,  DIRECTOR, DIVISION  OF OIL AND GAS,  DEPARTMENT                                                                   
OF   NATURAL   RESOURCES   concurred   with   Mr.   Logsdon's                                                                   
interpretation of the credits being transportable.                                                                              
                                                                                                                                
Representative   Croft  noted  that   the  language   made  a                                                                   
distinction   between  qualified   capital  investments   and                                                                   
qualified  services.   He maintained  that qualified  capital                                                                   
investment could be carried over,  whereas qualified services                                                                   
(such  as  labor)  were  in  question.     He  noted  that  a                                                                   
distinction  was   made  between  expenditures   for  capital                                                                   
investment,  and for the  services that  could apply  only to                                                                   
the specific tax year.                                                                                                          
                                                                                                                                
HB 61 was HEARD and HELD for further consideration.                                                                             
HOUSE BILL NO. 165                                                                                                            
                                                                                                                                
     "An Act relating to community schools; and providing                                                                       
     for an effective date."                                                                                                    
                                                                                                                                
Co-Chair Williams  stated that public testimony  on this bill                                                                   
had concluded  at its  previous hearing.   He noted  that the                                                                   
bill would  repeal the Community  Schools grant  program, and                                                                   
observed that currently 80 percent  of schools in the program                                                                   
received grants of  roughly $5 thousand annually.   He stated                                                                   
that the  Administration viewed  the grant program  as having                                                                   
been intended  only to provide support to  initiate community                                                                   
schools  programs,  and  that  this  goal  had  already  been                                                                   
achieved.                                                                                                                       
                                                                                                                                
EDDY JEANS,  MANAGER, SCHOOL FINANCE AND  FACILITIES SECTION,                                                                   
DEPARTMENT  OF  EDUCATION  AND   EARLY  DEVELOPMENT  provided                                                                   
clarification on the bill.  He  responded to questions raised                                                                   
in previous testimony  about the spreadsheet  prepared by the                                                                   
Department  of Education  and  Early Development  ("Community                                                                   
Schools Expenditures  and Grants, Prepared 3/12/03",  copy on                                                                   
file).                                                                                                                          
                                                                                                                                
Mr.   Jeans  noted   that  the   spreadsheet  had   reflected                                                                   
expenditures   for  community  services.     He   provided  a                                                                   
departmental  regulation  definition of  community  services:                                                                   
activities  provided  by  the  school  or  district  for  the                                                                   
purpose  of relating  to the community  as  a whole, or  some                                                                   
segment of the  community, not directly related  to providing                                                                   
education   for  students.   He  listed   examples  such   as                                                                   
recreation, public libraries,  civic activities, public radio                                                                   
programs,  community  welfare  activities  and  childcare  in                                                                   
residential  day schools.   He quoted  the Community  Schools                                                                   
statute,  under  purpose  and   intent:    Community  Schools                                                                   
promotes more efficient use of  school facilities through the                                                                   
extension  of  buildings  and  equipment  beyond  the  normal                                                                   
schools  day. He  explained  that the  Department  aggregated                                                                   
expenditures  for  activities   that  occurred  "outside  the                                                                   
normal  school   day"  in  preparing   the  figures   in  the                                                                   
spreadsheet.   He pointed out  that there is a  separate fund                                                                   
called  "community  schools",  where  districts  deposit  the                                                                   
grant  and  matching  funds  for   the  specific  purpose  of                                                                   
Community  Schools programs.   The  spreadsheet had  included                                                                   
expenditures  for all  community  services and  not just  for                                                                   
community schools.                                                                                                              
                                                                                                                                
Representative  Croft asked  if  the total  of $500  thousand                                                                   
reflected all  community services or just  community schools.                                                                   
Mr. Jeans  confirmed that this  amount represented  the total                                                                   
grants  provided to  schools.   He  noted  that the  previous                                                                   
column (Community  Schools FY02  Expenditures) reflected  all                                                                   
community  services,  and not  just  functions  of the  grant                                                                   
program.                                                                                                                        
                                                                                                                                
Co-Chair Harris observed that  the areas most affected by the                                                                   
legislation  were  rural areas.    Mr. Jeans  clarified  that                                                                   
these areas reflected 100 percent  funding of programs by the                                                                   
grant  funds.     He  maintained  that  these   schools  were                                                                   
accounting  for some of  their operating  costs elsewhere  in                                                                   
their budgets.                                                                                                                  
                                                                                                                                
Co-Chair Harris noted that in  rural communities, the schools                                                                   
were the center of community activity,  whereas larger cities                                                                   
had other  options  for activities.   He asked  if any  means                                                                   
existed  to lessen  the effect  on rural  communities of  the                                                                   
resulting decrease in availability of facilities.                                                                               
                                                                                                                                
Mr. Jeans speculated  that the facilities would  remain open.                                                                   
He submitted that  a grant of $1,500 would not  keep a school                                                                   
open  for a  significant  period.   He  suggested that  other                                                                   
resources were already being used to support activities.                                                                        
                                                                                                                                
Co-Chair Harris asked  that the fiscal note  which reflects a                                                                   
savings of $500 thousand be zero  since it was already zeroed                                                                   
out of the budget.                                                                                                              
                                                                                                                                
Mr.  Jeans   stated  that   the  Department  had   previously                                                                   
acknowledged that  the program was zeroed out  in the budget,                                                                   
but agreed to prepare a new fiscal note.                                                                                        
                                                                                                                                
Representative Hawker observed  that the State recognizes and                                                                   
encourages  the continuation of  community schools  programs.                                                                   
He pointed  out, however, that  by repealing sections  of the                                                                   
statute  it takes  away  the State's  authority  to fund  the                                                                   
program in  the future, even  though the funding  had already                                                                   
been taken out of the State's budget for FY 04.                                                                                 
                                                                                                                                
Mr. Jeans acknowledged  concern that the bill  would diminish                                                                   
districts'  ability  to  continue   their  community  schools                                                                   
programs.   He maintained  that districts  would continue  to                                                                   
offer community schools programs.   He acknowledged that user                                                                   
fees might be slightly increased to accommodate grant cuts.                                                                     
                                                                                                                                
Co-Chair Harris MOVED  to report HB165 out of  Committee with                                                                   
individual recommendations  and the accompanying  zero fiscal                                                                   
note.  Representative Croft OBJECTED.                                                                                           
                                                                                                                                
Representative  Hawker also OBJECTED.   He acknowledged  that                                                                   
the funding was already zeroed  out, but stated that he would                                                                   
be more comfortable  supporting communities who  rely on this                                                                   
program by retaining  the option to consider  possible future                                                                   
funding.  He would like to see the statute maintained.                                                                          
                                                                                                                                
Representative  Croft pointed out  that there was  no funding                                                                   
saved  by  passing  the  legislation,  since  the  action  of                                                                   
eliminating funding  had already been taken  in the operating                                                                   
budget.  He took exception to  the sponsor statement that the                                                                   
statute was intended  merely to start the program  and not to                                                                   
maintain  it.    He noted  programs  like  the  school  lunch                                                                   
program, which  would be damaged if funding  diminished after                                                                   
the program had  been established.  He also  gave examples of                                                                   
reading  and tutorial  programs in  Anchorage and  maintained                                                                   
that  the small  amount of  [community  schools] funding  was                                                                   
doing  a great  deal  of good.   He  noted  that the  statute                                                                   
reflected   support  of   the  program,   and  that   it  was                                                                   
appropriate for the legislature  to provide a small amount of                                                                   
financial incentive for these valuable programs.                                                                                
                                                                                                                                
TAPE HFC 03 - 61, Side B                                                                                                        
                                                                                                                                
Representative  Whitaker questioned  the  purpose of  passing                                                                   
the  legislation, since  funding had  already been  cut.   He                                                                   
maintained that the action would serve no purpose.                                                                              
                                                                                                                                
Co-Chair Williams  concurred with the Administration  that to                                                                   
repeal  the  legislation  was   a  housekeeping  measure.  He                                                                   
suggested   that  future  legislatures   could  enact   other                                                                   
legislation  if the  ability and  need to  fund the  programs                                                                   
arose.                                                                                                                          
                                                                                                                                
Vice-Chair  Meyer  asked  for   further  explanation  of  the                                                                   
Administration's support of the bill.                                                                                           
                                                                                                                                
