Legislature(2005 - 2006)HOUSE FINANCE 519

03/14/2006 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 365 APPROP: OPERATING BUDGET/LOANS/FUNDS TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
*+ HB 366 APPROP: MENTAL HEALTH BUDGET TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
+ HB 190 REQUIRED ID FOR PURCHASING ALCOHOL TELECONFERENCED
Heard & Held
+ HB 409 NO WORKERS' COMP. FOR REAL EST. LICENSEE TELECONFERENCED
Moved CSHB 409(L&C) Out of Committee
+ HB 471 KNIK ARM BRIDGE AND TOLL AUTHORITY TELECONFERENCED
Moved CSHB 471(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 14, 2006                                                                                           
                         1:42 p.m.                                                                                              
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Chenault called the House  Finance Committee meeting                                                                   
to order at 1:42:00 PM.                                                                                                       
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Chenault, Co-Chair                                                                                          
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Bill Stoltze, Vice-Chair                                                                                         
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Jim Holm                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Beth Kerttula                                                                                                    
Representative Carl Moses                                                                                                       
Representative Bruce Weyhrauch                                                                                                  
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Sharon   Kelly,   Staff,   Representative    Mike   Chenault;                                                                   
Representative Bob  Lynn; Dave Feeken, Alaska  Association of                                                                   
Realtors,  Kenai,   Paul  Lisankie,  Director,   Division  of                                                                   
Workers  Compensation,  Department  of  Labor  and  Workforce                                                                   
Development; Tom  Boutin, Deputy Commissioner,  Department of                                                                   
Revenue; William Green, Project  Counsel, Knik Arm Bridge and                                                                   
Toll  Authority;  Mayor  George Wuerch,  Chairman,  Knik  Arm                                                                   
Bridge and Toll Authority; Hope  Louise Cermelj, Alaska Elder                                                                   
Voters;   Emily  Ferry,   Alaska  Transportation   Priorities                                                                   
Project; Representative Harry Crawford                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Duane  Bannock,   Director,  Division   of  Motor   Vehicles,                                                                   
Department of Administration;  Doug Griffin, Alcohol Beverage                                                                   
Control (ABC) Board                                                                                                             
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 365    "An  Act making  appropriations  for the  operating                                                                   
          and loan program expenses  of state government, for                                                                   
          certain      programs,  and  to  capitalize  funds;                                                                   
          making  appropriations under  art. IX, sec.  17(c),                                                                   
          Constitution  of  the  State  of Alaska,  from  the                                                                   
          constitutional  budget reserve fund;  and providing                                                                   
          for an effective date."                                                                                               
                                                                                                                                
          HB 365 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
HB 366    "An Act making appropriations for the operating                                                                       
          and  capital  expenses  of the  state's  integrated                                                                   
          comprehensive mental  health program; and providing                                                                   
          for an effective date."                                                                                               
                                                                                                                                
          HB 366 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
HB 409    "An Act relating to excluding qualified real                                                                          
          estate   licensees   from   workers'   compensation                                                                   
          coverage."                                                                                                            
                                                                                                                                
          CSHB 409  (L&C) was REPORTED out of  Committee with                                                                   
          a "no recommendation"  and with zero note #1 by the                                                                   
          Department  of  Commerce,  Community  and  Economic                                                                   
          Development   and  with   zero  note   #2  by   the                                                                   
          Department of Labor and Workforce Development.                                                                        
                                                                                                                                
HB 471    "An Act amending the Knik Arm Bridge and Toll                                                                         
          Authority Act  and the powers and authority  of the                                                                   
          authority,   and  making   conforming  changes   to                                                                   
          statutes   relating   to  issuance,   renewal,   or                                                                   
          reinstatement  of driver's licenses and  to levy on                                                                   
          permanent  fund  dividends;  and providing  for  an                                                                   
          effective date."                                                                                                      
                                                                                                                                
          CSHB 471  (FIN) was REPORTED out of  Committee with                                                                   
          a "no recommendation"  and with two new zero fiscal                                                                   
          notes  by  the  Department  of  Transportation  and                                                                   
          Public  Facilities and  the  Department of  Natural                                                                   
          Resources.                                                                                                            
                                                                                                                                
HB 190    "An Act relating to certain licenses for the sale,                                                                    
          distribution,  or manufacture of  tobacco products;                                                                   
          relating to  tobacco taxes and sales  and cigarette                                                                   
          tax stamps;  relating to provisions  making certain                                                                   
          cigarettes  contraband and  subject to seizure  and                                                                   
          forfeiture; relating  to certain crimes, penalties,                                                                   
          and  interest concerning  tobacco taxes and  sales;                                                                   
          relating  to  notification  regarding  a  cigarette                                                                   
          manufacturer's   noncompliance  with   the  tobacco                                                                   
          product  Master  Settlement  Agreement  or  related                                                                   
          statutory  provisions  and to  confiscation of  the                                                                   
          affected   cigarettes;   and   providing   for   an                                                                   
          effective date."                                                                                                      
                                                                                                                                
          HB 190 was heard and  HELD in Committee for further                                                                   
          consideration.                                                                                                        
                                                                                                                                
1:42:22 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 365                                                                                                            
                                                                                                                                
     "An  Act making  appropriations  for  the operating  and                                                                   
     loan program  expenses of state government,  for certain                                                                   
     programs,    and    to    capitalize    funds;    making                                                                   
     appropriations  under art. IX, sec.  17(c), Constitution                                                                   
     of the State  of Alaska, from the  constitutional budget                                                                   
    reserve fund; and providing for an effective date."                                                                         
                                                                                                                                
Co-Chair  Meyer MOVED  to ADOPT  the work draft  for HB  365,                                                                   
labeled 24-GH2033\I,  Bailey, 3/13/06, as the  version of the                                                                   
bill before the committee.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
HOUSE BILL NO. 366                                                                                                            
                                                                                                                                
