Legislature(2003 - 2004)

05/16/2003 01:49 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                        May 16, 2003                                                                                            
                         1:49 P.M.                                                                                              
                                                                                                                                
TAPE HFC 03 - 97, Side A                                                                                                        
TAPE HFC 03 - 97, Side B                                                                                                        
TAPE HFC 03 - 98, Side A                                                                                                        
TAPE HFC 03 - 98, Side B                                                                                                        
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 1:49 P.M.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Ethan Berkowitz                                                                                                  
Representative Mike Chenault                                                                                                    
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Beth Kerttula                                                                                                    
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Croft                                                                                                            
Representative Joule                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Vic  Kohring; Representative  Norm  Rokeberg;                                                                   
Senator  Lyda Green;  Senator Gary  Stevens; Michael  Barton,                                                                   
Commissioner,   Department   of   Transportation   &   Public                                                                   
Facilities;  Larry Persily,  Deputy Commissioner,  Department                                                                   
of  Revenue;  Tim Benintendi,  Staff,  Representative  Moses;                                                                   
Robynn Wilson,  Tax Division, Department of  Revenue; Ernesta                                                                   
Ballard,    Commissioner,   Department    of    Environmental                                                                   
Conservation; Tom Boutin, Deputy  Commissioner, Department of                                                                   
Revenue; John  MacKinnon, Deputy Commissioner,  Department of                                                                   
Transportation  & Public  Facilities;  Roger Painter,  Alaska                                                                   
Shellfish Growers, Juneau; Kristin  Rilin, Director, Division                                                                   
of   Environmental   Health,  Department   of   Environmental                                                                   
Conservation;  Robert D. Storer,  Executive Director,  Alaska                                                                   
Permanent  Fund Corporation,  Department  of Revenue;  Robert                                                                   
Bartholomew, Chief  Operating Officer, Alaska  Permanent Fund                                                                   
Corporation,  Department  of   Revenue;  Doug  Letch,  Staff,                                                                   
Senator  Gary Stevens;  Pat Davidson,  Director, Division  of                                                                   
Legislative  Audit;  Jacqueline  Tupou, Staff,  Senator  Lyda                                                                   
Green;  Scott  Nordstrand,  Deputy  Attorney  General,  Civil                                                                   
Division, Department of Law                                                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Mark Meyers,  Director, Division  of Oil and Gas,  Department                                                                   
of  Natural  Resources,  Anchorage;  Don  Kitchen,  Assistant                                                                   
Attorney General, Department of Law, Anchorage                                                                                  
                                                                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HJR 26    Proposing  amendments  to the  Constitution of  the                                                                   
          State   of   Alaska   relating  to   and   limiting                                                                   
          appropriations  from   and  inflation-proofing  the                                                                   
          Alaska permanent fund  by establishing a percent of                                                                   
          market value spending limit.                                                                                          
                                                                                                                                
          HJR 26 was HEARD and HELD in Committee.  The bill                                                                     
          was  placed into  Subcommittee with  Representative                                                                   
          Meyer  as  Chair and  with  members  Representative                                                                   
          Joule,    Representative   Croft,    Representative                                                                   
          Chenault and Representative Whitaker.                                                                                 
                                                                                                                                
HB 28     An Act relating to adjustments to royalty reserved                                                                    
          to  the  state to  encourage  otherwise  uneconomic                                                                   
          production  of oil  and gas;  and providing  for an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CS HB 28 (FIN) was reported out of Committee with                                                                     
          a "no  recommendation" and  with a new  fiscal note                                                                   
          by the Department of Natural Resources.                                                                               
                                                                                                                                
HB 196    An  Act  relating  to   carbon  sequestration;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          The Committee did not receive HB 196.  Discussion                                                                     
          was POSTPONDED.                                                                                                       
                                                                                                                                
HB 293    An  Act levying  and collecting  a state sales  and                                                                   
          use tax; and providing for an effective date.                                                                         
                                                                                                                                
          CS HB 293 (FIN) was  reported out of Committee with                                                                   
          a "do not pass" recommendation  and with new fiscal                                                                   
          notes by  the Department of Revenue  and Department                                                                   
          of Law.                                                                                                               
                                                                                                                                
HB 301    An Act  establishing the  Knik Arm Bridge  and Toll                                                                   
          Authority  and  relating  to  that  authority;  and                                                                   
          providing for an effective date.                                                                                      
                                                                                                                                
          HB 301 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 312    An  Act giving  notice of and  approving the  entry                                                                   
          into   and   the  issuance   of   certificates   of                                                                   
          participation for a  lease-purchase agreement for a                                                                   
          seafood   and  food  safety  laboratory   facility;                                                                   
          relating  to the use  of certain investment  income                                                                   
          for certain  construction costs; and  providing for                                                                   
          an effective date.                                                                                                    
                                                                                                                                
          HB 312 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 41     An Act relating to medical care and crimes                                                                            
          relating  to medical  care, including medical  care                                                                   
          and  crimes  relating  to  the  medical  assistance                                                                   
          program.                                                                                                              
                                                                                                                                
          CS SS SB 41 (FIN) was reported out of Committee                                                                       
          with  a "do pass" recommendation  and with  the new                                                                   
          fiscal note by the Department  of Health and Social                                                                   
          Services.                                                                                                             
                                                                                                                                
SB 45     An Act relating to the Legislative Budget and                                                                         
          Audit Committee.                                                                                                      
                                                                                                                                
          HCS CS SB 45 (FIN) was reported out of Committee                                                                      
          with  a  "do  pass" recommendation  and  with  zero                                                                   
          fiscal note #1 by the  Department of Administration                                                                   
          and a new zero note by the Department of Law.                                                                         
                                                                                                                                
SB 192    An Act  relating to teachers and  training programs                                                                   
          in   the   Department   of  Labor   and   Workforce                                                                   
          Development,   to  the  placement  in   the  exempt                                                                   
          service  of  certified  teachers  employed  by  the                                                                   
          Department  of Labor and Workforce  Development, to                                                                   
          their eligibility  to participate in  the Teachers'                                                                   
          Retirement  System of Alaska, and to  the functions                                                                   
          of the Alaska Workforce  Investment Board regarding                                                                   
          the  Kotzebue  Technical   Center  and  the  Alaska                                                                   
          Vocational  Technical Center; and providing  for an                                                                   
          effective date.                                                                                                       
                                                                                                                                
          CSSB 192  (L&C) was reported out of  Committee with                                                                   
          a "do  pass" recommendation  and with a  new fiscal                                                                   
          note  by  the  Department of  Labor  and  Workforce                                                                   
          Development.                                                                                                          
                                                                                                                                
SB 216    An Act  relating to international  airports revenue                                                                   
          bonds; and providing for an effective date.                                                                           
                                                                                                                                
          SB 216 was reported out of Committee with a "do                                                                       
          pass" recommendation and with fiscal note #1 by                                                                       
          the Department of Revenue.                                                                                            
                                                                                                                                
HOUSE BILL NO. 293                                                                                                            
                                                                                                                                
     An Act levying and collecting a state sales and use                                                                        
     tax; and providing for an effective date.                                                                                  
                                                                                                                                
Representative  Moses  MOVED   to  RESCIND  action  taken  on                                                                   
adopting Amendment  #5.  There  being NO OBJECTION,  previous                                                                   
action was rescinded.                                                                                                           
                                                                                                                                
Representative  Moses MOVED  to ADOPT  the revised  Amendment                                                                   
#5.  (Copy on File).                                                                                                            
                                                                                                                                
TIM BENINTENDI,  STAFF, REPRESENTATIVE MOSES,  explained that                                                                   
the  amendment had  been  revised to  include  unincorporated                                                                   
communities  within boroughs.   The language  in the  earlier                                                                   
amendment addressed  only those outside  the lines.   The new                                                                   
#5  would  add  language  to  Page  14,  Line  22,  following                                                                   
"municipality",  inserting  "an  unincorporated  community,".                                                                   
He added  that there are about  fifty of this  type community                                                                   
throughout the State.                                                                                                           
                                                                                                                                
Additionally, on  Page 30, Line 19, the revised  Amendment #5                                                                   
would  insert  that  same  definition.   He  noted  that  the                                                                   
reference to A.S. 39.52.960 does  not contain a definition of                                                                   
unincorporated communities, making the amendment important.                                                                     
                                                                                                                                
There being  NO OBJECTION, the  new revised Amendment  #5 was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair  Harris  MOVED to  ADOPT  Amendment  #7.   (Copy  on                                                                   
File).    Co-Chair  Williams  OBJECTED  for  the  purpose  of                                                                   
discussion.                                                                                                                     
                                                                                                                                
Co-Chair Harris explained that  Amendment #7 would delete all                                                                   
the text on Page 15, Lines 4-5.   The amendment would provide                                                                   
an exemption for Union due payments.                                                                                            
                                                                                                                                
Representative   Whitaker  understood   that  the   need  was                                                                   
included in the "unreasonable" category.                                                                                        
                                                                                                                                
LARRY PERSILY,  DEPUTY COMMISSIONER,  DEPARTMENT OF  REVENUE,                                                                   
pointed out  that there had  been discussion during  drafting                                                                   
in regards  to Union  dues.  The  intent was  not to  tax the                                                                   
dues because "they are not a service, but a right".                                                                             
                                                                                                                                
Representative Whitaker reiterated  that he understood it was                                                                   
classified as  "intangible".  Co-Chair Harris  explained that                                                                   
the   action    was   necessary   to   guarantee    "absolute                                                                   
clarification".                                                                                                                 
                                                                                                                                