Mr. Jeans  relayed the funding  history of the bill,  and the                                                                   
statutory  entitlement  of  the   program.    He  noted  full                                                                   
funding-  of  the program  would  entail  $3.2 million.    He                                                                   
stated  that  the  program  had been  funded  at  under  $800                                                                   
thousand  since 1988.   He observed  that the  intent of  the                                                                   
statute  was to implement  programs that  would later  become                                                                   
self-sufficient.    He  submitted   that  the  Administration                                                                   
ceased to provide  operational funding to the  program in the                                                                   
mid  1980's.   Funding levels  had  been prorated  down to  a                                                                   
level  as  low as  $1,500.    He suggested  that  unless  the                                                                   
legislature   was   willing   to  fund   the   program,   the                                                                   
Administration felt  it was time to take the  statute off the                                                                   
books.                                                                                                                          
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:      Meyer, Moses, Whitaker, Chenault, Foster,                                                                        
               Williams, Harris                                                                                                 
OPPOSED:       Stoltze, Croft, Hawker                                                                                           
                                                                                                                                
The MOTION PASSED 7-3.                                                                                                          
                                                                                                                                
CSHB  165  (HES)  was REPORTED  out  of  Committee  with  "no                                                                   
recommendation"  and   a  new  zero  fiscal   note  from  the                                                                   
Department of Education and Early Development.                                                                                  
                                                                                                                                
HOUSE BILL NO. 142                                                                                                            
                                                                                                                                
     "An Act relating to provider responsibility for ocular                                                                     
     postoperative care; and providing for an effective                                                                         
     date."                                                                                                                     
                                                                                                                                
REPRESENTATIVE CHERYLL  HEINZE, SPONSOR provided  information                                                                   
about the bill.   She explained that the  legislation focused                                                                   
on patient care, and noted that  a number of her constituents                                                                   
were  of an  age when  their eyesight  was deteriorating  and                                                                   
they were  in need of surgical  procedures.  She  stated that                                                                   
the  bill   ensures  post-operative  care   following  ocular                                                                   
surgery.   She  maintained that  care  by an  ophthalmologist                                                                   
following  surgery  was  imperative for  good  patient  care.                                                                   
Today's  technology makes  surgical procedures  appear  to be                                                                   
routine.    She  maintained  that  although  most  often  the                                                                   
surgeries are successful, serious  complications might occur.                                                                   
HB 142 provides  appropriate ocular postoperative  care by an                                                                   
appropriate  professional.   She noted  that the  legislation                                                                   
required the surgeon to be physically  available to a patient                                                                   
in  the community  where  the surgery  is  performed for  120                                                                   
hours following surgery.  She  added that, after that period,                                                                   
the  surgeon may  delegate  post  operative care  to  another                                                                   
person  that the surgeon  determines qualified  to treat  the                                                                   
patient.                                                                                                                        
                                                                                                                                
Representative   Heinze  noted   the   changes  proposed   by                                                                   
Amendment #1, which  reduces the number of hours  from 120 to                                                                   
72 hours, or three days.                                                                                                        
                                                                                                                                
ERIK    CHRISTIANSON,    OD,   KETCHIKAN,    testified    via                                                                   
teleconference in  opposition to the bill.  He  noted that in                                                                   
Ketchikan, the  population was not  large enough to  employ a                                                                   
full time ophthalmologist.   He read from  prepared testimony                                                                   
as follows:                                                                                                                     
                                                                                                                                
       HB142  is  a  good  example   of  poorly  thought  out                                                                   
       legislation.   I  am  opposed to  the  spirit of  this                                                                   
       bill. By that  I mean that entire premise  on which it                                                                   
       is  founded  is  wrong.  The  premise  is  that  post-                                                                   
       operative  care  after eye  surgery  or  co-management                                                                   
       needs  to  be  regulated.  Co-management  of  surgical                                                                   
       patients  by optometrists is  already regulated  under                                                                   
       federal law. No  other state has this type  of law. If                                                                   
       you    are     regulating    co-management     between                                                                   
       ophthalmologists and  optometrists then why  not other                                                                   
       types of surgical  specialties arid the  local doctors                                                                   
       who will  follow their patients.  This is not  the job                                                                   
       of the legislature!!!                                                                                                    
                                                                                                                                
       It questions  the clinical competence  of optometrists                                                                   
       to   co-manage  patients.   Optometrists   have   been                                                                   
       performing  this to  a  high level  for  more than  20                                                                   
       years. I have been a member of  the Board of Optometry                                                                   
       for 5+ years and  we have never had a  case brought us                                                                   
       where an optometrist caused a patient harm.                                                                              
                                                                                                                                
       It  is  an  attempt  to  legislate  clinical  decision                                                                   
       making  on  the  part of  ophthalmic  surgeons.  If  a                                                                   
       surgeon  is  performing  "bad  surgery"  federal  law,                                                                   
       malpractice,  referring  providers, and  the  PATIENTS                                                                   
       themselves will cause this surgeon to stop.                                                                              
                                                                                                                                
       It  is bad  for rural  Alaska  in that  it limits  the                                                                   
       potential   choices  available   to  these   patients.                                                                   
       Currently   certain   eye  surgical   procedures   are                                                                   
       performed at Ketchikan General  Hospital (KGH) and the                                                                   
       ophthalmologists  who perform them  would have  a hard                                                                   
       time managing  the 5-day time  limit. I do  not manage                                                                   
       with these doctors except when  their patients develop                                                                   
       problems  after they  leave. In  the 13  years I  have                                                                   
       been  in Ketchikan  I  have  had to  only  help out  a                                                                   
       handful of  times. FIB  142 would not  allow me  as an                                                                   
       optometrist to  help out within  the critical  first 5                                                                   
       days. Even though only 35  surgeries per year are done                                                                   
       at KGH it  offers a choice for those  persons who have                                                                   
       difficulty  traveling  or  are cover  by  Medicaid  or                                                                   
       Medicare and cannot afford travel.                                                                                       
                                                                                                                                
       Optometrists live where the patient  lives. We are the                                                                   
       eye care experts in rural Alaska  limiting our ability                                                                   
       to care  for our  patients is  bad for these  patients                                                                   
       and the communities we serve.                                                                                            
                                                                                                                                
       HB 142 is an attempt to limit patient access to care                                                                     
       it is obviously special interest legislation, and is                                                                     
       both anti-consumer and anti-patient.                                                                                     
                                                                                                                                
Representative  Croft   asked  about  the   typical  surgical                                                                   
schedule.  Mr. Christianson stated  that surgeons who came to                                                                   
Ketchikan,   typically  from   Juneau,  generally   performed                                                                   
procedures  on   Mondays  and   stayed  in  Ketchikan   until                                                                   
Thursday, whereas  a surgeon from  Anchorage might  leave the                                                                   
day after  a procedure  was performed.   He noted  that there                                                                   
was   a   local  optometrist   who   specialized   in   early                                                                   
postoperative  care  for  patients  of ocular  surgery.    He                                                                   
responded  to sentiments by  Anchorage ophthalmologists  that                                                                   
don't  want  to deal  with  patients  treated by  an  outside                                                                   
surgeon.     He   noted   that  the   follow-up   optometrist                                                                   
specializes in the area of postoperative care.                                                                                  
                                                                                                                                
Representative  Croft  asked  if  a  three-day  vs.  five-day                                                                   
period made a  difference.  Mr. Christianson  maintained that                                                                   
the  crux of  the problem  was  that the  legislation in  the                                                                   
guise of  being helpful  affected an  entire profession.   He                                                                   
noted  that  different  surgeries  had  various  complication                                                                   
rates and  recovery times, depending  on the surgeon  and the                                                                   
procedure.                                                                                                                      
                                                                                                                                
Representative  Stoltze noted  that  in his  community of  35                                                                   
thousand, there was no practicing  ophthalmologist.  He asked                                                                   
about  the demographics  of practitioners  per  capita.   Mr.                                                                   
Christianson noted that generally  a population of 8 thousand                                                                   
could  sustain  an optometrist,  whereas  an  ophthalmologist                                                                   
with  a   more  extensive   education  background   generally                                                                   
required a  community of at least  100 thousand to  sustain a                                                                   
practice.                                                                                                                       
                                                                                                                                