     "An  Act making  appropriations  for  the operating  and                                                                   
     capital    expenses    of   the    state's    integrated                                                                   
     comprehensive mental  health program; and  providing for                                                                   
     an effective date."                                                                                                        
                                                                                                                                
Co-Chair  Meyer MOVED  to ADOPT  the work draft  for HB  366,                                                                   
labeled 24-GH2035\G,  Bailey, 3/13/06, as the  version of the                                                                   
bill before the committee.  There  being NO OBJECTION, it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
1:43:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  summarized  the committee substitutes  for                                                                   
the budget  bills.   He  related that the total  general fund                                                                   
reductions  by House  Committees  to the  operating bill  are                                                                   
$82,341.7  million from  the  numbers section  and  $32,758.4                                                                   
million from  the language  sections, which total  $115,100.1                                                                   
million  in  general  funds.   This  comparison  assumes  the                                                                   
committee will  eventually appropriate  $90 million  more for                                                                   
K-12 education.   Language making  that appropriation  is not                                                                   
currently  in the committee  substitute,  but is expected  to                                                                   
appear as  a fiscal  note attached to  a bill increasing  the                                                                   
base student allocation.  Agency  summary reports dated March                                                                   
14  show a  reduction  of $205  million  from the  governor's                                                                   
request.   Those  reports,  while technically  more  accurate                                                                   
than  the  $115  million  reduction shown  in  the  March  13                                                                   
reports, distort the expected  outcome of the budget process.                                                                   
                                                                                                                                
SHARON KELLY,  STAFF, CO-CHAIR  CHENAULT, shared  the process                                                                   
used to arrive  at the new committee substitutes.   The House                                                                   
Finance subcommittees  were appointed  and they reviewed  the                                                                   
                                                            th                                                                  
governor's bill plus  all operation amendments up  to the 45                                                                    
                                                 th                                                                             
included:  one was  a  reduction of  $2.3  million to  Marine                                                                   
Transportation  for a  reduction of fast  ferry service,  and                                                                   
another was  a reduction of $1.3  million to the  Senior Care                                                                   
Fund.  Two  amendments that were received last  week relating                                                                   
to Corrections  salary and benefits are not  included because                                                                   
they would have delayed drafting of the bill.                                                                                   
                                                                                                                                
Ms.  Kelly reported  that the  subcommittees  closed out  and                                                                   
made  recommendations to  the full  House Finance  Committee.                                                                   
These  recommendations   were  rolled  into   this  committee                                                                   
substitute along with some adjustments  made by the co-chair.                                                                   
Some  of  those  adjustments  include:  fuel  increases  were                                                                   
deleted  for consistency  with the  rest of  the budget;  new                                                                   
programs not requested  in the governor's bill  were removed,                                                                   
but may  be considered later  through the amendment  process;                                                                   
technical  adjustments  recommended  by  Legislative  Finance                                                                   
were  made  to  adjust the  position  count  correctly;  some                                                                   
funding  changes were  made to allow  for sustainability  and                                                                   
full utilization of funding sources  such as business license                                                                   
receipts,  Commercial  Fisheries   Entry  Commission  (CFEC),                                                                   
vehicle rental  tax, criminal fines, and the  commercial loan                                                                   
fund.                                                                                                                           
                                                                                                                                
Ms.  Kelly  addressed  some  additions  of  general  fund  to                                                                   
correct  some   modified  adjusted   base  problems   in  the                                                                   
Department  of  Fish  and  Game  and  in  the  Department  of                                                                   
Military and Veterans  Affairs.  There were  also other small                                                                   
reductions.    The Health,  Education,  and  Social  Services                                                                   
subcommittee cut  $10 million more  than is reflected  on the                                                                   
CS.    The  co-chair moved  this  amount  from  the  language                                                                   
section of the Senior Care Fund  over to the numbers section.                                                                   
The Senior  Care Fund  will lapse  next year.   Federal  fund                                                                   
authority  was reestablished  in the Department  of Fish  and                                                                   
Game and in the Department of  Public Safety.  If those funds                                                                   
do become available those departments  will not have to go to                                                                   
Legislative Budget and Audit for approval.                                                                                      
                                                                                                                                
1:47:55 PM                                                                                                                    
                                                                                                                                
Ms. Kelly related that in the  language section of the budget                                                                   
some reordering changes were made.   Senior Care was moved to                                                                   
the numbers  section and  some deletions  were taken.   Power                                                                   
Cost  Equalization was  funded at  FY 06  levels.   Education                                                                   
funding is  included in the  language section,  excluding the                                                                   
$656,000,000  of FY  06 funds  the governor  is proposing  to                                                                   
use.  The $90 million amount for  education will be addressed                                                                   
in another  vehicle.  There  are also  $565 million of  FY 06                                                                   
funds that  the governor is proposing  to use to fund  the FY                                                                   
07 education budget.                                                                                                            
                                                                                                                                
Ms. Kelly  pointed out that  there are two agency  summaries,                                                                   
one  dated   March  13,  which   show  the  actions   of  the                                                                   
subcommittee  and co-chairs,  and one  dated March 14,  which                                                                   
also shows the  $90 million for education reduction  since it                                                                   
is not included in the bill.                                                                                                    
                                                                                                                                
1:48:33 PM                                                                                                                    
                                                                                                                                
Ms. Kelly  addressed one  change to  the Mental Health  bill.                                                                   
The item removed  was $550,000 for the Department  of Natural                                                                   
Resources' Mental Health Land  Trust Development, which comes                                                                   
from  Mental Health  Trust Receipts.   Information  regarding                                                                   
these bills will be on the Legislative Finance web site.                                                                        
                                                                                                                                