Representative Stoltze  asked if there were  any counter-band                                                                   
fees for  business management  that might  also be  exempted.                                                                   
Representative  Hawker  explained  that the  amendment  would                                                                   
make  the language  explicit  and  that during  the  drafting                                                                   
process it was  only "implicit" to the language  of the bill.                                                                   
In order to  itemize everything excluded from  the bill would                                                                   
take a  very long time.   He concluded  that the  State would                                                                   
need to rely on the intent behind the "words".                                                                                  
                                                                                                                                
Co-Chair  Williams WITHDREW  his OBJECTION.   There  being NO                                                                   
further OBJECTIONS, Amendment #7 was adopted.                                                                                   
                                                                                                                                
Representative  Moses introduced a  new amendment to  Page 3,                                                                   
Line  28,  deleting "except  as  specifically  prohibited  or                                                                   
limited" and  inserting "a" before "municipality".   Co-Chair                                                                   
Williams OBJECTED.                                                                                                              
                                                                                                                                
Mr.  Persily  stated  that  it  was not  the  intent  of  the                                                                   
legislation to limit or prohibit  a municipality from levying                                                                   
a specific excise  tax.  He acknowledged  that municipalities                                                                   
would be "more comfortable" if that language was removed.                                                                       
                                                                                                                                
Representative Whitaker  noted that he did not  object to the                                                                   
amendment.   There  being  NO  OBJECTION, the  amendment  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Vice-Chair  Meyer  noted  that  Representative  Chenault  had                                                                   
intended to offer an amendment,  however, he was not present.                                                                   
Co-Chair  Williams  acknowledged that  he  knew  of that  and                                                                   
recommended that the consideration be made in caucus.                                                                           
                                                                                                                                
Co-Chair  Harris MOVED  to  report  CS HB  293  (FIN) out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Kerttula OBJECTED.   She noted that Juneau has                                                                   
had  a sales  tax  for  a long  time  and that  the  proposed                                                                   
legislation would  be detrimental to not only  this community                                                                   
but also the entire State.                                                                                                      
                                                                                                                                
Vice-Chair Meyer  acknowledged that  the legislation  was not                                                                   
"perfect"  legislation  but  was  essential.   He  noted  his                                                                   
appreciation for all the hard  work done on the bill, voicing                                                                   
his support.                                                                                                                    
                                                                                                                                
Representative  Stoltze  echoed  the comments  made  by  Vice                                                                   
Chair Meyer.   He recommended that  the bill go to  the House                                                                   
floor for full debate.                                                                                                          
                                                                                                                                
Co-Chair  Harris noted  that  this was  the  first time  that                                                                   
Alaska has  seriously considered  a tax.   He noted  that the                                                                   
State is  headed into  some "rough  waters" and although  the                                                                   
legislation is  not the perfect form,  it is necessary.    He                                                                   
applauded the effort of the Ways  and Means Committee for the                                                                   
many hours  of work they  put in on  the legislation.   It is                                                                   
the responsibility  of elected  officials to determine  a way                                                                   
to  help  the   State  move  out  of  our   current  economic                                                                   
situation.                                                                                                                      
                                                                                                                                
Co-Chair Williams  noted his appreciation to  Mr. Persily and                                                                   
Ms.  Wilson   for  their   work  helping   to  clarify   this                                                                   
complicated  legislation and  added his  appreciation to  the                                                                   
Committee's members working on the bill.                                                                                        
                                                                                                                                
A roll  call vote was  taken on the  motion to move  the bill                                                                   
from Committee.                                                                                                                 
                                                                                                                                
IN FAVOR:      Meyer, Stoltze, Whitaker, Hawker, Harris,                                                                        
               Williams                                                                                                         
OPPOSED:       Kerttula, Moses, Berkowitz, Foster                                                                               
                                                                                                                                
Representative     Chenault,    Representative     Joule    &                                                                   
Representative Croft were not present for the vote.                                                                             
                                                                                                                                
The MOTION PASSED (6-4).                                                                                                        
                                                                                                                                
CS HB 293 (FIN) was reported out  of Committee with a "do not                                                                   
pass"  recommendation  and  with  new  fiscal  notes  by  the                                                                   
Department of Revenue and the Department of Law.                                                                                
                                                                                                                                
HOUSE BILL NO. 312                                                                                                            
                                                                                                                                
     An Act  giving notice  of and  approving the entry  into                                                                   
     and the issuance of certificates  of participation for a                                                                   
     lease-purchase agreement  for a seafood and  food safety                                                                   
     laboratory  facility;  relating to  the  use of  certain                                                                   
     investment  income for certain  construction costs;  and                                                                   
     providing for an effective date.                                                                                           
                                                                                                                                
Co-Chair  Harris  MOVED  to ADOPT  work  draft  version  #23-                                                                   
GH1134\I,  Bannister,   5/15/03,  as   the  version   of  the                                                                   
legislation before the Committee.   There being NO OBJECTION,                                                                   
it was adopted.                                                                                                                 
                                                                                                                                
Co-Chair Williams explained that  the bill would conform with                                                                   
the version coming from the Senate side.                                                                                        
                                                                                                                                
ERNESTA  BALLARD, COMMISSIONER,  DEPARTMENT OF  ENVIRONMENTAL                                                                   
CONSERVATION, commented  that the Department  was responsible                                                                   
for  protecting  the  environment  and  human  health.    She                                                                   
testified  to the  importance of  the lab.   The seafood  and                                                                   
food safety lab  analyzes raw, finished and  value-added food                                                                   
products  for bacteria,  chemicals,  and toxic  contaminants,                                                                   
maintaining    the   capabilities    and   Food   and    Drug                                                                   
Administration   (FDA)  certifications   that  private   labs                                                                   
cannot.   The Department operates  on schedules that  are not                                                                   
available  from private  labs and  assumes greater  liability                                                                   
needed   to   perform  analysis   for   paralytic   shellfish                                                                   
poisoning.     The   Department   cooperates  with   emerging                                                                   
industry,  such as the  growing dive  fisheries to  guarantee                                                                   
time-critical  water and raw  product analysis are  available                                                                   
and market commitments are met.                                                                                                 
                                                                                                                                
Commissioner Ballard  continued, the Department  is qualified                                                                   
to train  and certify private  labs so that they  can operate                                                                   
in established and high-demand testing markets.                                                                                 
                                                                                                                                
The  Department   of  Environmental  Conservation   leased  a                                                                   
facility in Palmer  for 34 years.  The new  facility will not                                                                   
be  available until  after  2006.   The  current facility  is                                                                   
overcrowded,  not  fully  compliant  with  safety  codes  and                                                                   
laboratory  design standards.  That  facility was  originally                                                                   
placed  in  Palmer  when  the   principal  lab  business  was                                                                   
agriculture  and dairy.   The  emerging  value added  seafood                                                                   
industries  in  coastal  Alaska have  added  significant  and                                                                   
time-sensitive testing demands  for the Department's service.                                                                   
The  proposed new  lab will  be in  Anchorage where  valuable                                                                   
hours could  be saved between  sample collection  and testing                                                                   
for raw and live seafood products.                                                                                              
                                                                                                                                
Commissioner Ballard continued,  the laboratory functions are                                                                   
essential  to  protect  the  health of  all  Alaskans.    The                                                                   
Governor,  past legislatures,  and the  commissioners of  the                                                                   
Department of Revenue, Department  of Transportation & Public                                                                   
Facilities,  and  Department  of  Environmental  Conservation                                                                   
have   reviewed   the   design    specifications,   equipment                                                                   
requirements  and   expense.    Alternative   locations  were                                                                   
considered  and financing  mechanisms for  a modern  facility                                                                   
sized  and  equipped  for long-term  service  to  the  State.                                                                   
Careful  consideration  was  given   to  the  possibility  of                                                                   
locating  in  remodeled Alaska  Seafood  International  (ASI)                                                                   
facility  space  in Anchorage.    Requirements  would  occupy                                                                   
approximately 5% of that space.                                                                                                 
                                                                                                                                
The process  of acquiring a new  seafood and food  safety lab                                                                   
began  seven  years  ago  with  a  feasibility  study.    The                                                                   
Department received  an appropriation of $150,000,  to obtain                                                                   
an independent  evaluation of  both build and  lease options.                                                                   
The analysis showed that the most  economical choice would be                                                                   
a State owned  laboratory financed with  lease/purchase bonds                                                                   
known  as Certificates  of  Participation.   The  Legislature                                                                   
agreed and in 2001 appropriated  $1,300,000 dollars to design                                                                   
the  facility, a  conservative and  cost conscious  proposal.                                                                   
She  emphasized  that the  building  design,  specifications,                                                                   
space   allocations,  and   the  financing   plan  were   all                                                                   
conservative.  The building contains  only laboratory and lab                                                                   
support  space.   Meeting and  classroom  facilities will  be                                                                   
available in  the adjacent public  health lab.   The building                                                                   
materials were selected for low  and simple maintenance.  The                                                                   
design   and  materials   are  similar   to  those  used   in                                                                   
constructing the  public health lab, built several  years ago                                                                   
on schedule  and within budget.   Laboratory fee  charges for                                                                   
services are being reviewed.   They compare well to fees used                                                                   
in other states.                                                                                                                
                                                                                                                                
Representative  Stoltze  interjected  that  the  project  and                                                                   
building  facility  was  too  large  and  asked  about  other                                                                   
alternatives.                                                                                                                   
                                                                                                                                