Co-Chair   Harris  cited  an   oracular  surgical   procedure                                                                   
performed on  a family  member by an  outside physician.   He                                                                   
noted that the initial post-operative  care was completed the                                                                   
same  day by  the  surgeon, with  subsequent  care being  the                                                                   
responsibility  of the patient  and the clinic  that provided                                                                   
facilities for  the surgeon. He  asked if this was  a typical                                                                   
schedule.                                                                                                                       
                                                                                                                                
Mr.  Christianson   confirmed  that   this  was   a  standard                                                                   
procedure.    He  added  that   occasionally  patients  would                                                                   
sometimes choose to have a procedure  performed elsewhere due                                                                   
to  lower costs.    He noted  that  this kind  of  procedures                                                                   
worked  if  Dr. Christianson  retained  control  over  making                                                                   
referrals and was  able to do continuous follow-up.  He noted                                                                   
that certain complications  would require a  further visit to                                                                   
the surgeon,  but stated that  these complications  were rare                                                                   
if a patient went to a quality surgeon.                                                                                         
                                                                                                                                
Co-Chair Harris asked how the  bill, with the change from 120                                                                   
to  72  hours,  affected the  procedure.    Mr.  Christianson                                                                   
referenced  page 2,  and  maintained that  the  bill did  not                                                                   
allow  an optometrist  to  be involved  within  the set  time                                                                   
period.    He  stated  that  only  an  ophthalmologist  or  a                                                                   
physician would be allowed to do immediate follow-up.                                                                           
                                                                                                                                
HELEN BEDDER,  STAFF, REPRESENTATIVE HEINZE referred  to line                                                                   
25  of page  2, and  quoted  that a  co-management  agreement                                                                   
could be  agreed to  "only if the  surgeon confirms  that the                                                                   
person to  whom the care is  delegated is qualified  to treat                                                                   
the patient  during the postoperative  period".   She pointed                                                                   
out that they  must be "licensed or certified  to provide the                                                                   
care if  license or certification  is required by law."   She                                                                   
maintained that  the language was specifically  to allow care                                                                   
in  remote areas  where optometrists  may  not be  available.                                                                   
She noted that following the five  (or three) day period, the                                                                   
surgeon could delegate anyone who is available.                                                                                 
                                                                                                                                
Mr. Christianson questioned the  need for the legislation and                                                                   
asserted that  the clinical decision-making of  a surgeon was                                                                   
not within legislative purview.   He maintained that the bill                                                                   
opened  this   issue  for  other   types  of   referrals  and                                                                   
questioned why this regulation was required.                                                                                    
                                                                                                                                
Ms.  Bedder  stated  that  ophthalmologists  had  raised  the                                                                   
concern  about  patient  care  with  Representative  Heinze's                                                                   
office.    She  noted  out  that  in  other  surgical  areas,                                                                   
surgeons   were  responsible   for  patient  care   following                                                                   
surgery.  She stated that problems  had occurred in Anchorage                                                                   
with  a  surgeon  who  comes   to  town  and  leaves  without                                                                   
communicating  with an  ophthalmologist  for follow-up  care.                                                                   
She pointed  out that  many times  the patients were  elderly                                                                   
and it  was a burden  for them to  be treated by  a physician                                                                   
with whom they were unfamiliar.                                                                                                 
                                                                                                                                
CARLOS BUZNEGO, M.D., ACADEMY  OF OPTHAMOLOGY, D.C. testified                                                                   
via  teleconference in  support of  the bill.   He  explained                                                                   
that    this     organization    represent     27    thousand                                                                   
ophthalmologists  throughout the  nation.  He explained  that                                                                   
whereas  federal  regulations   address  patient  protection,                                                                   
state legislatures  were the forum  for health  policy merits                                                                   
to be debated and acted upon.  He noted that he serves on the                                                                   
Academy's Governing  Committee for State Affairs,  as well as                                                                   
practicing ophthalmology with  a focus on cataract treatment.                                                                   
He maintained  that the bill  addressed an abuse  of surgical                                                                   
trust between  a patient  and surgeon.  He noted that  ocular                                                                   
care was a rare area when non-physicians  may inappropriately                                                                   
perform postoperative care following surgery.                                                                                   
                                                                                                                                
Dr. Buznego explained  that co management was  the sharing of                                                                   
postoperative responsibilities  between the operating surgeon                                                                   
and  another  health  care  provider.    He  stated  that  an                                                                   
arrangement might be entered into  only if it was in the best                                                                   
interest of a  patient, as in cases where the  patient cannot                                                                   
travel.  He maintained that unethical  behavior occurred when                                                                   
a surgeon  enters into  a co management  arrangement  with an                                                                   
allied health provider to economic  considerations, as for an                                                                   
inducement  for surgical  referrals.   He  asserted that  the                                                                   
bill  would eliminate  this unethical  behavior by  carefully                                                                   
regulating  surgical  referrals.   He  noted  that under  the                                                                   
bill, referral would occur only  when in the best interest of                                                                   
the patient and  by the judgment of the surgeon  to determine                                                                   
appropriate  postoperative care.  He stressed  that they  key                                                                   
issue was  not a commercial  considerations, but  the ethical                                                                   
treatment of surgical eye patients.                                                                                             
                                                                                                                                
Dr.  Buznego  pointed  out that  cataract  surgery  or  Lasik                                                                   
surgery often  involved complications.   He gave  the example                                                                   
of  an early  postoperative infection.    He maintained  that                                                                   
there  was no  such thing  as a  specialist in  postoperative                                                                   
cataract surgery.  He noted that  if a wound was not properly                                                                   
closed, it  required a surgeon  to complete the surgery.   He                                                                   
stressed that  optometrists were  not trained or  licensed to                                                                   
perform  such  procedures,  or   to  determine  postoperative                                                                   
infections  or other  surgical complications.   He  suggested                                                                   
that  surgeons should  not be  free  to leave  the state  and                                                                   
leave  someone who  is not  properly trained  or licensed  to                                                                   
resolve potential problems.                                                                                                     
                                                                                                                                
CHERYL    LENTFER,    O.D.,    ANCHORAGE,    testified    via                                                                   
teleconference  in  opposition   to  the  legislation.    She                                                                   
refuted the statement  that optometrists were  not trained or                                                                   
licensed  in postoperative  surgical  care, but  acknowledged                                                                   
that they could not close sutures.   She also maintained that                                                                   
many patients  in Alaska had  been seeing their  optometrists                                                                   
for 30 years,  and that it was the optometrists  who referred                                                                   
the patient to a surgeon.  She  pointed out that she had been                                                                   
seeing postoperative patients for many years.                                                                                   
                                                                                                                                
Dr.  Lentfer referenced  her  written testimony  provided  in                                                                   
member's packets.  She pointed  out that co-management was an                                                                   
aspect of health  care that had already  existed successfully                                                                   
for many  years, and  questioned the need  to regulate  it at                                                                   
this  time.    She  maintained  that  such  regulation  would                                                                   
ultimately  apply to  all fields  of  health care,  including                                                                   
cardiology,  oral surgery,  etc.   She  stated that  surgeons                                                                   
suspected  of unethical  practices should  be brought  before                                                                   
the  Medical Board,  and not  regulated  by the  legislature.                                                                   
She also  pointed out that the  bill regulated the  amount of                                                                   
time  a  surgeon  was  required  to be  present  in  a  given                                                                   
location, which was unrealistic  given the variety of follow-                                                                   
up needed for different procedures.                                                                                             
                                                                                                                                
Representative    Stoltze   referenced   earlier    testimony                                                                   
regarding nurses  handling post-operative care.   He asked if                                                                   
in  any situation  that would  be appropriate.   Dr.  Lentfer                                                                   
replied  that  this  would  only  be  appropriate  in  unique                                                                   
situations,  such  as  if the  nurse  had  specific  oracular                                                                   
expertise.                                                                                                                      
                                                                                                                                
DR.   CARL    ROSEN,   M.D.,    ANCHORAGE,   testified    via                                                                   
teleconference  in support of  the bill.   He stated  that he                                                                   
was a surgeon specializing in  oracular procedures, and noted                                                                   
that  he  often  performed  eyelid  reconstruction  following                                                                   
trauma.      He  commented   that,   although   co-management                                                                   
originally  carried  good intentions,  a  patient  protection                                                                   
bill is currently needed to address abuse of the practice.                                                                      
                                                                                                                                