Co-Chair  Chenault explained  that  the process  would be  to                                                                   
accept the committee  substitutes today and  then take public                                                                   
testimony  on Thursday  through Saturday.   The deadline  for                                                                   
amendments will  be on Monday  at 5:00.   He stated  that the                                                                   
committee would  take up amendments on Tuesday  and Wednesday                                                                   
with the  intention  of passing  the bill out  no later  than                                                                   
Thursday.  He  requested that those proposing  amendments for                                                                   
more money  should stipulate where  the money will  come from                                                                   
in the budget.                                                                                                                  
                                                                                                                                
CHB 365 and  CS HB 366 were  heard and HELD in  Committee for                                                                   
further consideration.                                                                                                          
                                                                                                                                
Co-Chair Meyer took over as chair of the committee.                                                                             
                                                                                                                                
1:51:15 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 409                                                                                                            
                                                                                                                                
     "An Act relating to excluding qualified real estate                                                                        
     licensees from workers' compensation coverage."                                                                            
                                                                                                                                
REPRESENTATIVE  BOB LYNN, sponsor,  addressed the  purpose of                                                                   
HB  409, which  is  to  exclude  real estate  licensees  from                                                                   
workers'  compensation  coverage.     He  noted  that  he  is                                                                   
currently  a  licensed  real   estate  broker  acting  as  an                                                                   
associate  broker.   He  related that  every  state has  laws                                                                   
governing real  estate licenses.  Most real  estate licensees                                                                   
in Alaska  are independent  contractors.   They are  licensed                                                                   
under   a   broker,   but  they   operate   as   "independent                                                                   
contractors", paying for all of  their own expenses.  They do                                                                   
not receive  a wage, salary, or  benefits.  They  control and                                                                   
decide  what  days and  hours  they  will  work and  pay  for                                                                   
business   expenses  such  as   licensing  fees,   continuing                                                                   
education,  advertising,   long-distance  phone   calls,  and                                                                   
business insurance  on their  vehicles.   They often  pay for                                                                   
their own computer and other office  equipment, and quarterly                                                                   
estimated income  tax and social  security tax.   Real estate                                                                   
licensees operate an independent  business within a business,                                                                   
controlling  their own  hours of  work.   The IRS  recognizes                                                                   
them  as  independent   contractors  and  the   state  should                                                                   
likewise.                                                                                                                       
                                                                                                                                
1:54:38 PM                                                                                                                    
                                                                                                                                
Representative Holm asked for  more information about how the                                                                   
real   estate  business   works   with   brokers  and   their                                                                   
associates.   Representative Lynn responded that  brokers can                                                                   
list  themselves  independently.    A  sales  associate  must                                                                   
operate  under a  broker.   A broker  receives a  commission,                                                                   
such as 40 percent  of the sales.  Representative  Holm asked                                                                   
what  the broker  offers to  the associate  broker for  their                                                                   
cut.   Representative Lynn replied  that the broker  oversees                                                                   
transactions as they apply to state law.                                                                                        
                                                                                                                                
Representative Holm  asked how workers' compensation  applies                                                                   
to the hierarchical nature of  the industry.  He wondered, if                                                                   
real  estate licensees  cannot work  on their  own, why  they                                                                   
wouldn't qualify  for workers' compensation.   Representative                                                                   
Lynn explained the difference  between a broker's license and                                                                   
a  sales  associate  license.     He  emphasized  that  sales                                                                   
associates are  not employees.  Representative  Holm restated                                                                   
the question  to compare  a sales  associate's  job to  a car                                                                   
salesman who gets a percentage  of the sales.  Representative                                                                   
Lynn clarified  that a real  estate sales associate  does not                                                                   
get a salary, only a commission.                                                                                                
                                                                                                                                
2:00:48 PM                                                                                                                    
                                                                                                                                
Representative  Kerttula wondered  if there  has ever  been a                                                                   
workers'   compensation   claim    filed   by   a   licensee.                                                                   
Representative Lynn said he does not know.                                                                                      
                                                                                                                                
Representative  Hawker noted  that  this situation  regarding                                                                   
independent  contractors  and   workers'  compensation  is  a                                                                   
pervasive problem.   He wondered why the bill  was limited to                                                                   
the real  estate industry.   Representative Lynn  agreed that                                                                   
other areas  could be looked  at later.    He chose  to limit                                                                   
the bill to real estate licensees.                                                                                              
                                                                                                                                
2:02:50 PM                                                                                                                    
                                                                                                                                
DAVE FEEKEN,  ALASKA ASSOCIATION  OF REALTORS, KENAI,  stated                                                                   
that  the  bill would  clarify  a  confusing issue  that  his                                                                   
organization  has  been  working  on.    He  noted  that  the                                                                   
Department  of Labor  recognizes  the status  of  independent                                                                   
contractors  and  exempts  them  from  workers'  compensation                                                                   
coverage.  The  relationship in a brokerage  firm between the                                                                   
broker  and  licensee  meets  the  standards  of  independent                                                                   
contractor.   The IRS  recognized this  relationship  for tax                                                                   
purposes in the  70's as self-employed.  The  broker does not                                                                   
withhold taxes on  commissions earned by the  licensees.  The                                                                   
licensee is responsible  for filing quarterly  returns.  This                                                                   
does not mean that a brokerage  firm would not carry workers'                                                                   
compensation  insurance for staff,  personal assistants,  and                                                                   
hourly employees.   It only exempts licensees  with a written                                                                   
independent   contract  agreement  with   the  broker.     He                                                                   
concluded  that  the Department  of  Labor, the  director  of                                                                   
workers'  compensation,   and  the  real   estate  commission                                                                   
support the bill.                                                                                                               
                                                                                                                                