JOHN   MACKINNON,   DEPUTY   COMMISSIONER,    DEPARTMENT   OF                                                                   
TRANSPORTATION   &   PUBLIC    FACILITIES,   responded   that                                                                   
consideration  had been discussed  regarding the  facility in                                                                   
the ASI building.   He noted that the building  was too large                                                                   
and that another building could  actually fit inside it.  The                                                                   
space requirements  for the  lab would  consume around  5% of                                                                   
the  total area  in  ASI and  that  there would  be  "serious                                                                   
compromises" made  by doing it, limiting the  ability of that                                                                   
building to be used for anything  else.  When considering the                                                                   
overall cost,  there would be  little savings made.   The API                                                                   
building  was  designed  as a  stand-alone  structure.    The                                                                   
redesign  costs would  be  well over  $900,000  and it  would                                                                   
require complete separate mechanical system & electrical.                                                                       
                                                                                                                                
Mr. MacKinnon acknowledged that  initially, it appeared to be                                                                   
a  good idea;  however, with  all  the information  gathered,                                                                   
there would not be a tremendous  amount of savings to be made                                                                   
if it were located in that space.   He added that this design                                                                   
process has  been on going for  many years and  attempting to                                                                   
accommodate these needs.                                                                                                        
                                                                                                                                
Representative Stoltze inquired  how many employees would the                                                                   
facility employ.   Commissioner Ballard responded  that there                                                                   
are 11 employees.                                                                                                               
                                                                                                                                
Co-Chair  Harris  understood what  the  Department  considers                                                                   
this to  be a  vital need to  move the  lab to Anchorage  and                                                                   
having closer access  to the airport.  He asked  if there had                                                                   
been  any attempt  to address  the City  of Palmer's  concern                                                                   
with the  possible move.   Commissioner  Ballard pointed  out                                                                   
that there are approximately 23  employees in the Valley area                                                                   
and  that only  11 would  be moved.   The  reason for  adding                                                                   
additional  staff  would  be particularly  for  the  drinking                                                                   
water certification.  Those needs  are growing as the State's                                                                   
population  expands.    All employees  would  remain  in  the                                                                   
Palmer area except the ones working in the laboratory.                                                                          
                                                                                                                                
Co-Chair  Harris questioned  why  such a  large facility  was                                                                   
needed.  Commissioner Ballard  explained that the utilization                                                                   
of the space would be about 50/50.   The portion used for the                                                                   
labatory testing activities versus  equipment space, requires                                                                   
a certain  amount  of isolation.   Using half  the space  for                                                                   
isolation  is  important to  protect  the integrity  of  that                                                                   
work.                                                                                                                           
                                                                                                                                
Co-Chair   Harris  asked   for   more  information   on   the                                                                   
certificate of  participation bonding and/or funding  for the                                                                   
project.                                                                                                                        
                                                                                                                                
TOM  BOUTIN,  DEPUTY  COMMISSIONER,  DEPARTMENT  OF  REVENUE,                                                                   
explained that  lease financing was a mechanism  of financing                                                                   
building  that  the  State  issues.    The  State  uses  that                                                                   
mechanism, as  do all other  states and municipalities.   The                                                                   
debt service is subject to annual  appropriation and for that                                                                   
reason, the credit  is normally rated much below  the general                                                                   
obligation (GO) rate of the issuer.                                                                                             
                                                                                                                                
Co-Chair  Harris  asked who  would  own  the building.    Mr.                                                                   
Boutin  responded  that a  feature  of a  lease-financing  or                                                                   
capital  lease is  that at  the end  of the  lease term,  the                                                                   
lessee owns the  building.  In a capital lease  as opposed to                                                                   
an operating  lease, the  lessee becomes  the owner.   During                                                                   
the lease term,  there is a trustee who has  an obligation on                                                                   
behalf of the bondholder to enter  and take over the facility                                                                   
on behalf of the best interest of the bondholders.                                                                              
                                                                                                                                
Representative Hawker  asked why the  State was in  this type                                                                   
business,  noting that  it appeared  to be  "out sourcing  of                                                                   
services",  which  should  be  left in  the  private  sector.                                                                   
Commissioner  Ballard  advised that  whenever  they can,  the                                                                   
State  gets out  of the  "testing"  business.   The State  no                                                                   
longer  does testing  of drinking  water.   The only  testing                                                                   
that  the  States  currently  does are  those  that  are  not                                                                   
available  through  private lavatories.    If  a private  lab                                                                   
sought the  certification, then  the State would  not compete                                                                   
with them.  She pointed out that  it is unlikely that private                                                                   
labs would  perform this type  testing as there  is generally                                                                   
not enough volume and it needs to be done on a 24/7.                                                                            
                                                                                                                                
Representative Hawker  inquired why the private  industry has                                                                   
not  expressed   interest  in   undertaking  this   activity.                                                                   
Commissioner Ballard  advised that  the fees that  would need                                                                   
to be charged, the schedule of  maintaining the equipment and                                                                   
the   rigorous  certification   requirements   would   simply                                                                   
preclude  the  investment  of  working  capital  for  private                                                                   
enterprise   for   performing   these   tests.      The   lab                                                                   
certification   requirements   certify   the   facility   and                                                                   
technicians.   The technicians  must be certified  to operate                                                                   
the new facility  and that they have to be  available.  There                                                                   
is  not a  large  enough market  in  Alaska  and that  market                                                                   
expects turn-around on its schedule.   The State provides the                                                                   
service  at the same  cost that  the industry  would find  in                                                                   
other states.                                                                                                                   
                                                                                                                                
Representative Hawker  argued that the State could  not do it                                                                   
cheaper.    Commissioner  Ballard disagreed.    She  reminded                                                                   
members that the  general fund subsidizes the  service in the                                                                   
way that it  subsidizes other public services,  considered to                                                                   
be in the interest of the State's citizens.                                                                                     
                                                                                                                                
Co-Chair Harris  asked again what  the general  "feeling" was                                                                   
currently in the  Palmer area regarding moving  the facility.                                                                   
Representative  Stoltze  observed that  it  was  viewed as  a                                                                   
"slap in the  face" to the agriculture industry.   He pointed                                                                   
out that he  does not represent that entire  "physical area",                                                                   
however, does represent the entire  valley.  He repeated that                                                                   
there is not a good feeling around the proposed change.                                                                         
                                                                                                                                
Co-Chair Williams remembered that  three years ago, a similar                                                                   
bill passed  from Committee  to undertake  basic design  work                                                                   
and that this concern had been  discussed during the last two                                                                   
legislative sessions.                                                                                                           
                                                                                                                                
Representative  Kerttula  noted  her  appreciation  that  the                                                                   
Department has  considered what  is happening in  Juneau with                                                                   
closure of the lab.  She hoped  that would make it easier for                                                                   
the employees and the University.                                                                                               
                                                                                                                                
ROGER PAINTER, ALASKA SHELLFISH  GROWERS ASSOCIATION, JUNEAU,                                                                   
testified in support of the bill.   He commented that the lab                                                                   
needs  a new  facility.   There  has  been  interest in  S.E.                                                                   
Alaska but  there is not enough  commerce related to  the lab                                                                   
to locate it in the Southeast  area.  He acknowledged that an                                                                   
Anchorage location would make the most sense.                                                                                   
                                                                                                                                
Mr.  Painter responded  to queries  regarding private  sector                                                                   
testing,  pointing out  that it  is easier  to go to  Seattle                                                                   
than to  get samples to  Palmer.  There  are no  private labs                                                                   
that can test marine samples and  no private labs anywhere in                                                                   
the  United States  that can  check  for paralytic  shellfish                                                                   
poisoning  or  other harmful  problems.   Assuming  that  the                                                                   
private sector  will step up  to contract for  these services                                                                   
is not an option.  He added that  in support of comments made                                                                   
by Commissioner  Ballard regarding fees, the  costs are below                                                                   
what would be paid to a private lab.                                                                                            
                                                                                                                                
Representative  Hawker noted  that he  was supportive  of the                                                                   
State's mari-culture activities.   He asked if there were any                                                                   
alternative  facilities  for  that  type  of  testing.    Mr.                                                                   
Painter  replied that  there is  not for  either the  growing                                                                   
water  certification or  for paralytic  shellfish  poisoning.                                                                   
He noted  that Washington  State is  the largest producer  of                                                                   
oysters  and clams  and that  he  had contacted  all labs  in                                                                   
Seattle, finding no testers.                                                                                                    
                                                                                                                                
Representative Hawker  asked if this type testing  was unique                                                                   
to  Alaska.   Mr.  Painter  replied  that these  are  federal                                                                   
requirements and  that the State must comply  with those laws                                                                   
in order  to participate in  interstate commerce.   Providing                                                                   
public health protection is an important service.                                                                               
                                                                                                                                
Representative   Hawker   asked   if   there   were   federal                                                                   
regulations in place in the Pacific  Northwest, then why were                                                                   
the services not  available.  Mr. Painter explained  that the                                                                   
State of Washington  does provide testing services  and has a                                                                   
somewhat  different  testing  program in  that  they  certify                                                                   
large areas,  which is  more cost  effective than working  on                                                                   
the  issues in  Alaska  where everything  is  remote and  the                                                                   
farms  are  separated.    The   Department  of  Environmental                                                                   
Conservation  is working  in  those areas  where  there is  a                                                                   
concentration of farms in order to certify larger areas.                                                                        
                                                                                                                                