He explained that  the legislation was needed  to support the                                                                   
patient's best  interest, and suggested  that in the  case of                                                                   
co-managed care,  an equally  trained surgeon, preferably  an                                                                   
ophthalmologist,    be   responsible   for    the   patient's                                                                   
postoperative care.  He maintained  that optometrists did not                                                                   
fill this need, not being trained  in the nuances of oracular                                                                   
surgery.                                                                                                                        
                                                                                                                                
He noted  that the  current situation  in Anchorage  involved                                                                   
organizations that  perform oracular surgery, and  then leave                                                                   
the  patients to  the care  of optometrists.   He  maintained                                                                   
that this sometimes resulted in  delayed care, and noted that                                                                   
he  saw  patients  with  potentially  serious  post-operative                                                                   
complications that resulted from  such care.  He also pointed                                                                   
out  that   occasionally  patients   were  "dumped"   on  the                                                                   
emergency  room,  forcing  a  local  ophthalmologist  who  is                                                                   
uninformed to assume the care and liability.                                                                                    
                                                                                                                                
DR. JILL  GEERING, O.D., JUNEAU,  testified in  opposition to                                                                   
the bill.  She read from written testimony as follows:                                                                          
                                                                                                                                
TAPE HFC 03 - 62, Side A                                                                                                      
                                                                                                                                
Arguments Against Alaska Co-Management                                                                                      
                                                                                                                                
       1. Co-management of surgical patients by optometrists                                                                    
         is already  adequately regulated under  Federal law.                                                                   
         In  1980, Congress amended  the Medicare  statute to                                                                   
         allow  payment to doctors of optometry  for cataract                                                                   
         post-operative   care.  The  report  from  the  then                                                                   
         Department  of Health,  Education, and Welfare  upon                                                                   
         which  this legislation  was  based concluded,  "The                                                                   
         services   appear   to  be   effective  in   patient                                                                   
         management,  including  the  management  of  aphakic                                                                   
         and  cataract patients.  They  are reasonable,  non-                                                                   
         experimental,  safe and generally acceptable  to the                                                                   
         vision/eye  care  community  and  the  public."  The                                                                   
         Federal   law  is   quite  extensive  in   providing                                                                   
         patient  protections  and  should  not  be  tampered                                                                   
         with.  States  are  avoiding  doing  this,  and  the                                                                   
         Alaska bill would be an unwise change.                                                                                 
                                                                                                                                
       2. Federal law is premised on protecting patients from                                                                   
         financial     exploitation      in     co-management                                                                   
         arrangements. Neither Federal  law nor any state law                                                                   
         has  ever  questioned  the  clinical  competence  of                                                                   
         optometrists    to    co-manage     patients,    and                                                                   
         optometrists  have been  doing  so successfully  for                                                                   
         over  twenty  years.  There   is  no  public  health                                                                 
         justification for the Alaska co-management bill.                                                                       
                                                                                                                                
       3. The   Alaska   co-management    bill    effectively                                                                   
         eliminates  optometrists from  the co-management  of                                                                   
         patients by  preventing them from being  involved in                                                                   
         patient care  for 5 days following surgery.  This is                                                                   
         harmful to patients.                                                                                                   
                                                                                                                                
       4. The Alaska bill forces patients to seek out less                                                                    
         available  and  more expensive  ophthalmologic  care                                                                   
         for no legitimate health  care reason. Again, the co                                                                   
         management  regulation adopted  by the Federal  laws                                                                   
         was  not premised  on patients  being in any  health                                                                   
         care   danger,  but  was   premised  on   protecting                                                                   
         patients from being taken  advantage of financially.                                                                   
         Both  an  optometrist's   and  an  ophthalmologist's                                                                   
         ordinary   obligations   not   to   commit   medical                                                                   
         malpractice  would  work   to  prevent  any  harmful                                                                   
         clinical  co-management decisions  within the  first                                                                   
         five  days of  surgery.  This bill  adds nothing  to                                                                   
         those  protections,  and Is  a  step backwards  from                                                                   
         Federal  law in  that it  limits  patient access  to                                                                   
         care  and makes  it more likely  that patients  will                                                                   
         unnecessarily    pay    more    for    care    (from                                                                   
         ophthalmologists)  - exactly  what  the Federal  law                                                                   
         was aimed at preventing.                                                                                               
                                                                                                                                
       5. Even if I believed that co-management should be                                                                       
         limited,  I would  argue  against this  bill. It  is                                                                   
         full of technical flaws and ambiguities.                                                                               
                                                                                                                                
              a) While this doesn't specifically prohibit                                                                       
                optometrists  from  performing  post op  care                                                                   
                after  the 5-day period, it is  a harrier. It                                                                 
                eliminates  patient's freedom of  choice, and                                                                   
                creates   fear.   According   to   the   bill                                                                   
                (section  C,  number 5,  and  letter g),  the                                                                   
                patient  is  to  be  made  aware  of  special                                                                   
                risks  that may happen to them  if they enter                                                                   
                into  a co-management agreement.  Since there                                                                   
                are   no  special  risks  (as  Determined  by                                                                   
                Congress  over 20  years ago),  I would  like                                                                   
                to  see what  such a  description would  say,                                                                   
                because      optometrists      and      other                                                                   
                ophthalmologists,     are    licensed     and                                                                   
                qualified to perform such care,                                                                                 
                                                                                                                                
              b) There seems to be a double standard in                                                                         
                regards   to  many  of  the  exceptions.  The                                                                   
                Alaska   bill  shifts  the  determination  of                                                                   
                patient  travel hardship  onto the  shoulders                                                                   
                of  the   patient,  which  is  an  unworkable                                                                   
                legal   standard.  The   exemption   for  the                                                                   
                surgeon's  travel that  says, if  the surgeon                                                                   
                will   not  be  available  for  postoperative                                                                   
                care.   ..as  a   result  of  the   surgeon's                                                                   
                personal   travel,   illness,  etc     "   is                                                                   
                obviously   self  serving  on   the  surgeons                                                                   
                part.  If the true intent of this  bill is to                                                                   
                protect  the  public, why  is  it unsafe  and                                                                   
                not  good  medicine  for other  well  trained                                                                   
                eye   care  professionals  to   co-manage  in                                                                   
                normal  circumstances,  but if  a surgeon  is                                                                   
                going  on vacation, then it is  Ok for others                                                                   
                to co-manage safely?                                                                                            
                                                                                                                                
              c) The agreement can only be entered into if                                                                      
                the  surgeon confirms that the  co-manager is                                                                   
                qualified  to treat the patient.  This is not                                                                   
                the  surgeon's  job,  this is  the  licensing                                                                   
                department's  job.  Does this  mean that  the                                                                   
                surgeon  must contact occupational  licensing                                                                   
                before    entering   into   a   co-management                                                                   
                agreement?                                                                                                      
                                                                                                                                
              d) The co-managing doctor cannot further                                                                          
                delegate care to another. What if the co-                                                                       
                managing  doctor is sick, ill,  or called out                                                                   
                of  town on an  emergency and the  surgeon is                                                                   
                off  on  vacation? Any  referral  to a  third                                                                   
                doctor  would violate  this law, but  the co-                                                                   
                managing   doctor  is   ethically  bound   to                                                                 
                arrange care for that patient.                                                                                  
                                                                                                                                
              e) An exception is made to US Public Health                                                                       
                Service  doctors or  US Armed Forces  doctors                                                                   
                who  are  volunteering without  pay or  other                                                                   
                remuneration.   This  implies  that  patients                                                                   
                are  safe for co-managing  if follow  up care                                                                   
                is  free, but not  safe if it isn't  free? Or                                                                   
                does     this    just    mean     that    the                                                                   
                ophthalmologists  shouldn't  have to  provide                                                                   
                free  follow up care...but they  are the only                                                                   
                one  who should provide follow up  care if it                                                                   
                is paid for?                                                                                                    
                                                                                                                                
              f) Midwives are exempt. This bill would pass                                                                      
                into law a provision that allows midwives                                                                       
                to perform follow up care for someone who                                                                       
                had cataract surgery.                                                                                           
                                                                                                                                
       As some of you may know, there is  an unfortunate duel                                                                   
       between  ophthalmologists  and  optometrists  in  this                                                                   
       state.  Most  of   which  is  professional   jealousy.                                                                   
       Optometrists seek to move forward  by way of improving                                                                   
       on and  learning new  techniques to  better serve  the                                                                   
       citizens of Alaska, Including adding  oral medications                                                                   
       to our licensure. Ophthalmologists have opposed that                                                                     
                                                             1                                                                  
       this bill is another attempt at  limiting our scope of                                                                   
       care and  superseding the  Alaska Board of  Optometry.                                                                   
       This bill would not  only limit us, but it  would move                                                                   
       our profession back to the 1960's.  I encourage you to                                                                   
       vote no.                                                                                                                 
                                                                                                                                