Representative  Kerttula asked  if  there had  ever been  any                                                                   
workers' compensation  claims by licensees  against realtors.                                                                   
Mr. Feeken said there have only  been a few.  He recalled one                                                                   
instance  of a  person slipping  on  the ice  when showing  a                                                                   
house   and   collecting   compensation    for   two   weeks.                                                                   
Representative  Kerttula  summarized  that  it  seems  to  be                                                                   
related to the type of work done,  rather than the job title.                                                                   
                                                                                                                                
2:06:37 PM                                                                                                                    
                                                                                                                                
PAUL LISANKIE,  DIRECTOR, DIVISION  OF WORKERS  COMPENSATION,                                                                   
DEPARTMENT OF LABOR, agreed to answer questions.                                                                                
                                                                                                                                
Representative Kerttula  asked if Mr. Lisankie  thought there                                                                   
was  a  risk, with  the  passage  of  this bill,  of  leaving                                                                   
employees out  who qualified for workers' compensation.   Mr.                                                                   
Lisankie replied that part of  the problem is there has to be                                                                   
a written agreement that identifies  the relationship between                                                                   
the worker and the employee.   What happens sometimes is that                                                                   
people believe,  due to the  paperwork that they  have filled                                                                   
out, that they  have an independent contractor  relationship.                                                                   
But at  some later  point, someone  is unsatisfied  with that                                                                   
view  and  may want  an  injury  considered by  the  workers'                                                                   
compensation  board.     Another  example  would   be  if  an                                                                   
insurance  company  audits  premiums   on  the  office  staff                                                                   
insurance  and  determines  that the  associate  brokers  are                                                                   
employees and  should be  subject to a  back premium.   It is                                                                   
the uncertainty that causes problems.                                                                                           
                                                                                                                                
Representative  Kerttula  asked  if  that is  true  for  many                                                                   
professions.   Mr. Lisanke  agreed that  it applies  to other                                                                   
occupations as well.                                                                                                            
                                                                                                                                
2:10:16 PM                                                                                                                    
                                                                                                                                
Representative  Foster MOVED  to REPORT  CSHB 409 (L&C)  with                                                                   
individual  recommendations and  with  the accompanying  zero                                                                   
fiscal notes.  There being NO OBJECTION, it was so ordered.                                                                     
                                                                                                                                
CSHB  409 (L&C)  was REPORTED  out  of Committee  with a  "no                                                                   
recommendation" and  with zero note  #1 by the  Department of                                                                   
Commerce, Community  and Economic  Development and  with zero                                                                   
note   #2  by   the  Department   of   Labor  and   Workforce                                                                   
Development.                                                                                                                    
                                                                                                                                
2:11:06 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 471                                                                                                            
                                                                                                                                
     "An Act amending the Knik  Arm Bridge and Toll Authority                                                                   
     Act and the  powers and authority of the  authority, and                                                                   
     making  conforming  changes   to  statutes  relating  to                                                                   
     issuance,   renewal,   or  reinstatement   of   driver's                                                                   
     licenses and  to levy on  permanent fund  dividends; and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
Representative Stoltze  MOVED to ADOPT  the work draft  to HB                                                                   
471,  labeled  24-LS1670\Y, Kane,  3/3/06.    There being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
REPRESENTATIVE  BILL  STOLTZE,  sponsor, reported  that  this                                                                   
bill sets  up the mechanisms for  when money is  provided for                                                                   
the Knik Arm Bridge  project.  It does not request  funds for                                                                   
the project,  but sets  up the  bonding and toll  mechanisms.                                                                   
He termed  it an  innovative means  of achieving this  public                                                                   
project  by leveraging  private sector  funds to construct  a                                                                   
toll bridge across the Knik Arm  and connect the municipality                                                                   
of Anchorage and the Matanuska-Susitna.                                                                                         
                                                                                                                                
2:14:30 PM                                                                                                                    
                                                                                                                                
GEORGE  WUERCH, EXECUTIVE  DIRECTOR, KNIK  ARM BRIDGE  & TOLL                                                                   
AUTHORITY (KABATA), introduced  the others who were available                                                                   
to answer  questions.  He  congratulated the legislature  for                                                                   
adopting the state's first toll  authority in 2003.  He spoke                                                                   
of  a specific  responsibility  related  to that  legislation                                                                   
which  requires  KABATA  to  set  a  debt  ceiling.    KABATA                                                                   
requested  a $500  million  cap  on its  debt,  an amount  in                                                                   
response  to the governor's  budget.   He suggested  it  is a                                                                   
workable number to finance that  which is needed to begin the                                                                   
project.                                                                                                                        
                                                                                                                                
WILLIAM  GREEN,  PROJECT  COUNSEL,  KNIK ARM  BRIDGE  &  TOLL                                                                   
AUTHORITY,  referred  to  a  packet  made  available  to  the                                                                   
members of the  committee entitled "Knik Arm  Bridge and Toll                                                                   
Authority Presentation" (copy  on file).  HB 471 is a product                                                                   
of  several efforts.   The  CS  contains recommendations  and                                                                   
additions  made by  the  State  Bond Council.    In 2003  the                                                                   
legislature charge KABATA to build  a bridge across Knik Arm.                                                                   
Federal  funds  have been  made  available to  this  project,                                                                   
which includes the bridge and  all access approaches.  It has                                                                   
always been understood by KABATA  that other funding would be                                                                   
necessary, such  as revenue bonds.   Visits with  other state                                                                   
Departments  of  Transportation   and  toll  facilities,  and                                                                   
discussions  with  senior representatives  with  the  Federal                                                                   
Highway  Administration   and   their  loan  programs,   have                                                                   
provided information about other  funding sources.  He termed                                                                   
the  bill a  good  and unique  toll  authority  statute.   He                                                                   
offered  clear   and  specific   suggestions  for   financing                                                                   
options.                                                                                                                        
                                                                                                                                