KRISTIN RILIN,  DIRECTOR, DIVISION  OF ENVIRONMENTAL  HEALTH,                                                                   
DEPARTMENT  OF  ENVIRONMENTAL  CONSERVATION, added  that  the                                                                   
Federal Drug  Administration (FDA) certifies  laboratories to                                                                   
perform  the  testing.    Paralytic  shellfish  poison  is  a                                                                   
dangerous toxin and  is heavily regulated.   Because of that,                                                                   
private lavatories are not interested in the liability.                                                                         
                                                                                                                                
Representative  Foster   asked  how  the  costs   were  being                                                                   
determined.  Ms. Rilin replied  that the costs were not based                                                                   
on the costs of  running the tests.  She added  that the fees                                                                   
would need to  change to meet the operating  costs associated                                                                   
with the laboratory.                                                                                                            
                                                                                                                                
HB 312 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
                                                                                                                                
TAPE HFC 03 - 97, Side B                                                                                                      
                                                                                                                                
HOUSE BILL NO. 28                                                                                                             
                                                                                                                                
     An Act relating to adjustments to royalty reserved to                                                                      
     the state to encourage otherwise uneconomic production                                                                     
     of oil and gas; and providing for an effective date.                                                                       
                                                                                                                                
REPRESENTATIVE VIC KOHRING explained  that HB 28 would take a                                                                   
royalty  adjustment  system  that is  an  understandable  and                                                                   
usable  adjustment method  for  fields that  might  otherwise                                                                   
prove to  be uneconomic.   It would  provide a usable  system                                                                   
for reduction  of royalties belonging  to Alaska so  that the                                                                   
State could encourage  production of oil and  gas fields that                                                                   
might be  marginal or  not economically  feasible if  it were                                                                   
not for such reductions.                                                                                                        
                                                                                                                                
The bill  is not  new, but  it sets  forth an  understandable                                                                   
modification  formula; protecting  the  public's interest  in                                                                   
such  proceedings and  maintaining  the  public's ability  to                                                                   
comment on  the preliminary  findings and determination  made                                                                   
by the  Commissioner.   The Department  of Natural  Resources                                                                   
Commissioner would  provide the tools necessary  to negotiate                                                                   
with the drilling  companies for both oil and  gas production                                                                   
to determine if  they are financially viable.   If the fields                                                                   
are  not  economically  viable, the  legislation  would  take                                                                   
action to  decide what the  royalty reduction would  be based                                                                   
on the economics of that field.                                                                                                 
                                                                                                                                
Representative  Kohring pointed out  that the State's  normal                                                                   
share is established  at 12.5%, but could run as  high as 20%                                                                   
depending upon the field.  A royalty  reduction allowed under                                                                   
HB 28 would depend on changes  in oil prices, field recovery,                                                                   
production rate  and operating costs.   The rate could  be as                                                                   
low as 3%.                                                                                                                      
                                                                                                                                
Representative Kohring  stressed that the  Commissioner would                                                                   
need to  establish that the  field was economically  situated                                                                   
before  it would  be  granted.   The determination  would  be                                                                   
based  upon  a detailed  analysis,  professional  evaluation.                                                                   
The  evaluation could  be  done either  internally  or by  an                                                                   
outside  company   that  has   expertise  in  that   type  of                                                                   
evaluation.   The State would  be reimbursed the cost  of the                                                                   
evaluation.   The  amount would  be capped  at $150  thousand                                                                   
dollars.                                                                                                                        
                                                                                                                                
Representative  Kerttula MOVED  to ADOPT  Amendment #1,  #23-                                                                   
LS0177\V.2, Chenoweth,  5/15/03.   (Copy on File).   Co-Chair                                                                   
Williams OBJECTED.                                                                                                              
                                                                                                                                
Representative  Kerttula  noted that  in  the last  Committee                                                                   
hearing,  there  had been  a  deletion  of the  section  that                                                                   
allows   legislators    to   receive   signed    confidential                                                                   
information.    The information  is  critical  in order  that                                                                   
legislators  can look at  certain records.   It is  something                                                                   
that  has  been  done  for  over   25-years.    The  proposed                                                                   
amendment would  "un-delete" that proposed  section, allowing                                                                   
access to confidential information.   She understood that the                                                                   
sponsor supported the change.                                                                                                   
                                                                                                                                
REPRESENTATIVE   NORM  ROKEBERG   agreed,  noting   that  the                                                                   
original presumption  on that deletion  was that it  would be                                                                   
standard   procedure   under   executive   privilege.      He                                                                   
acknowledged that  the language  needs to be re-entered  into                                                                   
the legislation.                                                                                                                
                                                                                                                                
There being NO OBJECTION, Amendment #1 was adopted.                                                                             
                                                                                                                                
Representative  Kerttula MOVED  to ADOPT  Amendment #2,  #23-                                                                   
LS0177\V.3, Chenoweth,  5/15/03.   (Copy on File).   Co-Chair                                                                   
Williams OBJECTED.                                                                                                              
                                                                                                                                
Representative Kerttula  pointed out that the  sponsor had no                                                                   
objection  with  the  grammatical  changes  proposed  by  the                                                                   
language  of   the  amendment.     There  being   NO  further                                                                   
OBJECTION, Amendment #2 was adopted.                                                                                            
                                                                                                                                
Representative  Kerttula MOVED  to ADOPT  Amendment #3,  #23-                                                                   
LS0177\V.1, Chenoweth,  5/15/03.  (Copy on File).    Co-Chair                                                                   
Williams OBJECTED.                                                                                                              
                                                                                                                                
Representative  Rokeberg requested  that a  simple change  be                                                                   
made to the amendment.                                                                                                          
                                                                                                                                
Representative  Kerttula  read  the language  recommended  by                                                                   
Representative  Rokeberg to be  added to the amendment,  Line                                                                   
12,  after "approval"  inserting "shall  not be  unreasonably                                                                   
withheld by", and deleting "of".                                                                                                
                                                                                                                                
Representative  Rokeberg reiterated  that  as amended,  there                                                                   
would  be no  objection to  inserting that  language.   There                                                                   
being  NO further  OBJECTION,  Amendment  #3  as amended  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Co-Chair   Harris  referenced   the  fiscal  note   analysis,                                                                   
pointing out  that the Division of  Oil and Gas had  not been                                                                   
complimentary.    He  asked  if  the  Administration  was  in                                                                   
support of the proposed legislation.                                                                                            
                                                                                                                                
MARK  MEYERS,   (TESTIFIED  VIA  TELECONFERENCE),   DIRECTOR,                                                                   
DIVISION  OF OIL AND  GAS, DEPARTMENT  OF NATURAL  RESOURCES,                                                                   
ANCHORAGE,  noted that  the Administration  does support  the                                                                   
bill.   The  Division believes  that the  bill would  clarify                                                                   
problems  that  have  been  identified  with  the  bill  with                                                                   
previous  royalty  reduction   statutes.    The  fiscal  note                                                                   
adequately reflects the changes  recommended in the bill with                                                                   
the  royalty  reductions.   The  fiscal  note  was  carefully                                                                   
thought out.   The Division is comfortable with  the proposed                                                                   
version of the legislation.                                                                                                     
                                                                                                                                
Co-Chair  Harris pointed  out  that the  analysis  identifies                                                                   
problems  with   hydrocarbon  cost  allocation   for  royalty                                                                   
relief.   The proposed  legislation would  open the  door for                                                                   
every oil and gas  reservoir in the State to  be eligible for                                                                   
a royalty  reduction.  He acknowledged  that it would  not be                                                                   
possible to accurately predict  what the fiscal impact of the                                                                   
legislation will be and could be a negative impact.                                                                             
                                                                                                                                
Mr. Meyers admitted  that in an earlier version  of the bill,                                                                   
those problems  were present.   Since  that time, the  fiscal                                                                   
note applies to  the current version; all concerns  have been                                                                   
properly addressed.  The earlier  version did not address the                                                                   
previous history of the statute.                                                                                                
                                                                                                                                
Representative  Whitaker asked what  would be the  advantages                                                                   
and risks to the State through the proposed legislation.                                                                        
                                                                                                                                
Mr. Meyer explained  that there would be no  additional risks                                                                   
to the State.  [Testimony inaudible].                                                                                           
                                                                                                                                
He added that the bill would allow  for a lot of flexibility.                                                                   
The Commissioner will be able  to adjust as the conditions in                                                                   
the  market  place  change.    It  is  important  that  there                                                                   
continues to be legislative oversight.                                                                                          
                                                                                                                                
Vice-Chair Meyer  asked if the  legislation was  intended for                                                                   
only the  Cook Inlet area or  would it apply statewide.   Mr.                                                                   
Meyer  confirmed that  it  will apply  statewide  and in  any                                                                   
place the State receives royalty  on State lands.  Vice-Chair                                                                   
Meyer stated  for the record that  he "might have  a conflict                                                                   
of interest" regarding the legislation.                                                                                         
                                                                                                                                
Representative Foster MOVED to  report CSSSHB 28 (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying new  fiscal note.  There being  NO OBJECTION, it                                                                   
was so ordered.                                                                                                                 
                                                                                                                                
CSSSHB  28 (FIN) was  reported  out of Committee  with  a "no                                                                   
recommendation" and with a new  fiscal note by the Department                                                                   
of Natural Resources.                                                                                                           
                                                                                                                                
SENATE BILL NO. 216                                                                                                           
                                                                                                                                
     An Act relating to international airports revenue                                                                          
     bonds; and providing for an effective date.                                                                                
                                                                                                                                