DAVID  KATZEEK,  ALASKA  NATIVE  BROTHERHOOD,  JUNEAU,  is  a                                                                   
member  of the  Tlingit  tribe, from  the  Chilkat tribes  in                                                                   
Haines.   He testified in Tlingit  and English in  support of                                                                   
the  bill.   He gave  information  about the  history of  his                                                                   
people's migration  to different  areas.  He maintained  that                                                                   
the bill  was supportive  of patient's  needs.  He  expressed                                                                   
his  opinion  that  the  bill  closes  loopholes  that  allow                                                                   
professionals  from  other  states  to  perform  services  in                                                                   
Alaska  without responsibility  to Alaskans.   He  referenced                                                                   
the limited  entry legislation  in regard to salmon  fishing.                                                                   
He maintained  that the  legislation provided higher  quality                                                                   
care for  people not  only in rural  communities but  for all                                                                   
Alaskans.   He observed  the contention between  professional                                                                   
groups and emphasized  that the eyesight of  Alaskans were of                                                                   
utmost importance  and value.  He encouraged  members to take                                                                   
the safety of the people into consideration.                                                                                    
                                                                                                                                
Mr.  Katzeek stated  that,  according  to the  Department  of                                                                   
Health  and  Social  Services,  over  50  percent  of  Native                                                                   
Americans  suffer  from  type   two  diabetes,  which  causes                                                                   
problems with eyesight.                                                                                                         
                                                                                                                                
HB  142  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Williams began  a brief  at  ease at  3:30 pm.  The                                                                   
meeting reconvened at 3:45 p.m.                                                                                                 
                                                                                                                                
HOUSE BILL NO. 234                                                                                                            
                                                                                                                                
     "An Act relating to brewpubs, and continuing the                                                                           
     existence of the Alcoholic Beverage Control Board; and                                                                     
     providing for an effective date."                                                                                          
                                                                                                                                
REPRESENTATIVE LISEL  MCGUIRE, SPONSOR, testified  in support                                                                   
of the  legislation.   She explained  that  Section 1 of  the                                                                   
bill allows for the sale of "growlers"  of up to five gallons                                                                   
per  day, as  stated  in current  statute,  but eliminates  a                                                                   
technical provision  that required a  brewery must be  on the                                                                   
premises  in order  to sell a  "growler" to  customers.   She                                                                   
explained  that this  provision prevented  the Moose's  Tooth                                                                   
Brewery  [Anchorage] from  being  in the  marketplace,  since                                                                   
their brewery  was in  Ship Creek.   She  also noted  that an                                                                   
earlier  version of the  bill pertained  to gallonage,  which                                                                   
was removed from  the bill based on testimony  in the [House]                                                                   
Labor and  Commerce Committee  that indicated  that it  was a                                                                   
fundamental  policy  decision  better suited  to  a  separate                                                                   
vehicle.   In response  to a question  by Co-Chair  Williams,                                                                   
Representative  McGuire confirmed that  this change  would be                                                                   
implemented by amendment.                                                                                                       
                                                                                                                                
Representative McGuire also noted  that Section 3 extends the                                                                   
Alcoholic  Beverage  Control Board  to  June  30 2007.    She                                                                   
referred  to a  Legislative Budget  and  Audit (LB&A)  report                                                                   
commending  the  Board's  success.    She  pointed  out  that                                                                   
suggested changes  from the Department of Public  Safety were                                                                   
forthcoming, one of  them stemming from the LB&A  audit.  She                                                                   
stated  that  her  office  did not  have  objections  to  the                                                                   
Administration's amendments.                                                                                                    
                                                                                                                                
In  response   to  a  question  by  Representative   Stoltze,                                                                   
Representative  McGuire defined  a "growler" as being a micro                                                                   
brewery that distributes  an amount under five  gallons.  She                                                                   
stressed   that  the   bill  did  not   change  this   amount                                                                   
requirement.                                                                                                                    
                                                                                                                                
PAT  DAVIDSON,   DIRECTOR,  DIVISION  OF   LEGISLATIVE  AUDIT                                                                   
provided information on the department's  audit of the board.                                                                   
She  stated  that  the audit  had  recommended  a  three-year                                                                   
extension,  due to some  operational deficiencies  discovered                                                                   
during the audit.   She noted that overall  they believed the                                                                   
continuation of  the Alcoholic Beverage Control  Board was in                                                                   
the best public interest.                                                                                                       
                                                                                                                                
DOUGLAS GRIFFIN, DIRECTOR, ALCOHOLIC  CONTROL BOARD testified                                                                   
via teleconference in support  of the legislation.  He stated                                                                   
that they would prefer a four-year,  rather than a three-year                                                                   
extension  of the board.   He  commended the audit  procedure                                                                   
and noted that  the Board was making recommended  changes and                                                                   
acknowledged   that  the  Board   was  experiencing   funding                                                                   
shortfalls.                                                                                                                     
                                                                                                                                
MATT   JONES,   MOOSE'S  TOOTH,   ANCHORAGE   testified   via                                                                   
teleconference in support of the bill.                                                                                          
                                                                                                                                
DAN COFFEE, ATTORNEY, ANCHORAGE  testified via teleconference                                                                   
in support  of the legislation.   He  noted he had  served on                                                                   
the board of  fisheries as well.  He commended  the Alcoholic                                                                   
Beverage Control  Board for its excellent work.   He observed                                                                   
that  their  only  problems  were  funding  shortfalls.    He                                                                   
supported the  extension of the board and  expressed industry                                                                   
support for the  amendment pertaining to brewpubs.   He asked                                                                   
for  information regarding  forthcoming  amendments from  the                                                                   
Administration and how to comment on these changes.                                                                             
                                                                                                                                
Representative Stoltze referred  to the provision of the bill                                                                   
that  provided  for  free samples,  and  asked  whether  this                                                                   
practice  was  new.    Mr. Coffee  stated  that  this  was  a                                                                   
standard  procedure for  brewpubs, allowing  them to  provide                                                                   
small samples for potential customers.                                                                                          
                                                                                                                                
Representative Croft MOVED amendment #1.                                                                                        
                                                                                                                                
     Section 1 -                                                                                                              
                                                                                                                                
     Pg. 2, Lines 6-8                                                                                                           
     (5)   sell beer  manufactured on  the premises  licensed                                                                   
     under  the  beverage dispensary  license  to  a   person                                                                   
     licensed   as  a wholesaler  under  AS 04.11.160;  sales                                                                   
     under this  paragraph may   not  exceed 15,000   gallons                                                                   
     [OR THE  AMOUNT SOLD   UNDER THIS PARAGRAPH  IN CALENDAR                                                                   
     YEAR  2001,  PLUS  10  PERCENT,    WHICHEVER  AMOUNT  IS                                                                   
     GREATER].                                                                                                                  
                                                                                                                                
     Should be amended to read:                                                                                                 
                                                                                                                                
     (5)   sell beer  manufactured on  the premises  licensed                                                                   
     under  the  beverage dispensary  license  to  a   person                                                                   
     licensed   as  a wholesaler  under  AS 04.11.160;  sales                                                                   
     under this  paragraph may   not  exceed 15,000   gallons                                                                   
     OR THE  AMOUNT SOLD   UNDER  THIS PARAGRAPH IN  CALENDAR                                                               
     YEAR  2001,  PLUS  10  PERCENT,    WHICHEVER  AMOUNT  IS                                                               
     GREATER.                                                                                                               
                                                                                                                                
                                                                                                                                
     Section 2 -                                                                                                                
                                                                                                                                
     Pg. 2, Lines 24-27                                                                                                         
     (B)   to   a  wholesaler  licensed  under AS  04.11.160;                                                                   
     sales  under this  subparagraph  may  not exceed  15,000                                                                   
     gallons [OR  THE AMOUNT SOLD   UNDER THIS   SUBPARAGRAPH                                                                   
     IN   CALENDAR YEAR  2001,   PLUS  10  PERCENT, WHICHEVER                                                                   
     AMOUNT IS GREATER];                                                                                                        
                                                                                                                                