2:22:18 PM                                                                                                                    
                                                                                                                                
Mr. Green  clarified the  purposes of the  bill: to  clean up                                                                   
language in state statutes and  to assure and give competence                                                                   
to public and  private financing sectors that  KABATA has the                                                                   
authority  it needs  to  enter into  financing  arrangements.                                                                   
The  bill serves  to  "fill in  the  blank"  of the  original                                                                   
statute to request  the level of revenue bonds  to be issued.                                                                   
He  offered  to  review  the  proposed  bill:    It  provides                                                                   
authority to  KABATA to set the  amount of the  bridge tolls.                                                                   
It   provides   authority  to   enter   into   public-private                                                                   
partnerships for the construction,  maintenance and operation                                                                   
of the  toll bridge.   It  authorizes obtaining  non-recourse                                                                   
loans from  the U.S. DOT's TIFIA  loan program.  It  sets the                                                                   
dollar of non-recourse  revenue bonds that may  be issued and                                                                   
refunded.  It provides means for  the collection of tolls and                                                                   
other obligations  owing KABATA in the operation  of the toll                                                                   
bridge.  He concluded that it is a housekeeping bill.                                                                           
                                                                                                                                
2:24:52 PM                                                                                                                    
                                                                                                                                
TOM  BOUTIN,  DEPUTY  COMMISSIONER,  DEPARTMENT  OF  REVENUE,                                                                   
offered to answer questions.                                                                                                    
                                                                                                                                
Representative Kerttula noted  that the statute says that the                                                                   
bonds  issued  by  the  Authority  are  not  going  to  be  a                                                                   
liability of the  state.  She wondered what  happens if there                                                                   
was  not enough  funding within  the Authority.   Mr.  Boutin                                                                   
described  the  language as  standard,  stand-alone,  revenue                                                                   
bond language.   The bond holders  and KABATA would  not have                                                                   
the ability  to give  the bond holders  a pledge  of anything                                                                   
other than  the rates and  fees and reserve funds  associated                                                                   
with the  facility.  There  would not  be a way  to penetrate                                                                   
the revenues  and funds on hand  for a bondholder to  get the                                                                   
general fund  or any other funds  of the state.   These bonds                                                                   
would not carry the moral obligation  of the state.  They are                                                                   
stand-alone  revenue  bonds  of   a  state  agency  that  are                                                                   
independent.                                                                                                                    
                                                                                                                                
Representative Kerttula  asked for an example of  a bond that                                                                   
does not carry  a moral obligation by the state.   Mr. Boutin                                                                   
related  that  International  Airport Revenue  Bonds  are  an                                                                   
example of stand-alone revenue bonds.                                                                                           
                                                                                                                                
Representative  Stoltze summarized  that the  risk is  to the                                                                   
investor who is buying the bonds.  Mr. Boutin agreed.                                                                           
                                                                                                                                
2:28:37 PM                                                                                                                    
                                                                                                                                
HOPE LOUISE  CERMELJ,  ALASKA ELDER VOTERS,  spoke about  her                                                                   
participation on the Petition  Trail Campaign.  She testified                                                                   
in  opposition to  HB  471.   She termed  it  a $600  million                                                                   
project  of which  $94 million  will be  appropriated by  the                                                                   
federal government, a large decrease  from $240 million.  She                                                                   
referred  to the last  page of  the bill,  which states  that                                                                   
persons  can  lose their  permanent  fund  if their  toll  is                                                                   
unpaid.  She suggested that the  toll could be as high as $12                                                                   
round trip.   She proposed that seniors and  veterans receive                                                                   
a toll exemption  or compensation to use this  facility.  She                                                                   
spoke about the loss of the longevity bonus.                                                                                    
                                                                                                                                
Co-Chair Meyer  noted that gas  prices are high,  which makes                                                                   
the toll seem reasonable.                                                                                                       
                                                                                                                                
2:32:48 PM                                                                                                                    
                                                                                                                                
EMILY  FERRY,   ALASKA  TRANSPORTATION  PRIORITIES   PROJECT,                                                                   
stated relief that the contract  is being tightened down, but                                                                   
voiced  concern  about strengthening  KABATA's  authority  to                                                                   
bond.   She referred  to a  handout of  KABATA's 2005  Annual                                                                   
Report  (copy on  file)  that shows  a  graph of  anticipated                                                                   
project  spending.   $200  million  would  be from  the  bond                                                                   
revenue, which is  one-third of the cost of the  bridge if it                                                                   
is  $600  million.    She  mentioned  that  there  have  been                                                                   
estimates of  up to $1.5 billion  for the same project.   She                                                                   
noted  $94  million  from  the  federal  government  and  $50                                                                   
million from the  general fund for Mat-Su  road improvements.                                                                   
That  still leaves  $256 million  unfunded.   She  questioned                                                                   
where that money  would come from.  She suggested  that other                                                                   
projects  that  depend on  general  fund  money may  be  left                                                                   
short.                                                                                                                          
                                                                                                                                
Co-Chair Meyer closed public testimony.                                                                                         
                                                                                                                                
Mr. Wuerch concluded  that the issue before  the committee is                                                                   
to grant  KABATA the  authority to  proceed with private  and                                                                   
public financing.   The rest of the funding  issue would come                                                                   
later.  There  will be roughly $100 million  in public money.                                                                   
He pointed out  that toll facilities are subject  to rigorous                                                                   
public scrutiny.                                                                                                                
                                                                                                                                
2:37:40 PM                                                                                                                    
                                                                                                                                
Representative  Kerttula asked why  the right to  garnish the                                                                   
permanent  fund dividend  was included.   Mr. Wuerch  replied                                                                   
that is  just a mechanism  of collecting  debt to  the state.                                                                   
KABATA  is not  asking for  police  power, but  to set  fees.                                                                   
Agencies    can   enforce    collection    of   the    tolls.                                                                   
Representative  Kerttula  cautioned to  use  good sense  when                                                                   
dealing with permanent funds.                                                                                                   
                                                                                                                                