MICHAEL BARTON, COMMISSIONER,  DEPARTMENT OF TRANSPORTATION &                                                                   
PUBLIC  FACILITIES, explained  that the  bill would  increase                                                                   
the  cumulative   authorization  for  international   airport                                                                   
revenue bonds to support capital  improvement projects at the                                                                   
Ted Stevens  Anchorage International Airport &  the Fairbanks                                                                   
International  Airport.     The  bill  would   authorize  the                                                                   
issuance of $76 million dollars  in revenue bonds.  Those two                                                                   
airports  are   jointly  managed   as  part  of   the  Alaska                                                                   
International  Airport system.   The  costs and revenues  are                                                                   
pooled.    The   system  is  operated  through   the  airport                                                                   
operating agreement,  a contract between the  airport and the                                                                   
airlines.  It  establishes the business relationships  at the                                                                   
airport,  obligates  the airlines  to  pay  for the  cost  of                                                                   
running  &   maintaining  the   airport,  including   capital                                                                   
projects and bonded  indebtedness through the  rates and fees                                                                   
charged at the  airports.  It also obligates  the airports to                                                                   
secure agreements on costs with the airlines.                                                                                   
                                                                                                                                
The airlines  agreed in  1997 to  the terminal  redevelopment                                                                   
project.   The bonds  requested through  the legislation  are                                                                   
revenue  bonds.  There  were two  previous  issues in 1999  &                                                                   
2002.   The current issue  would constitute no  obligation of                                                                   
the State.  The bonds would be  insured and there would be no                                                                   
general fund  money involved.   There  are three reasons  for                                                                   
the need for additional funds:                                                                                                  
                                                                                                                                
   ·    Transportation    Security    Administration    (TSA)                                                                   
        security requirements;                                                                                                  
   ·    Added square footage requested; and                                                                                     
   ·    Design problems, which caused delays.                                                                                   
                                                                                                                                
Commissioner   Barton   noted   the   Department   had   been                                                                   
negotiating with  the airlines  since January 2003  regarding                                                                   
how to cover  the cost overrun.   An agreement in  some areas                                                                   
was  reached  acknowledging  that  Concourse C  needs  to  be                                                                   
completed.   Completion is scheduled  for about in  about one                                                                   
year.   Another concern  is the deferral  of the  $60 million                                                                   
dollars  in capital  projects;  project  will continue  using                                                                   
federal money.                                                                                                                  
                                                                                                                                
Commissioner Barton referenced  the two handouts.  (Copies on                                                                   
File).    Page  18 of  the  "Business  Planning  Information"                                                                 
outlines the bonding requirement.   Approximately $48 million                                                                   
dollars is estimated  for the completion of  Concourse C; $10                                                                   
million dollars needed for the  match money for federal funds                                                                   
on the  capital project  in Anchorage;  $3.5 million  dollars                                                                   
needed  for  capital  projects   in  Fairbanks;  $15  million                                                                   
dollars  for the bond  issuance costs.   Commissioner  Barton                                                                   
stated that the Asian Pacific  markets have produced the most                                                                   
revenue.                                                                                                                        
                                                                                                                                
Representative Hawker  asked if the  Airport Fund was  out of                                                                   
cash.   Commissioner Barton responded  that only  the project                                                                   
needs funds.                                                                                                                    
                                                                                                                                
Representative  Hawker stated  that  there was  a balance  of                                                                   
$81.8 million dollars  as of June 30, 2002 in  that fund.  He                                                                   
asked if some of  that fund balance could be  used to address                                                                   
this concern.   Commissioner Barton noted that  it was agreed                                                                   
to use some of those funds for  the portion from the terminal                                                                   
to Concourse  C.  In order  to lessen the impact  on airlines                                                                   
in future years,  the Department has agreed  to contribute $1                                                                   
million  per year  from  that  fund, as  well  as $2  million                                                                   
dollars per  year from patent  facility charges.   He pointed                                                                   
out the  impact on  rates and  fees listed on  Page 20.   The                                                                   
projection  has been made  for the  completion of the  entire                                                                   
terminal and not just Concourse C.                                                                                              
                                                                                                                                
Representative  Hawker  asked  if  the  number  included  the                                                                   
increase  required to  meet the debt  service.   Commissioner                                                                   
Barton responded that it had been  included in those numbers.                                                                   
Representative  Hawker asked the  rationale, commenting  that                                                                   
"to an  extreme";  it could be  funded entirely  out of  that                                                                   
fund balance.    Commissioner Barton did not  believe that it                                                                   
could be  cash funded  entirely as the  State is  required to                                                                   
retain  1.25  times  the debt  service,  necessary  from  the                                                                   
previous  bond  issuance.    There  are  additional  on-going                                                                   
costs.    The airport  is  not  designed  to make  money  but                                                                   
instead  to break  even  and the  fees  reflect a  break-even                                                                   
situation.   Representative Hawker  maintained that  the cash                                                                   
reserve numbers were unclear.                                                                                                   
                                                                                                                                
Representative  Stoltze asked what  concerns had  been voiced                                                                   
by Senator Olson.  Commissioner  Barton stated that the House                                                                   
Transportation  Committee  had reviewed  the  plan and  added                                                                   
that  Senator  Olson's  concerns   were  related  to  general                                                                   
aviation  parking  and  not  related  to  completion  of  the                                                                   
concourse base.                                                                                                                 
                                                                                                                                
Co-Chair Harris asked if the new  concourse would exclusively                                                                   
be used  by Alaska Airlines.   Commissioner Barton  responded                                                                   
that they would be the major occupants.                                                                                         
                                                                                                                                
Co-Chair Harris  asked if there  would be increased  fees for                                                                   
some of the  airlines to help cover the costs.   Commissioner                                                                   
Barton  replied  that the  airlines  through  rates and  fees                                                                   
would pay the  entire bond.  Co-Chair Harris  inquired if the                                                                   
Department was  asking for an increase.   Commissioner Barton                                                                   
stated they were and that all  occupants agree that Concourse                                                                   
C should be completed.                                                                                                          
                                                                                                                                
Representative  Berkowitz inquired  if there  were any  side-                                                                   
boards  on  the  initial  bonding  authority.    Commissioner                                                                   
Barton responded  that the proposed  bill was the same  as an                                                                   
earlier proposed bill, authorizing the bonds.                                                                                   
                                                                                                                                
Representative  Berkowitz commented  on some  of the  issues,                                                                   
which have given  rise to increasing the number.   These have                                                                   
been questioned  by other legislators  who would like  to see                                                                   
some  insurance  that the  problem  will not  repeat  itself.                                                                   
Commissioner  Barton stated that  the urgency exists  because                                                                   
the project  will run out of  cash in September 2003.   After                                                                   
that emergency  is resolved, then  the entire  situation will                                                                   
be analyzed.                                                                                                                    
                                                                                                                                
Representative  Berkowitz asked  if there  would be  only one                                                                   
staircase  operator  at  the airport.    Commissioner  Barton                                                                   
offered to check into that.                                                                                                     
                                                                                                                                
Vice-Chair  Meyer MOVED  to report  SB 216  out of  Committee                                                                   
with  individual recommendations  and  with the  accompanying                                                                   
fiscal note.  There being NO OBJECTION, it was so ordered.                                                                      
                                                                                                                                
SB  216  was reported  out  of  Committee  with a  "do  pass"                                                                   
recommendation and  with fiscal note #1 by  the Department of                                                                   
Revenue.                                                                                                                        
                                                                                                                                
HOUSE BILL NO. 301                                                                                                            
                                                                                                                                
An Act  establishing the Knik  Arm Bridge and  Toll Authority                                                                   
and  relating  to  that  authority;   and  providing  for  an                                                                   
effective date.                                                                                                                 
                                                                                                                                
MICHAEL BARTON, COMMISSIONER,  DEPARTMENT OF TRANSPORTATION &                                                                   
PUBLIC FACILITIES,  explained that  the bill would  establish                                                                   
an independent authority  to build and operate  a toll bridge                                                                   
over  Knik Arm.    The authority  would  be  able to  receive                                                                   
federal money  and issue  revenue bonds  to finance  the toll                                                                   
bridge and its  appurtenant facilities.  The  authority would                                                                   
design, construct, and operate the bridge and the facility.                                                                     
                                                                                                                                
The authority would  be a public corporation  that would have                                                                   
a separate independent  legal existence from the  State.  The                                                                   
revenue  of  the  authority  would not  become  part  of  the                                                                   
general  fund and  the  property of  the  authority would  be                                                                   
exempt from taxation.                                                                                                           
                                                                                                                                
Commissioner Barton continued,  the bill establishes a three-                                                                   
person board to  govern the authority.  The  commissioners of                                                                   
the   Department   of   Revenue   and   the   Department   of                                                                   
Transportation & Public Facilities  would serve on the board,                                                                   
along with a member of the public,  appointed by the Governor                                                                   
for a five-year term.                                                                                                           
                                                                                                                                
Representative  Kerttula  referenced Page  3,  Lines 4-6  and                                                                   
voiced  concern  with  what could  happen  if  the  authority                                                                   
failed.  If that occurred, would  the Legislature retain only                                                                   
the power to pull back funding.                                                                                                 
                                                                                                                                