     Should be amended to read:                                                                                                 
                                                                                                                                
     (B)   to   a  wholesaler  licensed  under AS  04.11.160;                                                                   
     sales  under this  subparagraph  may  not exceed  15,000                                                                   
     gallons OR THE AMOUNT SOLD   UNDER THIS  SUBPARAGRAPH IN                                                               
     CALENDAR   YEAR   2001,    PLUS   10 PERCENT,  WHICHEVER                                                               
     AMOUNT IS GREATER;                                                                                                     
                                                                                                                                
                                                                                                                                
Co-Chair Williams OBJECTED.                                                                                                     
                                                                                                                                
Representative  McGuire   stated  that  the  intent   of  the                                                                   
amendment was to preserve the  existing statute as written in                                                                   
relation  to gallonage  and  percentage.  She explained  that                                                                   
when  the  Committee  Substitute  from the  House  Labor  and                                                                   
Commerce  Committee had  been written,  it had  inadvertently                                                                   
excluded a portion of the existing statute.                                                                                     
                                                                                                                                
Co-Chair  Williams REMOVED  his  OBJECTION.   There being  NO                                                                   
OBJECTION, the amendment was Adopted.                                                                                           
                                                                                                                                
Representative Stoltze MOVED Amendment #2.                                                                                      
                                                                                                                                
     Amendment No. 2                                                                                                          
                                                                                                                                
   *Section  .  AS 04.06.010 is amended to read:                                                                              
                                                                                                                                
     Sec.  04.06.010.   Establishment  of  board.   There  is                                                               
     established  in  the  Department of  Public  Safety  the                                                               
     [THE] Alcoholic Beverage  Control Board [IS ESTABLISHED]                                                                   
     as a  regulatory and  quasi-judicial agency.  [THE BOARD                                                                   
     IS IN THE DEPARTMENT OF REVENUE,  BUT FOR ADMINISTRATIVE                                                                   
     PURPOSES ONLY.]                                                                                                            
                                                                                                                                
Co-Chair Harris OBJECTED.                                                                                                       
                                                                                                                                
WILLIAM TANDESKE, COMMISSIONER,  DEPARTMENT OF PUBLIC SAFETY,                                                                   
provided  information about  Amendment  #2, that  effectively                                                                   
transfers  the  Alcoholic  Beverage Control  Board  from  the                                                                   
Department  of Revenue  to the Department  of Public  Safety.                                                                   
He   noted  the   language   change   was  to   remove   "for                                                                   
administrative  purposes  only".     He  explained  that  the                                                                   
purpose  of the  change was  not  to change  function of  the                                                                   
Board, but  rather to  recognize that  the nine employees  of                                                                   
the Board were employed by the  state of Alaska, such as with                                                                   
other boards within the Department  of Public Safety, such as                                                                   
the  Council on  Domestic Violence  and Sexual  Assault.   He                                                                   
stressed that this  change was directed at the  licensing and                                                                   
review function of the Alcoholic Beverage Control Board.                                                                        
                                                                                                                                
Co-Chair  Harris  asked  whether officers  of  the  Alcoholic                                                                   
Beverage  Control  Board  would  carry weapons  in  order  to                                                                   
respond to dangerous situations.   Mr. Tandeske stated he did                                                                   
not support  Board investigators  carrying weapons.   He gave                                                                   
the example  of Division of  Family and Youth  Services, when                                                                   
officers  entered into  volatile  situations, and  maintained                                                                   
that weapons  were not  necessary for  ABC investigators  and                                                                   
would  only escalate  such situations.   He  also noted  that                                                                   
this  would  create  additional   issues  of  recruiting  and                                                                   
training.    In  response to  another  question  by  Co-Chair                                                                   
Harris,  Mr. Tandeske  confirmed that  local police  officers                                                                   
would support  the efforts of the Alcoholic  Beverage Control                                                                   
Board officers.                                                                                                                 
                                                                                                                                
Representative  Croft  asked about  the  practical effect  of                                                                   
moving   the  Alcoholic   Beverage  Control   Board  to   the                                                                   
Department  of Public  Safety.  Mr.  Tandeske explained  that                                                                   
this was  a portion  of the process  of realigning  functions                                                                   
within all  departments, and that  the Department  of Revenue                                                                   
expressed  that the  Board was  more properly  placed in  the                                                                   
Department  of Public Safety,  given that  they are  a quasi-                                                                   
judicial,  investigative  and  enforcement agency.  He  added                                                                   
that if  other parts  of the state  required officers,  their                                                                   
becoming  official  State  employees   he  noted  that  their                                                                   
function was autonomous within the Department.                                                                                  
                                                                                                                                
Representative  Croft asked why  the Board was  not indicated                                                                   
as  being  "only administrative"  within  the  Department  of                                                                   
Public  Safety. Mr.  Tandeske  reiterated  that the  officers                                                                   
were employees  of the  state of  Alaska.  He  differentiated                                                                   
this from the Alcoholic Beverage  Control Board, but referred                                                                   
to  enforcement  officers  and   administrative  staff.    He                                                                   
stressed that  the Board will  still be separate in  order to                                                                   
consider licensing and other quasi-judicial issues.                                                                             
                                                                                                                                
Co-Chair  Harris  REMOVED  his  OBJECTION.   There  being  NO                                                                   
OBJECTION, amendment #2 was adopted.                                                                                            
                                                                                                                                
Representative Stoltze MOVED Amendment #3,                                                                                      
                                                                                                                                
   *Sec.  .  AS 04.06.020 is amended to read:                                                                                 
                                                                                                                                
     Sec. 04.06.020.   Appointment  and qualifications.   The                                                                   
     board   consists   of   seven    [FIVE]   members:   the                                                           
     commissioner  of  public  safety,  the  commissioner  of                                                               
     revenue, and five members  appointed by the governor and                                                               
     confirmed   by  a  majority   of  the  members   of  the                                                                   
     legislature in joint session.  A member of the board may                                                                   
     not  hold  any other  state  or federal  office,  either                                                                   
     elective or  appointive. Two members of  the board shall                                                                   
     be persons  actively engaged  in the alcoholic  beverage                                                                   
     industry,  except that  no member  may hold a  wholesale                                                                   
     license  or  be an  officer,  agent,  or employee  of  a                                                                   
     wholesale  alcoholic   beverage  enterprise.   No  three                                                                   
     members  of  the  board  may  be  engaged  in  the  same                                                                   
     business,  occupation,  or  profession. At  least  three                                                                   
     members  of  the  board   shall  represent  the  general                                                                   
     public. A  board member representing the  general public                                                                   
     or  an  immediate  family   member  of  a  board  member                                                                   
     representing  the  general   public  may  not  have  any                                                                   
     financial interest  in the alcoholic  beverage industry.                                                                   
     In  this  section,  "immediate family  member"  means  a                                                                   
     spouse, child, or parent.                                                                                                  
                                                                                                                                
   *Sec.  .  AS 04.06.030 is amended to read:                                                                                 
                                                                                                                                
     Sec. 04.06.030.  Terms of  office; chair.     (a)    The                                                               
     commissioners of  public safety and revenue  shall serve                                                               
     as  members during  their tenure  as commissioner.   The                                                               
     other  m[M]embers of  the board  shall be appointed  for                                                               
     overlapping terms of three years.                                                                                          
     (b) Except  for the commissioners  of public  safety and                                                               
     revenue, a  [A] vacancy occurring  in the  membership of                                                               
     the board shall be filled  within 30 days by appointment                                                                   
     of  the  governor  for  the  unexpired  portion  of  the                                                                   
     vacated term.                                                                                                              
     (c) The  board shall  select a  chairman from  among its                                                                   
     members.                                                                                                                   
                                                                                                                                
   *Sec.  .  AS 04.06.060 is amended to read:                                                                                 
                                                                                                                                
     Sec.  04.06.060.   Quorum  and majority.   Four  [THREE]                                                               
     members  of  the  board  constitute  a  quorum  for  the                                                                   
     conduct  of  business, except  that  a majority  of  the                                                                   
     whole  membership   of  the   board  must   approve  all                                                                   
     applications  for   new  licenses,  and   all  renewals,                                                                   
     transfers,  suspensions,  and  revocations  of  existing                                                                   
     licenses.   If a  majority of the  board is  present and                                                                   
     voting, the  director, with  the consent of  the members                                                                   
     present, may cast a tie-breaking vote.                                                                                     
                                                                                                                                