2:38:53 PM                                                                                                                    
                                                                                                                                
Mr.   Green  addressed   the  permanent   fund  concern   and                                                                   
speculated how  high the  toll bill would  have to  be before                                                                   
collection was  enacted.  He suggested that  discretion would                                                                   
be used  for leans against  the PFD.   The PFD provisions  do                                                                   
provide  for use as  a lean  for all  debts.   Representative                                                                   
Kerttula said  she would check  into how many  state agencies                                                                   
have that authority.                                                                                                            
                                                                                                                                
2:40:09 PM                                                                                                                    
                                                                                                                                
Representative Foster  MOVED to REPORT CSHB 471  (FIN) out of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying  two new  zero  fiscal notes.    There being  NO                                                                   
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
2:41:30 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 190                                                                                                            
                                                                                                                                
     "An  Act  relating to  certain  licenses  for the  sale,                                                                   
     distribution,   or  manufacture  of  tobacco   products;                                                                   
     relating to  tobacco taxes  and sales and  cigarette tax                                                                   
     stamps;   relating   to    provisions   making   certain                                                                   
     cigarettes  contraband   and  subject  to   seizure  and                                                                   
     forfeiture; relating  to certain crimes,  penalties, and                                                                   
     interest  concerning tobacco  taxes and sales;  relating                                                                   
     to  notification  regarding a  cigarette  manufacturer's                                                                   
     noncompliance   with   the    tobacco   product   Master                                                                   
     Settlement  Agreement  or related  statutory  provisions                                                                   
     and  to confiscation  of  the affected  cigarettes;  and                                                                   
     providing for an effective date."                                                                                          
                                                                                                                                
Representative Foster  MOVED to ADOPT  the work draft  for HB                                                                   
190, labeled  24-LS0617\S, Luckhaupt,  3/10/06.   There being                                                                   
NO OBJECTION, it was so ordered.                                                                                                
                                                                                                                                
2:42:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HARRY CRAWFORD,  sponsor,  spoke strongly  in                                                                   
support of  HB 190 because of  its potential to save  so many                                                                   
lives.   He  shared a  personal  story about  a car  accident                                                                   
involving his  wife and a repeat  offender drunk driver.   He                                                                   
emphasized that this bill focuses  on prevention, rather than                                                                   
punishment.   As a matter of  routine, a judge will  issue an                                                                   
order for  the defendant  not to buy  or consume  alcohol, or                                                                   
enter a licensed  establishment.  Many  offenders immediately                                                                   
purchase alcohol upon their release.   He related that he has                                                                   
borrowed  language from  other previous  bills to draft  this                                                                   
bill, which  would provide  for a  physical display  on state                                                                   
issued ID's if  a person has been prohibited  from purchasing                                                                   
alcohol  by a court.   It  also allows  for a civil  penalty,                                                                   
paid to the  licensee if a person restricted  from purchasing                                                                   
alcohol is on their premises.                                                                                                   
                                                                                                                                
Representative Crawford acknowledged  that "change" is always                                                                   
difficult.  There are many amendments  that were incorporated                                                                   
into the committee substitute.                                                                                                  
                                                                                                                                
2:48:22 PM                                                                                                                    
                                                                                                                                
Representative Crawford  provided a sectional  analysis of HB                                                                   
190 (copy on file.)                                                                                                             
                                                                                                                                
Section  1 amends  AS  04.16 by  adding  a  new section  that                                                                   
provides that  a person who  purchases alcohol may  not enter                                                                   
or remain on  licensed premises, provides a  civil remedy for                                                                   
licensees against persons who violate this section.                                                                             
                                                                                                                                
Section 2  amends AS 04.16 by  adding a new section  that the                                                                   
purchasing of  alcoholic beverages by  a person of  legal age                                                                   
is a privilege  that can be  revoked for the conviction  of a                                                                   
crime or as a condition of probation or parole.                                                                                 
                                                                                                                                
Section 3 provides a conforming amendment to Section 2.                                                                         
                                                                                                                                
Section 4 amends  AS 28.15.111(a) by requiring  that drivers'                                                                   
licenses  must  be  designed  to  allow  the  license  to  be                                                                   
electronically  read so as  to display  whether a person  has                                                                   
privilege   to   purchase  alcoholic   beverages   under   AS                                                                   
04.16.160.                                                                                                                      
                                                                                                                                
New Section  5 requires DMV to  cancel and re-issue  a marked                                                                   
license if an individual's privilege  to purchase alcohol has                                                                   
been revoked under Section 2 of HB 190.                                                                                         
                                                                                                                                
New Section  6 requires  the surrender of  a license  when an                                                                   
individual  has  been  ordered  not to  consume  alcohol  and                                                                   
establishes the  obligation of  the court and  the Department                                                                   
of Corrections to notify DMV when an order is issued.                                                                           
                                                                                                                                
New Section 7 permits DMV to establish  a fee for issuing the                                                                   
marked licenses established by HB 190.                                                                                          
                                                                                                                                
Representative  Crawford offered to  answer questions  of the                                                                   
committee.                                                                                                                      
                                                                                                                                
2:51:57 PM                                                                                                                    
                                                                                                                                
DUANE  BANNOCK,   DIRECTOR,  DIVISION   OF  MOTOR   VEHICLES,                                                                   
DEPARTMENT  OF  ADMINISTRATION,  noted appreciation  for  the                                                                   
work done  on this legislation.   He said DMV  recognizes the                                                                   
trouble that drunk driving has  caused Alaskans.  He reminded                                                                   
members  about  previous legislation  addressing  deaths  and                                                                   
accidents involving younger drivers.                                                                                            
                                                                                                                                
He  apologized to  the  committee for  the  submission of  an                                                                   
indeterminate fiscal note.  The  DMV has not been able to get                                                                   
a grip  on the number  of persons that  would be  affected by                                                                   
passage of the  legislation.  The Division does  not know how                                                                   
much it will  cost to develop an accurate real  time exchange                                                                   
between the Court  System and the Department  of Corrections.                                                                   
There   is  no  direct   link  between   the  Department   of                                                                   
Corrections and DMV.  He stressed  the worthwhile goal of the                                                                   
legislation.                                                                                                                    
                                                                                                                                
2:56:07 PM                                                                                                                    
                                                                                                                                
Mr.  Bannock  questioned  the  tie-in between  the  bill  and                                                                   
drinking while driving.  He asked  how the tragic story could                                                                   
change for drinking while driving  as a result of the passage                                                                   
of this bill.                                                                                                                   
                                                                                                                                
Co-Chair  Meyer asked  how the courts  and other  departments                                                                   
could link up  to see that the driver's licenses  are marked.                                                                   
Mr.  Bannock  replied  that  court-ordered   revocations  are                                                                   
usually  sent by  mail.   The  systems  are not  intra-agency                                                                   
connected.   In the future, the  agencies would like  to have                                                                   
that  type of  system for  intra-agency  communication.   The                                                                   
state is millions of dollars away from such a system.                                                                           
                                                                                                                                
2:59:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  posed a hypothetical situation  involving the                                                                   
transfer of information.   Mr. Bannock acknowledged  that his                                                                   
example was  correct, and  added that  there remains  an open                                                                   
end  in  the  circuit  concerning   the  vendor  selling  the                                                                   
alcohol.                                                                                                                        
                                                                                                                                
Representative Kerttula  assumed that the court  system could                                                                   
relay that  information by email.   Mr. Bannock  replied that                                                                   
under the  bill, Section 6, addresses  that.  He  agreed that                                                                   
email would  be the most efficient  way at this time,  but is                                                                   
not the cure-all of the overall purpose of the bill.                                                                            
                                                                                                                                
3:01:34 PM                                                                                                                    
                                                                                                                                
Representative  Crawford stated  that even  he is capable  of                                                                   
emailing.  He said he believes  that Mr. Bannock's assessment                                                                   
that  this would  cost  millions of  dollars  was creating  a                                                                   
"road-block".    He disagreed  with  Mr.  Bannock's  opinion.                                                                   
There   are   financial  incentives   associated   with   the                                                                   
legislation.  He emphasized that  the state must do something                                                                   
to interrupt the current situation.                                                                                             
                                                                                                                                
3:03:57 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer asked about the  constitutionality of labeling                                                                   
the ID of a person for drinking concerns.                                                                                       
                                                                                                                                
ANNE CARPENETI,  ASSISTANT ATTORNEY  GENERAL, LEGAL  SERVICES                                                                   
SECTION-JUNEAU,   CRIMINAL  DIVISION,   DEPARTMENT  OF   LAW,                                                                   
replied  that  it could  raise  constitutional  issues.   She                                                                   
thought  there  would  be ways  to  get  information  without                                                                   
carrying a "scarlet letter" for that person.                                                                                    
                                                                                                                                
Co-Chair Meyer suggested it could  impact DMV.  Ms. Carpeneti                                                                   
thought  that  there  may  have  to  be  a  bar  code  reader                                                                   
involved.                                                                                                                       
                                                                                                                                
Co-Chair Meyer commented on the  financial incentive to check                                                                   
the  identification.    Ms.  Carpeneti   responded  that  the                                                                   
current  drafting  would not  allow  for buying  or  drinking                                                                   
alcohol on the premise.                                                                                                         
                                                                                                                                
Representative Stoltze asked if  the consequences would apply                                                                   
only to  those that who commit  an offense after  the passage                                                                   
of   the  bill.      Ms.   Carpeneti  suggested   adding   an                                                                   
applicability section to the bill to clarify that.                                                                              
                                                                                                                                
Representative Stoltze  voiced concern with  the registration                                                                   
of sex offenders previous to the  passage of the sex offender                                                                   
bill.  If that logic was followed  in this legislation, there                                                                   
could  be problems.   Ms.  Carpeneti  advised that  generally                                                                   
criminal statutes apply into the future, not the past.                                                                          
                                                                                                                                
Representative  Stoltze  commented  that  there would  be  no                                                                   
"looking back" at offenses.  Ms.  Carpeneti discussed how the                                                                   
application works post facto and  said it could be applied as                                                                   
a condition of parole.                                                                                                          
                                                                                                                                
3:10:43 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer  noted that  when a  person does buy  alcohol,                                                                   
any ID is ok  to use.  Ms. Carpeneti agreed.   Representative                                                                   
Crawford pointed out that the  bill addresses both the ID and                                                                   
driver's  license.   Ms.  Carpeneti added  that  it does  not                                                                   
mention a passport.                                                                                                             
                                                                                                                                
Representative  Stoltze  suggesting  looking  a list  of  all                                                                   
possible ID's.  Ms. Carpeneti  said a person could get around                                                                   
it by using another form of ID.                                                                                                 
                                                                                                                                
Co-Chair Meyer implied that a  habitual offender would try to                                                                   
get around the law.                                                                                                             
                                                                                                                                
3:12:58 PM                                                                                                                    
                                                                                                                                
Representative Crawford  noted that the bill  is not perfect.                                                                   
He said he did not want to prohibit  a person with an out-of-                                                                   
state  license or  an  ID from  another  country from  buying                                                                   
alcohol.    The bill  is  just  trying to  prohibit  habitual                                                                   
offenders in Alaska; it is not trying to be all-inclusive.                                                                      
                                                                                                                                
Co-Chair  Meyer  expressed a  concern  about  loopholes.   He                                                                   
asked  if  there  is  a  way  to  educate  owners  of  liquor                                                                   
establishments.                                                                                                                 
                                                                                                                                
DOUG  GRIFFIN,  DIRECTOR,  ALCOHOL   BEVERAGE  CONTROL  (ABC)                                                                   
BOARD,  responded that  Co-Chair Meyer  is correct in  saying                                                                   
that any kind of government issued  ID, which would include a                                                                   
passport,  military  ID, or  a  driver's license  from  other                                                                   
states or territories could be used.                                                                                            
                                                                                                                                
Co-Chair Meyer asked  for comments on the bill.   Mr. Griffin                                                                   
said the removal of the requirement  that everyone purchasing                                                                   
alcoholic  beverages must  show  identification, removes  the                                                                   
direct interest the ABC Board  would have in this matter.  He                                                                   
spoke of his board's concern about the abuse of alcohol.                                                                        
                                                                                                                                
Co-Chair Meyer  noted previous bills regarding  this subject.                                                                   
He  spoke of  the  success  of those  bills.    He asked  Mr.                                                                   
Griffin if businesses have taken  advantage of civil lawsuits                                                                   
to sue persons  who use a fake ID.  Mr. Griffin  said he does                                                                   
not know  if they  are taking  the "civil  action" step.   He                                                                   
noted most come from Brown Jug and Chilkoot Charlie's.                                                                          
                                                                                                                                
3:18:36 PM                                                                                                                    
                                                                                                                                
Representative Kerttula  pointed out that in  Juneau when Co-                                                                   
Chair  Meyer's bill  on underage  drinking passed,  a lot  of                                                                   
education related  information went  out.  The  programs were                                                                   
successful in rural areas due to this education.                                                                                
                                                                                                                                
Mr.  Griffin responded  that  there are  differences  between                                                                   
underage drinking  and HB 190,  which deals with  the alcohol                                                                   
abuser.    He  agreed  that  we   must  take  a  multifaceted                                                                   
approach.                                                                                                                       
                                                                                                                                
3:21:20 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault MOVED to ADOPT Amendment #1:                                                                                  
                                                                                                                                
     Page 3, line 27                                                                                                            
     Following "license," delete "the person must obtain a                                                                      
     new license that lists" and insert "when the person                                                                        
     obtains a new license, the license must list"                                                                              
                                                                                                                                
     Page 4, line 2                                                                                                             
     Delete "the person must obtain a new license that                                                                          
     lists" and insert "when the person obtains a new                                                                           
     license, the license must list"                                                                                            
                                                                                                                                
Representative Stoltze OBJECTED for discussion purposes.                                                                        
                                                                                                                                
Representative Crawford  addressed the amendment.   He stated                                                                   
that the language change was requested by DMV.                                                                                  
                                                                                                                                
Co-Chair Chenault asked for Mr. Duane Bannock's opinion.                                                                        
                                                                                                                                
Duane Bannock  stated  that DMV concurs  with the  amendment.                                                                   
He summarized that  when a person applies for  a new license,                                                                   
then the new license must be marked.                                                                                            
                                                                                                                                
Representative  Joule asked  how  the mark  would be  removed                                                                   
when the penalty ends.  Representative  Crawford replied that                                                                   
the day the penalty ends, a new license could be obtained.                                                                      
                                                                                                                                
Representative Crawford shared  that in Minnesota, a person's                                                                   
car   license    plate   is   marked   and    that   is   not                                                                   
unconstitutional.   Co-Chair Meyer  responded that he  has no                                                                   
problem with that.  He stated  a concern about discrimination                                                                   
when trying to  rent a car.  Representative  Crawford thought                                                                   
it would  be up to the car  rental company's discretion.   He                                                                   
said  he does  not want  to address  that  situation in  this                                                                   
bill.                                                                                                                           
                                                                                                                                
Representative  Stoltze  REMOVED  his OBJECTION  to  adopting                                                                   
Amendment  #1.  There  being NO  OBJECTION, Amendment  #1 was                                                                   
adopted.                                                                                                                        
                                                                                                                                
3:28:00 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer stated his intent  to hold the bill due to the                                                                   
indeterminate fiscal  note, and  because he does  not believe                                                                   
that the bill targets the intended person.                                                                                      
                                                                                                                                
Representative Crawford  replied that the cost  would be born                                                                   
by the  offenders, not the  state.  The  fiscal note  must be                                                                   
indeterminate  because  the  numbers  of  offenders  are  not                                                                   
known.  He emphasized  that it would not be a  direct cost to                                                                   
the  state.    He  addressed  targeting  the  offender.    He                                                                   
explained  his intent  to give  tools to the  people who  are                                                                   
willing to help  "end this carnage".  He admitted  that it is                                                                   
not a perfect bill, but he strongly  asked for passage of the                                                                   
bill.                                                                                                                           
                                                                                                                                
Co-Chair  Meyer suggested  talking  to Brown  Jug about  this                                                                   
bill.  He said  he is not sure licensed premises  would agree                                                                   
to take this step.  Representative  Crawford reported that in                                                                   
his  discussions  with  licensed   establishments,  he  found                                                                   
offers of support.                                                                                                              
                                                                                                                                
Representative  Stoltze  suggested  finding  a  way  to  make                                                                   
offenders pay the cost.                                                                                                         
                                                                                                                                
3:33:05 PM                                                                                                                    
                                                                                                                                
Co-Chair Meyer said  that a bar coding system  could be used.                                                                   
Representative  Crawford  disagreed with  that  concept.   He                                                                   
said he prefers a marking system.                                                                                               
                                                                                                                                
CSHB 190  (FIN) was heard and  HELD in Committee  for further                                                                   
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:34 PM                                                                                            

Document Name Date/Time Subjects