TOM  BOUTIN,  DEPUTY  COMMISSIONER,  DEPARTMENT  OF  REVENUE,                                                                   
explained  that typically  in stand-alone  revenue bonds,  if                                                                   
there are bonds,  authorized by the Legislature,  there would                                                                   
be a  trustee who  would have  the ability  to take  over the                                                                   
entire facility and manage it  under the worse case scenario.                                                                   
The  bill  would  not  have  the  State's  moral  or  general                                                                   
obligation.                                                                                                                     
                                                                                                                                
Representative Kerttula asked  if that was standard language.                                                                   
Mr. Boutin  advised that any  new debt would  require further                                                                   
authorization.    It  is  typical  language  for  stand-alone                                                                   
revenue bond authority.                                                                                                         
                                                                                                                                
Representative  Kerttula  referenced  Page  3,  Lines  21-23,                                                                   
which lists  the powers.   She inquired if "planned,"  meant,                                                                   
"developing".     Commissioner  Barton  responded   that  was                                                                   
implicit.   Representative Kerttula  continued, Page  4, Line                                                                   
6, asking  what would happen  if the State received  "gifted"                                                                   
grants or authority.  Commissioner Barton [inaudible].                                                                          
                                                                                                                                
Representative  Kerttula noted concern  with the  language on                                                                   
Page  12, Lines  6-9, the  exemption  from local  regulation.                                                                   
That  language gives  the authority  complete exemption  from                                                                   
land  use  planning,  zoning  and  permitting  power  of  any                                                                   
political  subdivision.   She  asked what  local  communities                                                                   
felt about inclusion  of that language.   Commissioner Barton                                                                   
responded  that the language  was standard  for a project  of                                                                   
this size and stated that he did  not know what the community                                                                   
thought  about   the  verbiage.     Representative   Kerttula                                                                   
emphasized her concern with the  zoning affect.  Commissioner                                                                   
Barton added  that the communities  would each have  a member                                                                   
on the board.                                                                                                                   
                                                                                                                                
Representative Berkowitz asked  if there was a reason to rush                                                                   
into the  activity of the  proposed authority.   Commissioner                                                                   
Barton responded  that this could  be an "investment  for the                                                                   
future of Alaska".   The authority could provide  a focus and                                                                   
impetus  to move  the  project  forward.   He  noted that  he                                                                   
anticipated  process delays  and that  the legislation  could                                                                   
help facilitate getting the crossing built.                                                                                     
                                                                                                                                
Representative  Berkowitz  noted  concern  with  power  of  a                                                                   
bridge authority.   He  recommended moving  more slowly  as a                                                                   
legislative  body  and  proposing a  more  modified  version.                                                                   
Commissioner  Barton commented that  the authority  will only                                                                   
have the power that the Legislature grants.                                                                                     
                                                                                                                                
Representative  Berkowitz  emphasized  his concern  with  the                                                                   
composition of the board of directors  on that authority.  On                                                                   
Page 3, he  noted questions regarding the "powers  and duties                                                                   
of the  authority" on real and  personal property.   He added                                                                   
that it is mentioned that the  purpose of the authority is to                                                                   
advance  the  "economic  development   of  the  State".    In                                                                   
creating  an  authority,  there  needs  to be  more  time  to                                                                   
develop  the   authority's  mission.    Commissioner   Barton                                                                   
observed that it  is important that "both ends  of the bridge                                                                   
be involved".   The  impact extends  beyond the influence  of                                                                   
the actual bridge.                                                                                                              
                                                                                                                                
HB 301 was HELD in Committee for further consideration.                                                                         
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 26                                                                                                 
                                                                                                                                
     Proposing  amendments to the  Constitution of  the State                                                                   
     of Alaska  relating to and limiting  appropriations from                                                                   
     and  inflation proofing  the  Alaska  permanent fund  by                                                                   
     establishing a percent of market value spending limit.                                                                     
                                                                                                                                
Co-Chair Williams  assigned HJR 26 to a Subcommittee  to work                                                                   
on during the interim.  Members  of the subcommittee will be:                                                                   
Representative    Meyer,   Chair,    Representative    Joule,                                                                   
Representative    Croft,    Representative    Whitaker    and                                                                   
Representative Chenault.                                                                                                        
                                                                                                                                
ROBERT D. STORER,  EXECUTIVE DIRECTOR, ALASKA  PERMANENT FUND                                                                   
CORPORATION, DEPARTMENT OF REVENUE,  expressed that the Board                                                                   
of Trustees believes that it is  important to inflation proof                                                                   
the fund.                                                                                                                       
                                                                                                                                
                                                                                                                                
TAPE HFC 03 - 98, Side A                                                                                                      
                                                                                                                              
                                                                                                                                
Mr. Storer noted  that currently that it is in  statute.  The                                                                   
Legislature  has always  inflation  proofed  to maintain  the                                                                   
purchasing  power of the  fund.   This could inflation  proof                                                                   
the  entire fund  and not  just  the principle  of the  fund,                                                                   
which    could be achieved  by a spending limit,  which would                                                                   
suggest that  limit be no more  than 5% of the  5-year moving                                                                   
average of the fund.  Less could be appropriated.                                                                               
                                                                                                                                
Mr. Storer  explained that  could be  achieved by a  spending                                                                   
limit.  The Board suggests that  the limit be no more than 5%                                                                   
of the  five-year moving  average of the  fund and  that less                                                                   
could  be  appropriated.    Currently,  the  entire  earnings                                                                   
reserve could  be appropriated  so the magnitude  varies from                                                                   
year  to year.   There  have been  "big swings  based on  the                                                                   
market  conditions".     Using  a  moving   average  improves                                                                   
stability each year versus the status quo.                                                                                      
                                                                                                                                
The 5%  number was determined  by looking at  historical data                                                                   
and  prospectively  at  the  capital   markets,  the  current                                                                   
diversified portfolio will be  able to achieve 5% real income                                                                   
over  inflation.   The  old statute  was  developed about  26                                                                   
years ago  at a time  when people  only thought about  bonds.                                                                   
Now  that  more  is invested  in  the  equity  market,  amore                                                                   
volatile high-expected  return, half of the  fund is invested                                                                   
in  that market.   There  will  be more  volatility and  less                                                                   
income unless the managers take  profits over time.  He added                                                                   
this is more  predictable than the current methodology.   The                                                                   
computation  would be  from the five  previous fiscal  years.                                                                   
That  would provide  the legislators  information in  January                                                                   
each year to know the exact amount of available funds.                                                                          
                                                                                                                                
Mr. Storer  noted that at present  time, there is  a positive                                                                   
earnings reserve at  about $2 billion dollars.   The fund has                                                                   
incurred much  volatility to  date.   What is being  proposed                                                                   
would substantially increase the  predictability of the fund.                                                                   
                                                                                                                                
Co-Chair  Williams   requested  further  definition   of  the                                                                   
language of the resolution.                                                                                                     
                                                                                                                                
BOB BARTHOLOMEW,  CHIEF OPERATING  OFFICER, ALASKA  PERMANENT                                                                   
FUND  CORPORATION, DEPARTMENT  OF REVENUE,  pointed out  that                                                                   
the  version   before  the  Committee  was  from   the  House                                                                   
Judiciary  Committee.     Basically,   that  is   a  two-page                                                                   
amendment making  changes to the constitution.   The title is                                                                   
a policy statement  regarding why the trustees  are proposing                                                                   
the change to protect the Permanent Fund from inflation.                                                                        
                                                                                                                                
Mr. Bartholomew noted that the  first change was indicated on                                                                   
Page 1,  Line 10, referring to  a new second paragraph  to be                                                                   
added  to the  constitution.   Page 1,  Line 11  is the  most                                                                   
significant change,  which would delete "principal"  and that                                                                   
the Permanent Fund  would be protected with  a spending limit                                                                   
of up to 5% per year, which could  be taken.  That would be a                                                                   
policy  call to  balance.    Incorporating the  new  language                                                                   
would  provide   that  there   would  always  be   an  annual                                                                   
distribution from  the fund limited to 5%.   The action would                                                                   
balance the  benefit of providing  a distribution  every year                                                                   
against the  short-term risk of  spending down the fund.   He                                                                   
acknowledged that would be a significant policy decision.                                                                       
                                                                                                                                
Mr. Bartholomew continued, Page  1, Lines 13-14, would delete                                                                   
the language  "all income  from the  Permanent Fund  shall be                                                                   
deposited in  the General Fund  unless otherwise  provided by                                                                   
law".   The intent  would be  that all  income earned  by the                                                                   
Permanent Fund  remain in the fund.   The two pools  of funds                                                                   
would   be  combined   which  would  not   need  a   separate                                                                   
itemization of where the income was placed.                                                                                     
                                                                                                                                
Page 2, Line  2, begins the new paragraph,  which establishes                                                                   
a not to exceed  spending limit of 5% of the  year-end market                                                                   
value.    That amount  is averaged  over a five-year  period.                                                                   
Page 2,  Line 4,  clarifies that  it would  be for the  first                                                                   
five  of the  six fiscal  years,  immediately preceding  that                                                                   
fiscal year.   Under current  rules, the available  amount is                                                                   
not known  because the five-year  average used,  includes the                                                                   
        th                                                                                                                      
June  30  of  the  present year.    Looking  back six  years,                                                                   
                         th                                                                                                     
making  the last June  30  the  end point  for the  following                                                                   
year,  provides   information  indicating  exactly   what  is                                                                   
available for Legislative appropriation.                                                                                        
                                                                                                                                