Representative  Stolze  MOVED   to  AMEND  the  amendment  to                                                                   
include other designees for the two Commissioners.                                                                              
                                                                                                                                
Co-Chair Harris OBJECTED.   Representative Croft OBJECTED.                                                                      
                                                                                                                                
Commissioner Tandeske  explained the proposed changes  of the                                                                   
amendment.   He noted that  when the proposal  was originally                                                                   
made  to move  the  ABC Board  to  the Department  of  Public                                                                   
Safety,  the  Department  took  a  closer  look  at  Title  4                                                                   
enforcement that  specified procedures.   He cited  a finding                                                                   
in  the  LB&A  audit  that  recommended  that  the  Board  be                                                                   
expanded  from five  to seven  members.  He  referred to  the                                                                   
Administration's  concern regarding  alcohol related  issues.                                                                   
He maintained  that the Department  of Public  Safety brought                                                                   
to  the   Board  resources  and   skills  that   address  the                                                                   
consequences involved in these  issues.  He acknowledged that                                                                   
the Department  of Revenue  had contributed  other skills  to                                                                   
the  Board over  the  past ten  years.   He  stated that  the                                                                   
Department viewed this change  as an opportunity to readdress                                                                   
language in statutes that were 25 years old.                                                                                    
                                                                                                                                
Representative Croft  referred to page  22 of the  audit, and                                                                   
its  reference   to  the   possibility  of   disproportionate                                                                   
influence     by  alcohol members,  but  maintained that  the                                                                   
intent  of the  recommendation  was to  add  two more  public                                                                   
members.                                                                                                                        
                                                                                                                                
Commissioner Tandeske  clarified that the suggestion  was for                                                                   
two  other members,  specifying that  one might  be from  the                                                                   
medical community and one from law enforcement.                                                                                 
                                                                                                                                
Representative  Croft asked why  there was  a change  from an                                                                   
audit  recommendation of  a public  health/medical  community                                                                   
and   law   enforcement   member    to   two   commissioners.                                                                   
Commissioner  Tandeske reiterated  that  alcohol issues  were                                                                   
the focal point.   He expressed his commitment  to personally                                                                   
participate  on the Board  if the bill  was passed  into law,                                                                   
and  suggested  that he  would  fulfill the  law  enforcement                                                                   
member recommendation.  He noted  that from an administrative                                                                   
standpoint, it  seemed unusual for  a Commissioner not  to be                                                                   
part of a Board within their own Department.                                                                                    
                                                                                                                                
Representative Stoltze  referenced the language  that stated,                                                                   
"a  member of  the  board may  not hold  any  other state  or                                                                   
federal  office" and  asked if  the  Commissioner was  exempt                                                                   
from this  requirement.  Co-Chair  Harris recommended  that a                                                                   
technical change be made.                                                                                                       
                                                                                                                                
Representative  Stoltze  MOVED   to  AMEND  amendment  #3  to                                                                   
include "except  appointed Commissioners or  their designees"                                                                   
after "a member of the board".                                                                                                  
                                                                                                                                
Representative Foster  stressed that given  the controversial                                                                   
issues  that typically  come  before the  Alcoholic  Beverage                                                                   
Control Board, continuity of representation was necessary.                                                                      
                                                                                                                                
Commissioner  Tandeske  stated his  support  of the  language                                                                   
change,   and  expressed   his   commitment  to   maintaining                                                                   
continuity on  the board.  In  response to a question  by Co-                                                                   
Chair  Harris,   Commissioner  Tandeske  confirmed   that  he                                                                   
thoroughly briefed any designees on board issues.                                                                               
                                                                                                                                
Representative  Croft concurred  with Representative  Foster,                                                                   
and  highlighted  the  distinction  between  the  Council  on                                                                   
Domestic  Violence  or  other   organizations,  in  that  the                                                                   
Alcoholic Beverage  Control Board  was a semi  judicial body.                                                                   
He questioned whether a commissioner  ought to be included in                                                                   
such a body.   He asked why the Board was being  moved out of                                                                   
the Department of Revenue to the  Department of Public Safety                                                                   
and again referred to the audit  recommendation to add public                                                                   
members to the Board from health  and law enforcement, rather                                                                   
than the two  commissioners.  He suggested that  the language                                                                   
be   re-drafted    to   take    that   recommendation    into                                                                   
consideration.                                                                                                                  
                                                                                                                                
TAPE HFC 03 - 62, Side B                                                                                                      
                                                                                                                                
Representative Stoltze WITHDREW amendment #3.                                                                                   
                                                                                                                                
In  response   to  a   question  by  Representative   Foster,                                                                   
Commissioner  Tandeske  responded that  he  also  sat on  the                                                                   
Western  States Information  Network  Policy  Board, and  the                                                                   
Executive  [Committee]  of  the  Land  Mobile  Radio  Project                                                                   
[Board].                                                                                                                        
                                                                                                                                
Representative  Foster stressed  that the Alcoholic  Beverage                                                                   
Control  Board  required extensive  executive  sessions  that                                                                   
could last  for a period of  days, and pointed out  that this                                                                   
would  add another  burden  to  the Commissioner's  level  of                                                                   
commitment.  He asked if the Commissioner  would by necessity                                                                   
send representatives to these important meetings.                                                                               
                                                                                                                                
Representative Stoltze  MOVED amendment #4.   Co-Chair Harris                                                                   
OBJECTED.                                                                                                                       
                                                                                                                                
     *Sec.   .  AS 04.06.110 is amended to read:                                                                              
                                                                                                                                
     Sec. 04.06.110.  Peace officer  powers. The director and                                                                   
     the   persons  employed   for  the  administration   and                                                                   
     enforcement of  this title may, with the  concurrence of                                                                   
     the commissioner  of public safety, exercise  the powers                                                                   
     of  peace officers  when those  powers are  specifically                                                                   
     granted by the board. Powers  granted by the board under                                                                   
     this section  may be exercised  only when  necessary for                                                                   
     the   enforcement   of    the   [CRIMINALLY   PUNISHABLE                                                                   
     PROVISIONS  OF THIS TITLE,]  regulations of  the board[,                                                                   
     AND OTHER  CRIMINALLY PUNISHABLE  LAWS AND  REGULATIONS,                                                                   
     INCLUDING  INVESTIGATION OF  VIOLATIONS OF LAWS  AGAINST                                                                   
     PROSTITUTION AND PROMOTING  PROSTITUTION DESCRIBED IN AS                                                                   
     11.66.100  -   11.66.130  AND  LAWS   AGAINST  GAMBLING,                                                                   
     PROMOTING  GAMBLING, AND  RELATED OFFENSES DESCRIBED  IN                                                                   
     AS 11.66.200 - 11.66.280].                                                                                                 
                                                                                                                                
                                                                                                                                
Commissioner Tandeske emphasized  that the Alcoholic Beverage                                                                   
Control Board officers were most  properly equipped to handle                                                                   
alcohol related  issues, and not  issues of prostitution  and                                                                   
gambling.  He noted the limited  personnel resources, and the                                                                   
need to properly align personnel for tasks.                                                                                     
                                                                                                                                
Representative  Croft recalled  initial discussions  in 1999,                                                                   
when it  was reasoned that  Alcoholic Beverage  Control Board                                                                   
officers  often  viewed  these   related  issues,  and  could                                                                   
expeditiously handle them in the line of their duties.                                                                          
                                                                                                                                
Commissioner Tandeske  stated that he  was not part  of those                                                                   
discussions.   He   referenced    his   experience   in   law                                                                   
enforcement,  and  noted  that  employees'  authority  should                                                                   
align with their responsibilities.                                                                                              
                                                                                                                                
Representative  Hawker referred to  the LB&A audit  and noted                                                                   
the divergence of opinions on  whether investigators ought to                                                                   
function as  peace officers or administrative  investigators.                                                                   
He asked  if this  was a move  toward the  duties of  a peace                                                                   
officer.                                                                                                                        
                                                                                                                                
Commissioner Tandeske  emphasized the value of  the Alcoholic                                                                   
Beverage   Control  Board   officers  to   the  State.     He                                                                   
emphasized,  however,  that  they were  not  law  enforcement                                                                   
officers.                                                                                                                       
                                                                                                                                
Representative  Hawker  asked  if the  Department  of  Public                                                                   
Safety would  show any preference  for an ABC  officer wished                                                                   
to enter law enforcement.                                                                                                       
                                                                                                                                
Commissioner  Tandeske  noted  that all  applicants  for  law                                                                   
enforcement were treated equitably.                                                                                             
                                                                                                                                
Representative   Stoltze  expressed   his   hope  that   this                                                                   
amendment might prevent ABC officers  from "clamping down" on                                                                   
cribbage players at recreational halls.                                                                                         
                                                                                                                                
Co-Chair  Harris REMOVED  his  OBJECTION.   Amendment #4  was                                                                   
ADOPTED.                                                                                                                        
                                                                                                                                
Representative Stoltze renewed  his motion to MOVED Amendment                                                                   
#3.                                                                                                                             
                                                                                                                                
DEAN GUANELI,  CHIEF ASSISTANT  ATTORNEY GENERAL,  DEPARTMENT                                                                   
OF  LAW,  testified   regarding  potential  changes   to  the                                                                   
amendment.     He  stated  that   the  current   statute  (AS                                                                   
04.06.020)  would not  prevent  a commissioner  from being  a                                                                   
member  of  the  Board.   He  maintained  that  the  language                                                                   
restricted them  from holding any "other" office,  other than                                                                   
that which  they currently  hold.   He suggested that  courts                                                                   
would  view  the  statute  as   a  whole,  and  not  consider                                                                   
membership on  the ABC Board a  conflict. He did  not believe                                                                   
any   other  statutes   existed   that   would  prevent   the                                                                   
Commissioner from being on the board.                                                                                           
                                                                                                                                
Representative  Croft maintained  that  the language  "other"                                                                   
referred to  the Board position,  and restricted  the members                                                                   
from holding positions apart from the Board.                                                                                    
                                                                                                                                
Mr. Guaneli reiterated his belief  that the courts would take                                                                   
into   consideration   the  legislative   intent   that   the                                                                   
commissioners  of  Revenue  and   Public  Safety  hold  Board                                                                   
positions.   He suggested that  it would be simple  to insert                                                                   
more  language,  such as  "other  than the  commissioners  of                                                                   
Public Safety and Revenue".                                                                                                     
                                                                                                                                
Co-Chair Harris  asked if  this type  of language was  common                                                                   
and necessary,  and whether it  could simply be  omitted. Mr.                                                                   
Guaneli  noted  that he  hesitated  to suggest  that  change,                                                                   
since it was part of the original intent of the statute.                                                                        
                                                                                                                                
Representative  Foster stressed that  he did not  support the                                                                   
amendment.   He recalled the  regulations that  prevented the                                                                   
sale of Class III licenses for  fifteen years in the state of                                                                   
Alaska.   He  observed  that a  commissioner  sitting on  the                                                                   
Board  would  have a  disproportionate  amount  of  influence                                                                   
compared to other  members.   He stated his  uneasiness about                                                                   
granting a  regulatory agency  undue power  over a  board and                                                                   
then  allowing the  commissioner  to sit  on  that board  and                                                                   
grant licenses.                                                                                                                 
                                                                                                                                
Commissioner Tandeske  responded that it had  not occurred to                                                                   
him that  he would be more  influential than any  other party                                                                   
on the  Board.  He  acknowledged the  concern over  the issue                                                                   
with Class III licenses.                                                                                                        
                                                                                                                                
Representative  Foster gave examples  of potential  conflicts                                                                   
of interest for  board members.  He maintained  that in small                                                                   
villages, many public  officials might have an  interest in a                                                                   
bar or other business that presented  a conflict of interest.                                                                   
He  observed that  the commissioner  of  Public Safety  might                                                                   
have  an  inherent  conflict   of  interest  sitting  on  the                                                                   
Alcoholic Beverage Control Board.                                                                                               
                                                                                                                                
Representative Stoltze WITHDREW Amendment #3.                                                                                   
                                                                                                                                
Mr. Coffee  commented on the  amendments.  He  questioned the                                                                   
reason behind moving the Alcoholic  Beverage Control Board to                                                                   
the   Department   of   Public   Safety.     He   noted   the                                                                   
Administration's  desire to address  alcohol related  issues,                                                                   
but pointed  out that  the agency  was currently  functioning                                                                   
well.  He observed that the bill  would effectively make this                                                                   
quasi-judicial   and  regulatory   agency  a   part  of   the                                                                   
Department  of  Public  Safety,  which  is  in  the  criminal                                                                   
enforcement  business.   He asked  what was  to be gained  by                                                                   
making employees  a part of  the Department, and  pointed out                                                                   
that  board and  commissions  must  remain independent.    He                                                                   
commended the  withdrawal of the  amendment that  allowed the                                                                   
Commissioner to be on the board,  for purposes of continuity.                                                                   
He acknowledged  that enforcement  officers did stumble  upon                                                                   
gambling  and  prostitution  activities   in  the  course  of                                                                   
duties.   He  observed that  the  Alcoholic Beverage  Control                                                                   
Board had  four executive  directors  during his tenure,  and                                                                   
noted  that each  one had  worked to  ensure compliance  with                                                                   
liquor laws,  and did not  focus on criminal  enforcement. He                                                                   
again asked  about the benefit  of making such changes  to an                                                                   
agency that has existed since statehood.                                                                                        
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   234  out  of                                                                   
Committee with the accompanying  fiscal note.  Representative                                                                   
Stoltze OBJECTED.                                                                                                               
                                                                                                                                
Representative  Stoltze  suggested  that a  conforming  title                                                                   
change must be made to accommodate amendments.                                                                                  
                                                                                                                                
Representative Foster WITHDREW his MOTION.                                                                                      
                                                                                                                                
Representative  Stoltze MOVED  a conforming title  amendment.                                                                   
There being NO OBJECTION it was so ordered.                                                                                     
                                                                                                                                
Representative  Croft  expressed  the intent  to  follow  the                                                                   
recommendation of  the auditors by adding board  members from                                                                   
health care and law enforcement.                                                                                                
                                                                                                                                
Co-Chair  Harris addressed  the  fiscal note.   He  suggested                                                                   
that it should include the cost of operating the agency.                                                                        
                                                                                                                                
LANDA  BAILY,  SPECIAL  ASSISTANT,   DEPARTMENT  OF  REVENUE,                                                                   
explained  that  the  movement   of  the  Alcoholic  Beverage                                                                   
Control  Board   from  the  Department  of  Revenue   to  the                                                                   
Department of  Public Safety resulted  in a zero  fiscal note                                                                   
by the Department of Revenue.                                                                                                   
                                                                                                                                
Co-Chair Harris asked  why there was no fiscal  note from the                                                                   
Department  of Public  Safety.   Commissioner Tandeske  noted                                                                   
that  the fiscal  note was  attached to  the Executive  Order                                                                   
when it was submitted and added  that operational funding was                                                                   
reflected in  the Department's FY  04 budget plan.   Co-Chair                                                                   
Harris requested  that a fiscal  note reflecting the  cost of                                                                   
operations  from the  Department of  Public Safety  accompany                                                                   
the bill the floor.                                                                                                             
                                                                                                                                
Representative  Croft asked how  this differed from  the zero                                                                   
budget  line item  related to  community  schools.   Co-Chair                                                                   
Harris maintained that the cost  of eliminating the Community                                                                   
Schools program in statute was  zero.  He maintained that the                                                                   
cost of having the Alcoholic Beverage  Control Board operated                                                                   
by  Department of  Public  Safety should  be  reflected in  a                                                                   
fiscal note.                                                                                                                    
                                                                                                                                
Commissioner   Tandeske   reiterated  that   the   suggestion                                                                   
[amendment] of adding Board members  was withdrawn.  Co-Chair                                                                   
Harris maintained that he wished to see a fiscal note.                                                                          
                                                                                                                                
Representative  Foster   MOVED  to  report  HB   234  out  of                                                                   
Committee with the accompanying  fiscal note.  There being NO                                                                   
OBJECTION it was so ordered.                                                                                                    
                                                                                                                                
CSHB 234 (FIN) was REPORTED out  of Committee with individual                                                                   
recommendations,  a  previously  published zero  fiscal  note                                                                   
from the Department  of Revenue (#1) and a  new fiscal impact                                                                   
note from the Department of Public Safety.                                                                                      
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:50 PM                                                                                            
                                                                                                                                
                                                                                                                                

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