Mr. Bartholomew stated that Section  #3 provides the language                                                                   
proposed by  Legislative Legal, transitional  language, which                                                                   
clarifies  that  any  money in  the  earnings  reserve  would                                                                   
remain a part of the Permanent  Fund and states that it would                                                                   
stay with the Permanent Fund.                                                                                                   
                                                                                                                                
Mr.  Bartholomew noted  that Section  #4  stipulates that  to                                                                   
make it  effective to  change the  constitution, it  would go                                                                   
before the  voters of  Alaska at  the next general  election,                                                                   
November 2004.                                                                                                                  
                                                                                                                                
Co-Chair  Williams   appointed  a  subcommittee   to  address                                                                   
concerns  of the  legislation.   Representative  Meyer  would                                                                   
chair  the Subcommittee  with  members Representative  Croft,                                                                   
Representative   Chenault,   Representative   Whitaker,   and                                                                   
Representative   Joule.      Co-Chair   Williams   encouraged                                                                   
statewide participation.                                                                                                        
                                                                                                                                
HJR 126 was HELD in Committee for further consideration.                                                                        
                                                                                                                                
SENATE BILL NO. 41                                                                                                            
                                                                                                                                
     An Act relating to medical care and crimes relating to                                                                     
     medical care, including medical care and crimes                                                                            
     relating to the medical assistance program.                                                                                
                                                                                                                                
SENATOR LYDA  GREEN explained that  since 1999, the  costs of                                                                   
the Medicaid program  have risen throughout the  nation at an                                                                   
average  rate of  11  percent per  year.   Alaska's  Medicaid                                                                   
program has averaged  annual increases of 20  percent or more                                                                   
than  $100 million  per year,  bringing  the total  projected                                                                   
program  costs for  FY04  to just  under  $1 billion  dollars                                                                   
($695  million in  federal funds  and $289  million in  state                                                                   
funds).                                                                                                                         
                                                                                                                                
Factors such as increased participant  enrollments, increased                                                                   
use  of   health  services  and   the  increasing   costs  of                                                                   
pharmaceuticals   and  long-term   care   are  the   greatest                                                                   
contributors  to  the rise  in  the Medicaid  program  costs.                                                                   
While  the State  has  limited ability  to  contain the  cost                                                                   
factors, targeting waste and fraud can occur.                                                                                   
                                                                                                                                
Senator  Green  continued,  nationally,  the  error  rate  of                                                                   
overpayments in the  Medicare program are about  7 percent, a                                                                   
number that  could be inferred  to the Medicaid program.   In                                                                   
addition,  the  commonly held  perception  of  the amount  of                                                                   
fraud committed  against the  Medicaid program nationwide  is                                                                   
10 percent.   Whether those two numbers are  inclusive of one                                                                   
another or  should be compounded,  they represent  a sizeable                                                                   
amount of spending,  between $70 and $170 million  dollars in                                                                   
Alaska's  Medicaid  program  on   activities  that  could  be                                                                   
questionable.                                                                                                                   
                                                                                                                                
To preserve  the integrity and  fiscal viability  of Alaska's                                                                   
Medicaid  program,  that  system  must be  held  to  rigorous                                                                   
controls and  frequent scrutiny.   Relevant  laws must  be in                                                                   
place to prosecute  those who commit fraud and  abuse related                                                                   
to  medical  care.    Alaska  has  no  specific  health  care                                                                   
criminal theft  statutes.  Currently,  in order  to prosecute                                                                   
those  who  commit  Medicaid   fraud,  prosecutors  must  use                                                                   
criminal  statutes related  to  actions  coincidental to  the                                                                   
misconduct.  Alaska  theft statutes require proving  that the                                                                   
conduct was intentional,  a very high standard to  meet for a                                                                   
crime where  there is  no crime  scene or physical  evidence.                                                                   
Consequently,  there have been  relatively few  prosecutions.                                                                   
SB 41  would provide the legal  tools for the  fiduciaries of                                                                   
the  Medicaid  program  to establish  program  integrity  and                                                                   
maintain maximum fiscal control.                                                                                                
                                                                                                                                
Senator Green added that the legislation  would establish the                                                                   
crime  of  medical assistance  fraud,  define  elements  that                                                                   
constitute  fraud,  and  classifies the  crime  committed  as                                                                   
either  a felony  or  a misdemeanor.    SB  41 would  require                                                                   
independent    financial   audits    to   identify    errors,                                                                   
overpayments,  and  criminal   violations  made  to,  or  by,                                                                   
Medicaid providers and requires  administrative action within                                                                   
90 days  of receipt  of each  audit.   The legislation  would                                                                   
complete  the  loop  between the  Department  of  Health  and                                                                   
Social  Services  and  the Department  of  Law  by  requiring                                                                   
copies of all  audits to be provided to the  Attorney General                                                                   
and  by  directing   the  Attorney  General   to  notify  the                                                                   
Department of  Health and Social  Services of any  charges of                                                                   
misconduct filed  against a Medicaid  provider.   Such notice                                                                   
requires  the Department  to undertake  a complete review  of                                                                   
any outstanding claims  of that provider.  Finally,  the bill                                                                   
would  provide that  financing of  the audits  could be  made                                                                   
from the recovery, due to the audits, of misspent funds.                                                                        
                                                                                                                                
She  concluded that  it is  vital  that the  State of  Alaska                                                                   
administer  its Medicaid  program  in a  manner that  ensures                                                                   
effective, long-term cost containment  while providing needed                                                                   
medical care to its intended recipients.   Medicaid providers                                                                   
must  operate honestly,  responsibly and  in accordance  with                                                                   
the law.  Those who do not would be held accountable.                                                                           
                                                                                                                                
Representative  Foster asked  who would  pay for the  audits.                                                                   
Senator Green  advised that they  would be paid for  from the                                                                   
amount  recovered from  the lawsuits.    She speculated  that                                                                   
that ratio  of the amount recovered  would be 8 to  1, citing                                                                   
an  example  of  physicians in  Anchorage  involved  in  such                                                                   
suits.                                                                                                                          
                                                                                                                                
DON  KITCHEN,   (TESTIFIED  VIA  TELECONFERENCE),   ASSISTANT                                                                   
ATTORNEY GENERAL,  DEPARTMENT OF  LAW, ANCHORAGE,  offered to                                                                   
answer questions  of the Committee.   In response to  a query                                                                   
by Representative  Stoltze,  Mr. Kitchen  explained that  the                                                                   
statutes were  written to encompass  being able  to prosecute                                                                   
both recipients and providers.   He noted that his particular                                                                   
focus  was with  the  providers.   Senator  Green added  that                                                                   
there had been  a "recipient Medicaid" work  group in Juneau,                                                                   
who  reviewed  the  bill.    They   supported  the  bill  and                                                                   
suggested that recipients  be included.  Up  until that time,                                                                   
the recipients had been excluded.                                                                                               
                                                                                                                                
Representative  Berkowitz   questioned  how  the   cases  are                                                                   
currently being prosecuted.  Mr.  Kitchen responded that most                                                                   
often other statutes  are used, which can have  an element of                                                                   
specific  intent.     Trying   to  prove  "specific   intent"                                                                   
sometimes becomes impossible.   Without having a witness, the                                                                   
State has no  way to dis-prove the essential  defense of when                                                                   
the provider  suggests ignorance.   SB 41 would  require that                                                                   
the provider  comply with  the regulations  up front,  making                                                                   
them responsible for the resource.                                                                                              
                                                                                                                                
Representative Berkowitz  referenced Section  47.05.230, Page                                                                   
5, regarding aggregated amounts.   Mr. Kitchen explained that                                                                   
the aggregation  of amounts was  taken from the  sub-statutes                                                                   
and permits aggregating amounts into a particular charge.                                                                       
                                                                                                                                
Representative  Berkowitz referred to  Pages 4 &  5, pointing                                                                   
out that the amounts  for a C felony would be  $500 to $5,000                                                                   
dollars and  that an A  charge would be  less than $500.   He                                                                   
asked  if that  would  continue to  be  the "breaking  point"                                                                   
between misdemeanors  and felonies,  questioning the  raising                                                                   
amounts.  Mr. Kitchen did not recall the raised numbers.                                                                        
                                                                                                                                
Representative  Hawker asked  if the  current version  of the                                                                   
bill  was  acceptable   to  the  Department.     Mr.  Kitchen                                                                   
confirmed  that the Department  of Law  was comfortable  with                                                                   
the bill.                                                                                                                       
                                                                                                                                
Representative Berkowitz  MOVED to AMEND  Pages 4 &  5, Lines                                                                   
29 &  2, respectively,  raising  the amount  to $1,000  for a                                                                   
felony and deleting "$500".  Vice Chair Meyer OBJECTED.                                                                         
                                                                                                                                
Representative  Berkowitz  discussed   the  benefits  of  the                                                                   
change.   Vice-Chair  Meyer noted  that the  levels had  been                                                                   
raised in House Judiciary Committee last year.                                                                                  
                                                                                                                                
Senator  Green  maintained  that   value  was  not  the  only                                                                   
qualifying  factor.   She added  that even  if the drugs  had                                                                   
very little  "street value", that  might not be  as important                                                                   
as the use of the drug in the Medicaid program.                                                                                 
                                                                                                                                
In  response to  a  query  by Representative  Berkowitz,  Mr.                                                                   
Kitchen  explained  that  most  cases  do  not  come  to  the                                                                   
Department's attention  until they are at least  between $500                                                                   
&  $1000  dollars  and  that  in  other  states,  the  felony                                                                   
breaking  point is  $100 dollars.   Representative  Berkowitz                                                                   
WITHDREW the MOTION.                                                                                                            
                                                                                                                                
Co-Chair  Harris MOVED to  report CS  SS SB  41 (FIN)  out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CS SS SB  41 (FIN) was reported  out of Committee with  a "do                                                                   
pass"  recommendation  and with  a  new  fiscal note  by  the                                                                   
Department of Health and Social Services.                                                                                       
                                                                                                                                
SENATE BILL NO. 192                                                                                                           
                                                                                                                                
     An  Act relating  to teachers and  training programs  in                                                                   
     the Department  of Labor  and Workforce Development,  to                                                                   
     the  placement  in  the   exempt  service  of  certified                                                                   
     teachers  employed  by  the   Department  of  Labor  and                                                                   
     Workforce   Development,   to   their   eligibility   to                                                                   
     participate  in  the  Teachers'   Retirement  System  of                                                                   
     Alaska,  and to the  functions of  the Alaska  Workforce                                                                   
     Investment  Board   regarding  the  Kotzebue   Technical                                                                   
     Center and  the Alaska Vocational Technical  Center; and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
DOUG  LETCH, STAFF,  SENATOR GARY  STEVENS,  stated that  the                                                                   
bill would amend language so that  teachers in the Department                                                                   
of Labor and Workforce Development  would be eligible for the                                                                   
Teachers  Retirement System  (TRS).   Additionally, it  would                                                                   
provide  conforming  language  for the  Workforce  Investment                                                                   
Board so  that there would  be only one Workforce  Investment                                                                   
Board.   Section #3 would  add Kotzebue Technical  Center and                                                                   
Alaska  Vocational  Technical   Center  (AVTEC)  as  programs                                                                   
within  the   Department  of   Labor  and  remove   from  the                                                                   
Department of Education.                                                                                                        
                                                                                                                                
Mr. Letch  continued, Section  #4 conforms languag4e  for one                                                                   
Workforce Investment  Board.   Section #5 amends  language so                                                                   
that existing teachers at Alaska  Vocational Technical Center                                                                   
(AVTEC) and  skill centers that  are exempt positions  remain                                                                   
exempt positions.   Section #6 repeals statutory  language so                                                                   
that there is one Workforce Investment  Board and repeals the                                                                   
Business  Incentive  Training  Program,  which has  not  been                                                                   
funded for many years.                                                                                                          
                                                                                                                                
SENATOR GARY STEVENS  reiterated comments made  by Mr. Letch.                                                                   
The legislation  resulted from an issue in  consolidating the                                                                   
workforce and resulted in a substantial  savings indicated in                                                                   
the  attached  fiscal  note.    The  Board  will  have  fewer                                                                   
members.                                                                                                                        
                                                                                                                                
Co-Chair  Harris   MOVED  to  report  CSSB   192  (L&C)  from                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSSB  192 (L&C)  was reported  out  of Committee  with a  "do                                                                   
pass"  recommendation  and with  a  new  fiscal note  by  the                                                                   
Department of Labor and Workforce Development.                                                                                  
                                                                                                                                
SENATE BILL NO. 45                                                                                                            
                                                                                                                                
     An Act relating to the Legislative Budget and Audit                                                                        
     Committee.                                                                                                                 
                                                                                                                                
SENATOR LYDA  GREEN noted  that SB 45  was an act  related to                                                                   
the  Legislative  Budget  and  Audit (LBA)  Committee.    The                                                                   
statute lacks  any penalties for those who  are uncooperative                                                                   
or  who undermine  the  work  of the  committee.    SB 45  is                                                                   
designed  to remedy that  by providing  prosecutors  with the                                                                   
necessary  tools to  deter and  punish those  who hinder  the                                                                   
investigative work of that committee.                                                                                           
                                                                                                                                
A legislative auditor conducts three kinds of audits:                                                                           
                                                                                                                                
   ·    A "look-see" at an agency;                                                                                              
   ·    Review of boards due to sunset; and                                                                                     
   ·    Post audits.                                                                                                            
                                                                                                                                
When concerns  are presented to  the Legislature,  audits may                                                                   
be  conducted.    Senator  Green   pointed  out  that  audits                                                                   
conducted  this  year  have  provided  important  legislative                                                                   
information.   The bill assigns a penalty  for non-compliance                                                                   
with an audit and includes provisions  for "whistle blowers",                                                                   
on Page  2, Section 4, to  provide protection  for employees.                                                                   
Senator  Green  added  that  penalties   and  sanctions  were                                                                   
included since these situations can be serious.                                                                                 
                                                                                                                                
Co-Chair  Harris  MOVED  to ADOPT  work  draft  #23-LS0205\W,                                                                   
Luckhaupt, 5/15/03, as the version  of the legislation before                                                                   
the Committee.  There being NO OBJECTION, it was adopted.                                                                       
                                                                                                                                
Representative  Stoltze  realized   that  when  an  audit  is                                                                   
performed, there  are external  forces that attempt  to delay                                                                   
the  release of  information.   He asked  if the  legislation                                                                   
would cover that concern.                                                                                                       
                                                                                                                                
PAT  DAVIDSON,  DIRECTOR,  DIVISION   OF  LEGISLATIVE  AUDIT,                                                                   
responded   that   the   legislation   could   address   that                                                                   
"indirectly".   SB 45 will  eliminate the obstruction  during                                                                   
the course of the  audit, which will allow the  audit to move                                                                   
forward faster.   The  bill will  enhance the efficiency  and                                                                   
timeliness of the audit process.                                                                                                
                                                                                                                                
Representative   Kerttula   voiced   appreciation   for   the                                                                   
sponsor's changes.  She referenced  Page 3, Lines 9 & 10, "or                                                                   
other matters within the authority  of Legislative Budget and                                                                   
Audit  Committee".   She asked  for an example  of the  range                                                                   
that language indicates.                                                                                                        
                                                                                                                                
Ms.  Davidson  explained  that the  Division  of  Legislative                                                                   
Budget and Audit performs audits.   The Division can be asked                                                                   
to  prepare  reports,  memorandums and/or  other  matters  as                                                                   
directed  by the  Committee.   They attempt  to approach  all                                                                   
official  responsibilities that  may be  delegated under  the                                                                   
auspicious of the LBA Committee.                                                                                                
                                                                                                                                
Representative Kerttula voiced  concern of "how minimal" that                                                                   
might be.                                                                                                                       
                                                                                                                                
JACQUELINE  TUPOU,  STAFF, SENATOR  LYDA  GREEN,  interjected                                                                   
that when  writing the  legislation, it  was agreed  that the                                                                   
whistle  blower statute  should be  as broad  as possible  in                                                                   
order to be able to access all information.                                                                                     
                                                                                                                                
Representative   Kerttula   asked   about  the   section   of                                                                   
information  that  allows  going  into  the  State  employees                                                                   
files.  Information  could be added to the  file regarding if                                                                   
that  employee  had been  dismissed  or disciplined  for  the                                                                   
violation  of interference  with  LBA.   She  asked if  other                                                                   
crimes were intended to be included in that language.                                                                           
                                                                                                                                
Ms. Davidson explained that because  one of the penalties was                                                                   
a   disciplinary  action   regarding   the  personnel   laws,                                                                   
disciplinary laws are confidential.   If someone had violated                                                                   
the statute,  the knowledge  of that  could not be  concealed                                                                   
through the  confidentiality of  the personnel records.   The                                                                   
language  of the  bill  allows  that misconduct  be  publicly                                                                   
exposed.                                                                                                                        
                                                                                                                                
                                                                                                                                
TAPE HFC 03 - 98, Side B                                                                                                      
                                                                                                                                
                                                                                                                                
Senator  Green  advised  that   the  Department  of  Law  was                                                                   
initially opposed  to the legislation, but clarified  for the                                                                   
record that they now do support current language.                                                                               
                                                                                                                                
SCOTT NORDSTRAND,  DEPUTY ATTORNEY  GENERAL, CIVIL  DIVISION,                                                                   
DEPARTMENT  OF LAW, voiced  the Department's  support  of the                                                                   
current committee substitute and  reiterated that the bill is                                                                   
"workable".                                                                                                                     
                                                                                                                                
Representative Foster MOVED to  report HCS CS SB 45 (FIN) out                                                                   
of Committee  with  individual recommendations  and with  the                                                                   
accompanying fiscal  note.  There being NO  OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HCS  CS SB  45 (FIN)  was reported  out of  Committee with  a                                                                   
"do pass" recommendation and with  zero fiscal note #1 by the                                                                   
Department  of Administration  and  a new  zero  note by  the                                                                   
Department of Law.                                                                                                              
              --------------------------------                                                                                  
                                                                                                                                
Co-Chair  Harris MOVED  that  there be  no  more House  bills                                                                   
heard  in  the  House  Finance   Committee  this  legislative                                                                   
session.   He noted  that the Committee  had moved  "past the                                                                   
deadline"  for any  House bill  to pass  this current  fiscal                                                                   
year.                                                                                                                           
                                                                                                                                
Representative  Berkowitz  asked if  HB  111  had received  a                                                                   
House Finance referral.                                                                                                         
                                                                                                                                
Co-Chair Williams  noted that he intended to  "over-rule" the                                                                   
previous MOTION.  He stated that  HB 111 would be WAIVED from                                                                   
the House Finance  Committee and that the amendment  could be                                                                   
made on  the House Floor.   He added  that the Committee  was                                                                   
still waiting to receive HB 277.                                                                                                
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 4:40 P.M.                                                                                          
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects