Legislature(2009 - 2010)

04/02/2009 03:06 PM FIN


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                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 2, 2009                                                                                            
                         3:06 p.m.                                                                                              
                                                                                                                                
3:06:20 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  called the House Finance  Committee meeting                                                                   
to order at 3:06 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Allan Austerman                                                                                                  
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Cathy  Munoz,  Sponsor;  Representative  Beth                                                                   
Kertulla,  Sponsor; John Bitney,  Staff, Representative  John                                                                   
Harris, Sponsor;  Dan Fauske, CEO/Executive  Director, Alaska                                                                   
Housing  Finance  Corporation,  Department  of  Revenue;  Joe                                                                   
Doogler,  Chief  Financial Officer,  Alaska  Housing  Finance                                                                   
Corporation,  Department  of  Revenue;  Dirk  Moffet,  Staff,                                                                   
Representative   Bob   Lynn,    Sponsor;   Jerry   Luckhaupt,                                                                   
Legislative    Council,   Division    of   Legal    Services;                                                                   
Representative  Bob  Lynn,  Sponsor;   Jane  Pierson,  Staff,                                                                   
Representative   Jay    Ramas,   Sponsor;    Doug   Wooliver,                                                                   
Administrative   Attorney,   Alaska    Court   System;   Anne                                                                   
Carpeneti,   Assistant  Attorney   General,  Legal   Services                                                                   
Section-Juneau, Criminal Division, Department of Law.                                                                           
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Whitney  Brewster,  Director,  Division  of  Motor  Vehicles,                                                                   
Department of Administration.                                                                                                   
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 199    APPROPS: NON-TRANSPORTATION STIMULUS                                                                                  
                                                                                                                                
          HB 199 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 161    JUNEAU SUBPORT BLDG/AHFC BLDG                                                                                         
                                                                                                                                
          HB 161 was HEARD and HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 3      REQUIREMENTS FOR DRIVER'S LICENSE/I.D.                                                                                
                                                                                                                                
          CSHS 3 (FIN) was REPORTED out of Committee with a                                                                     
          "do pass" recommendation and with a previously                                                                        
          published fiscal note: FN1 (ADM).                                                                                     
                                                                                                                                
HB 98     ALCOHOL: MINOR CONSUMING/LOCAL OPTION                                                                                 
                                                                                                                                
          CSHB 98 (FIN) was REPORTED out of Committee with                                                                      
          "no recommendation" and with a new zero fiscal                                                                        
          note from the Department of Public Safety and two                                                                     
          previously published fiscal notes: FN1 (CRT), FN2                                                                     
          (LAW).                                                                                                                
                                                                                                                                
HOUSE BILL NO. 199                                                                                                            
                                                                                                                                
     "An Act making supplemental appropriations and capital                                                                     
     appropriations; amending appropriations; and providing                                                                     
     for an effective date."                                                                                                    
                                                                                                                                
3:06:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  MOVED to ADOPT  CSHB 199 (FIN),  version 26-                                                                   
GH1260\E, Kane, 4/1/09 as a working draft.                                                                                      
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
Co-Chair  Hawker informed  the committee  that the intent  of                                                                   
the  draft was  to forward  open  and transparent  discussion                                                                   
regarding  American  Recover   and  Reinvestment  Act  (ARRA)                                                                   
funds.  He detailed  that the  proposed committee  substitute                                                                   
(CS)  keeps all  the state's  options open  by accepting  and                                                                   
appropriating  all monies  available under  ARRA for  Alaskan                                                                   
non-transportation projects.                                                                                                    
                                                                                                                                
Co-Chair Hawker  stressed that the  CS is open  for amendment                                                                   
and further  evaluation. He noted  that one particular  item,                                                                   
Part B  of the  $20.7 million  education program, had  caused                                                                   
concern, but was  still a work in progress. In  the draft CS,                                                                   
the money  is appropriated  to the Capital  Income Fund  as a                                                                   
placeholder.  He emphasized  that  the discussion  was  still                                                                   
ahead; the  issue would be dealt  with in the  capital budget                                                                   
before the end of the legislative session.                                                                                      
                                                                                                                                
Co-Chair Hawker  acknowledged questions that had  been raised                                                                   
regarding  the potential  $15.6 million  direct deposit  into                                                                   
the unemployment  insurance (UI)  trust fund. He  pointed out                                                                   
that the  amount does not need  to be appropriated in  the CS                                                                   
as the money  will automatically be deposited  into the trust                                                                   
if separate legislation passes  revising the base periods for                                                                   
participating in unemployment insurance.                                                                                        
                                                                                                                                
3:10:12 PM                                                                                                                    
                                                                                                                                
Representative   Fairclough  requested   an  explanation   of                                                                   
legislative intent.                                                                                                             
                                                                                                                                
Co-Chair Hawker  detailed that Section  10 of the  work draft                                                                   
is an initial suggestion for legislative  intent. The section                                                                   
states in language as strong as  legally allowed that the use                                                                   
of stimulus  funds will not  create obligations to  the state                                                                   
to replace the funds, and that  existing programs will not be                                                                   
expanded.  The  intent  is  to  use  the  funds  to  continue                                                                   
existing  activities or  deal  with issues  such as  deferred                                                                   
maintenance.  He added  that another  important part  refuses                                                                   
federal  stimulus   money  that  would  violate   the  strong                                                                   
constitutional rights to privacy enjoyed by Alaskans.                                                                           
                                                                                                                                
3:11:36 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze WITHDREW his OBJECTION.                                                                                        
                                                                                                                                
Representative Kelly  wanted an opportunity to  look over the                                                                   
proposed CS and the intent language.  Co-Chair Hawker assured                                                                   
him that  the CS is a  working document subject  to committee                                                                   
scrutiny.                                                                                                                       
                                                                                                                                
Vice-Chair  Thomas noticed  that the  Office of the  Governor                                                                   
had $1 million  in discretionary funds and asked  whether the                                                                   
legislature  could spend  the money if  the governor  refused                                                                   
the funds. Co-Chair Hawker did not believe so.                                                                                  
                                                                                                                                
3:13:41 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  WITHDREW  his OBJECTION.  There  being  no                                                                   
further objection, the work draft was adopted.                                                                                  
                                                                                                                                
HB  199  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 161                                                                                                            
                                                                                                                                
     "An  Act  relating to  the  Alaska Mental  Health  Trust                                                                   
     Authority  Subport  Office   Building;  authorizing  the                                                                   
     issuance   of   certificates    of   participation   for                                                                   
     construction of the building  and authorizing the use of                                                                   
     up to $25,000,000 from the  mental health trust fund for                                                                   
     construction of the building; approving leases of all                                                                      
     or part of the building by the Department of                                                                               
     Administration; and providing for an effective date."                                                                      
                                                                                                                                
3:14:22 PM                                                                                                                    
                                                                                                                                
Representative Foster spoke in support of the bill.                                                                             
                                                                                                                                
REPRESENTATIVE  CATHY  MUNOZ,   SPONSOR,  addressed  specific                                                                   
questions  that  had  been  asked   previously  by  committee                                                                   
members. She  referred to additional materials  covering cost                                                                   
comparison   data,   due   diligence   information,   and   a                                                                   
construction analysis.                                                                                                          
                                                                                                                                
Representative  Munoz addressed  concerns  that the  proposed                                                                   
building was considered Class  A space. She detailed that the                                                                   
proposed construction  cost was  $315 per square  foot, which                                                                   
is considered  Class B  space when  compared to office  space                                                                   
around the state.  New office space ranges from  $200 to $500                                                                   
dollars per square foot.                                                                                                        
                                                                                                                                
Representative  Munoz  turned   to  the  question  of  square                                                                   
footage  price   and  reported   that  a  ceiling   had  been                                                                   
established  at $3.50  per  square foot;  the  intent was  to                                                                   
negotiate  down from the  ceiling. She  pointed to  extensive                                                                   
data  regarding cost  comparisons for  Anchorage and  Juneau.                                                                   
She reminded the  committee that the square  footage costs do                                                                   
not include investments  that the state makes  on lease space                                                                   
to  make   the  space   meet  information  technology   (IT),                                                                   
lighting, and  other requirements. For example,  the Frontier                                                                   
Building in  Anchorage is  leased at  $3.00 per square  foot,                                                                   
but recently  required over  $1 million  in upgrades  to make                                                                   
the space adequate.                                                                                                             
                                                                                                                                
Representative  Munoz  discussed  concerns raised  about  the                                                                   
owner of  the Department of  Labor and Workforce  Development                                                                   
(DLWD) building.  She noted that the state  is not interested                                                                   
in  renegotiating a  lease contract  at the  site because  of                                                                   
environmental and repair issues.                                                                                                
                                                                                                                                
Representative  Munoz emphasized  that  the proposed  project                                                                   
provided great  opportunity for the  state of Alaska  and for                                                                   
the Mental  Health Trust;  the state  would save $13  million                                                                   
and the trust would be able to develop a key asset.                                                                             
                                                                                                                                
Representative  Munoz  mentioned  a proposed  amendment  that                                                                   
would allow the Alaska Housing  Finance Corporation (AHFC) to                                                                   
purchase an  administrative building in Anchorage  using AHFC                                                                   
funds.                                                                                                                          
                                                                                                                                
3:19:54 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  puzzled over the location  of the building                                                                   
and questioned the  price that would be paid.  He thought for                                                                   
the price the  building should be where the  subport building                                                                   
used to be.  Representative Munoz responded  that the project                                                                   
architects could  speak specifically to site  issues; she was                                                                   
presenting the mental health trust's proposal.                                                                                  
                                                                                                                                
Co-Chair Stoltze  noted that  the bill  would be heard  again                                                                   
the next day.                                                                                                                   
                                                                                                                                
Representative  Kelly commented  that his previous  questions                                                                   
had been answered completely.                                                                                                   
                                                                                                                                
3:23:15 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker stated  some of his concerns  for the record.                                                                   
He  had  questions regarding  cost,  value,  quality  issues,                                                                   
financing alternatives, and the structure of the bill.                                                                          
                                                                                                                                
Representative Crawford  requested a short explanation  as to                                                                   
why it  would be  to the  state's advantage  to have  someone                                                                   
else build, own,  and operate the building instead  of owning                                                                   
the building  itself. He  understood that  the deal  would be                                                                   
increasingly good  for the mental health trust  over time and                                                                   
wondered how the state would benefit.                                                                                           
                                                                                                                                
Representative Munoz emphasized  that the mental health trust                                                                   
and  the state  should  be regarded  as  partners. The  state                                                                   
works  very  closely with  the  trust  and encourages  it  to                                                                   
develop  its assets.  She thought  the  project provided  the                                                                   
trust  with an  opportunity to  develop  their portfolio  and                                                                   
provide a revenue stream to beneficiaries  over the course of                                                                   
the project.  The state  would benefit  as a funding  partner                                                                   
with the trust.                                                                                                                 
                                                                                                                                
REPRESENTATIVE  BETH KERTTULA,  SPONSOR,  added that  another                                                                   
advantage to the state would be saving $13.5 million.                                                                           
                                                                                                                                
3:25:59 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  did not  understand  how the  state                                                                   
would save $13.5 million. He thought  the trust could gain by                                                                   
selling  the land  and investing  the earnings.  He had  been                                                                   
told that  the state had  paid over $50  million in  rent for                                                                   
the DLWD building. He asked why  the state should rent rather                                                                   
than  buy and  why  the state  should  not appropriate  money                                                                   
directly to the trust instead  of give it money through rent.                                                                   
Representative  Munoz responded  that  the proposal  involves                                                                   
three different sites. The Department  of Public Safety (DPS)                                                                   
building on  Whittier Street, was  built in 1970 to  last ten                                                                   
years,  but has  been occupied  by  the state  for nearly  40                                                                   
years.  Renovation  of  the  DPS   building  and  the  second                                                                   
building, the Department  of Fish and Game (DFG)  building in                                                                   
Douglas, would  cost much more  than $8.5 million.  She added                                                                   
that the  $13 million  savings does  not include  replacement                                                                   
costs  that the  state  foresees  for both  the  DPS and  DFG                                                                   
buildings.                                                                                                                      
                                                                                                                                
3:28:25 PM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  queried whether  the buildings  would have                                                                   
60-foot atriums  and whether  they would  meet the  new state                                                                   
energy  efficiency  codes  being   proposed  because  of  the                                                                   
stimulus funds.                                                                                                                 
                                                                                                                                
Co-Chair  Stoltze thought  the  architect  could address  the                                                                   
question.                                                                                                                       
                                                                                                                                
Co-Chair  Stoltze  MOVED Amendment  1,  26-LS0605\W.1,  Cook,                                                                   
4/2/09 (copy on file):                                                                                                          
                                                                                                                                
     Page 1, lines 2-3:                                                                                                         
          Delete "the Alaska Mental Health Trust Authority"                                                                     
          Insert "a separate trust land development account"                                                                    
                                                                                                                                
     Page 1, line 6, following "Administration;":                                                                               
          Insert  "authorizing  the  Alaska  Housing  Finance                                                                   
          Corporation   to  acquire  the  building   that  it                                                                   
          occurpies  for  an  amound  that  does  not  exceed                                                                   
          $14,500,000;"                                                                                                         
                                                                                                                                
     Page 5, following line 20:                                                                                                 
          Insert a new bill section to read:                                                                                    
     "*Sec.8. The  uncodified law of  the State of  Alaska is                                                                   
     amended by adding a new section to read:                                                                                   
                                                                                                                                
          AUTHORIZING THE ALASKA HOUSING FINANCE CORPORATION                                                                    
     TP  ACQUIRE  A  BUILDING.  The  Alaska  Housing  Finance                                                                   
     Corporation  is authorized  to acquire  the building  in                                                                   
     Anchorage it occupies on  the effective date of this Act                                                                   
     for  an amount that  does not  exceed $14,500,000.  This                                                                   
     section   constitutes  the   approval  required   by  AS                                                                   
     18.55.100(d) and AS 18.56.090(d)  for that acquisition."                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Co-Chair Hawker OBJECTED for DISCUSSION.                                                                                        
                                                                                                                                
JOHN BITNEY,  STAFF, REPRESENTATIVE JOHN HARRIS,  SPONSOR and                                                                   
CHAIRMAN, LEGISLATIVE  COUNCIL, reported  that the  intent of                                                                   
the amendment  was to  bring forth  a proposal. He  explained                                                                   
that the  Anchorage Legislative  Information Office  (LIO) is                                                                   
on   a   year-to-year   lease   and   needs   office   space.                                                                   
Conversations  with AHFC  about space  and financing  options                                                                   
led to a cost-savings idea. The  corporation has needed space                                                                   
as well  and had calculated costs  for a mortgage  that could                                                                   
result in savings of several million dollars.                                                                                   
                                                                                                                                
3:34:04 PM                                                                                                                    
                                                                                                                                
DAN FAUSKE,  CEO/EXECUTIVE DIRECTOR,  ALASKA HOUSING  FINANCE                                                                   
CORPORATION,   DEPARTMENT  OF   REVENUE,   provided  a   memo                                                                   
regarding the  proposal (copy on file). He  provided history,                                                                   
explaining  that   AHFC  has  owned  4.3  acres   in  midtown                                                                   
Anchorage since  1995; the corporation  had planned  to build                                                                   
office space  but the contract  was cancelled. In  1997, AHFC                                                                   
entered into  an agreement  to lease  office space.  In 1999,                                                                   
AHFC unsuccessfully  sought legislative  approval to  acquire                                                                   
the property.  Tatitlek Corporation  bought the building  for                                                                   
$6 million  and has been open  to sell the property  to AHFC.                                                                   
The native  corporation wants  the 4.3  acres that  AHFC owns                                                                   
and AHFC wants  the building they are currently  leasing from                                                                   
Tatitlek.                                                                                                                       
                                                                                                                                
Mr. Fauske  continued  that there have  been negotiations  to                                                                   
trade  assets. Appraisals  on the  building show  that it  is                                                                   
worth about $14.5 million. No  cash will be required from the                                                                   
legislature, lease  payments will  be reduced, and  AHFC will                                                                   
acquire an asset. In addition,  the increased net income will                                                                   
increase the dividend available to the state.                                                                                   
                                                                                                                                
Mr. Fauske added that the governor's  office had not objected                                                                   
to the idea  of AHFC purchasing the building.  He referred to                                                                   
a  spread  sheet  with  detailed   descriptions  and  figures                                                                   
related to the properties (copy on file).                                                                                       
                                                                                                                                
3:39:59 PM                                                                                                                    
                                                                                                                                
JOE DOOGLER, CHIEF FINANCIAL OFFICER,  ALASKA HOUSING FINANCE                                                                   
CORPORATION,  DEPARTMENT OF  REVENUE,    summarized  that the                                                                   
net  present   value   savings  [of  the   trade]  would   be                                                                   
approximately  $7.5 million,  and  possibly  $12 million.  He                                                                   
continued  that the purchase  price includes  $2 million  for                                                                   
needed upgrades.                                                                                                                
                                                                                                                                
Representative Foster  cited experience with city  taxes, and                                                                   
reported that most of a city can  be tax-exempt. He asked how                                                                   
the  proposal  would affect  tax  income for  Anchorage.  Mr.                                                                   
Fauske responded  that the  building would  be tax  exempt as                                                                   
AHFC would own  it as a state entity. He referred  to similar                                                                   
discussion regarding other property.                                                                                            
                                                                                                                                
Co-Chair Stoltze asked if the  taxable and tax-exempt aspects                                                                   
would cancel each  other out. Mr. Fauske replied  that it was                                                                   
possible.                                                                                                                       
                                                                                                                                
3:43:54 PM                                                                                                                    
                                                                                                                                
Representative Gara asked whether  the building was currently                                                                   
not taxed because  it was owned by Tatitlek  Corporation. Mr.                                                                   
Fauske thought it was being taxed.                                                                                              
                                                                                                                                
Representative  Gara wondered how  much property  tax revenue                                                                   
the municipality  would  lose. Mr. Fauske  responded  that he                                                                   
did not know but would find out.                                                                                                
                                                                                                                                
Representative   Gara  asked  if   Anchorage  would   end  up                                                                   
collecting  less  money. Mr.  Fauske  replied  that the  city                                                                   
would collect  less money. He  defended AHFC regarding  taxes                                                                   
because the corporation brings  a lot of assets to Anchorage.                                                                   
He thought the  issue was more a state issue.  He referred to                                                                   
past debates with the legislature regarding taxes.                                                                              
                                                                                                                                
3:45:31 PM                                                                                                                    
                                                                                                                                
Representative  Gara  wanted  to  know the  position  of  the                                                                   
municipality. Mr. Fauske did not know.                                                                                          
                                                                                                                                
Co-Chair Stoltze noted that the  municipality is not asked in                                                                   
other similar situations.                                                                                                       
                                                                                                                                
Representative Fairclough  spoke on the taxing  issue. In her                                                                   
experience,  taxes do  not go  up but are  spread across  the                                                                   
entire  body.  There  are many  components:  property  values                                                                   
might  go  up  or  down,  the mill  rate  goes  up  or  down,                                                                   
depending on  Anchorage's budget; but government  spending is                                                                   
not cut back when less tax income is available.                                                                                 
                                                                                                                                
Representative Gara  asked for clarification.  Representative                                                                   
Fairclough  responded that  state government  has a  bill for                                                                   
various  items;  if revenue  declines,  people  who have  the                                                                   
ability pay  in. She  pointed to other  variables, such  as a                                                                   
mini-permanent fund that draws interest.                                                                                        
                                                                                                                                
Representative Gara asked whether  AHFC's fund and ability to                                                                   
further its mission  would be impacted if AHFC  purchased the                                                                   
building.                                                                                                                       
                                                                                                                                
3:48:17 PM                                                                                                                    
                                                                                                                                
Mr.  Fauske  responded  that  there  would  only  be  a  cash                                                                   
displacement  and other  programs  would not  in  any way  be                                                                   
affected.                                                                                                                       
                                                                                                                                
Representative  Fairclough  asked whether  there  would be  a                                                                   
small increase  in income  to the  state. Mr. Fauske  replied                                                                   
that there would  be a positive increment because  AHFC would                                                                   
be spending less in operating  expenses and 75 percent of the                                                                   
corporation's  net income is  available for appropriation  by                                                                   
the state.                                                                                                                      
                                                                                                                                
Vice-Chair Thomas  asked for  clarification about  the trade.                                                                   
Mr.  Fauske responded  that  the amount  of  the land  value,                                                                   
estimated at  between $4.5 million  and $5 million,  would be                                                                   
deducted  from  the $14.5  million  and  AHFC would  owe  the                                                                   
difference. The  additional revenue from the  second piece of                                                                   
land would also be deducted.                                                                                                    
                                                                                                                                
Vice-Chair  Thomas asked  whether  the amendment  would  give                                                                   
legislative  authority  to  release the  assets.  Mr.  Fauske                                                                   
explained that  AHFC needs authority to purchase  a building.                                                                   
He  stressed  that in  the  present  proposal AHFC  would  be                                                                   
exchanging and not disposing an asset.                                                                                          
                                                                                                                                
Mr.  Doogler interjected  that  AHFC  would be  disposing  an                                                                   
asset  as well. He  added that  AHFC also  has the  statutory                                                                   
authority  to dispose  of assets. Mr.  Fauske clarified  that                                                                   
AHFC cannot sell  assets as a private entity  would; there is                                                                   
a public process.                                                                                                               
                                                                                                                                
Mr. Doogler pointed  out that Anchorage would  get more taxes                                                                   
from  the land  when  it is  developed,  which would  replace                                                                   
taxes lost by AHFC acquiring the building.                                                                                      
                                                                                                                                
3:51:54 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  asked about the quality and  desirability of                                                                   
the  exchanged  land  in the  Anchorage  market.  Mr.  Fauske                                                                   
                          th                                                                                                    
responded that  land on 34  street  was appraised in  2008 at                                                                   
$4,168,000;  current  market value  would  put  it closer  to                                                                   
between $4.7  million and $5.1  million. As of  February 2008                                                                   
the  1.4  acres  at Boniface  and  DeBarr  was  appraised  at                                                                   
$511,000; current market value could be slightly higher.                                                                        
                                                                                                                                
Co-Chair  Hawker  queried  the probability  of  the  property                                                                   
being developed.  Mr. Fauske responded  that there was a very                                                                   
high probability that Tatitlek  Corporation would develop the                                                                   
site. Co-Chair  Hawker confirmed  that the property  would be                                                                   
developed for taxable commercial purposes.                                                                                      
                                                                                                                                
Co-Chair  Hawker  asked  whether   AHFC  would  be  the  only                                                                   
occupant of  the building acquired.  Mr. Fauske  replied that                                                                   
one  tenant,  the  Alaska  Public   Safety  Employees  Union,                                                                   
occupies a small space. Co-Chair  Hawker confirmed that there                                                                   
was no commercial plaza involved.                                                                                               
                                                                                                                                
Mr. Fauske stated  that AHFC needs to own a  building. He did                                                                   
not want higher  leases and thought the opportunity  was good                                                                   
as the  location is centrally  located and the  property will                                                                   
only increase in  value. He did not feel the  amendment would                                                                   
harm HB 161.                                                                                                                    
                                                                                                                                
3:55:59 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker noted  that questions  he had had  regarding                                                                   
deferred maintenance  and other issues had been  answered. He                                                                   
hoped  negotiations would  continue in  such a  way that  the                                                                   
state  would receive  the  best  value possible.  Mr.  Fauske                                                                   
agreed.                                                                                                                         
                                                                                                                                
Co-Chair Stoltze  spoke to personal  experience with  an AHFC                                                                   
purchase and appreciated the open process.                                                                                      
                                                                                                                                
Representative  Gara stated  his support  but wanted  to hear                                                                   
from the municipality.  Mr. Fauske replied that  he would get                                                                   
the information.                                                                                                                
                                                                                                                                
3:59:04 PM                                                                                                                    
                                                                                                                                
Representative  Salmon asked which  native corporation  owned                                                                   
the building.  Mr. Fauske  responded Tatitlek Corporation,  a                                                                   
subsidiary of Chugach Alaska Corporation.                                                                                       
                                                                                                                                
Representative Kelly asked if  there would be further issues.                                                                   
Mr. Bitney  stated that  "this is  it." Mr. Fauske  explained                                                                   
that the purchase of the building  was originally going to be                                                                   
a stand-alone bill.                                                                                                             
                                                                                                                                
Co-Chair  Hawker  WITHDREW  his  OBJECTION.  There  being  no                                                                   
further objection, Amendment 1 was ADOPTED.                                                                                     
                                                                                                                                
HB  161  was   HEARD  and  HELD  in  Committee   for  further                                                                   
consideration.                                                                                                                  
                                                                                                                                
4:02:30 PM          AT EASE                                                                                                   
4:06:22 PM          RECONVENED                                                                                                
                                                                                                                                
HOUSE BILL NO. 3                                                                                                              
                                                                                                                                
     "An Act relating to issuance of identification cards                                                                       
     and to issuance of driver's licenses; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
4:06:22 PM                                                                                                                    
                                                                                                                                
Representative  Hawker MOVED to  ADOPT CSHB 3  (FIN), version                                                                   
26-LS0008\P, Luckhaupt, 3/30/09  (copy on file), as a working                                                                   
document.                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for DISCUSSION.                                                                                       
                                                                                                                                
DIRK  MOFFET,   STAFF,  REPRESENTATIVE  BOB   LYNN,  SPONSOR,                                                                   
introduced  the title change  of the  proposed CS because  of                                                                   
added language.                                                                                                                 
                                                                                                                                
JERRY  LUCKHAUPT,  LEGISLATIVE  COUNCIL,  DIVISION  OF  LEGAL                                                                   
SERVICES,  explained  that the  change  was  made because  of                                                                   
language  dealing with  regulation authority  in response  to                                                                   
questions that had been raised.                                                                                                 
                                                                                                                                
4:07:57 PM                                                                                                                    
                                                                                                                                
Mr.  Moffet   turned   to  the  next   change,  regarding   a                                                                   
typographical error on page 1, line 9 and page 2, line 1.                                                                       
                                                                                                                                
Mr. Luckhaupt added  that the change was made  in response to                                                                   
previous legislation by Representative Crawford.                                                                                
                                                                                                                                
Mr.  Moffet   explained  the   third  change  extending   the                                                                   
expiration  date of  cards  issued to  persons  60 years  and                                                                   
older on  page 2, line 1.  Language in version A  was changed                                                                   
since the  identification cards  are free to senior  citizens                                                                   
and  their physical  appearance does  not change  as fast  as                                                                   
that  appearance of  younger citizens.  The sponsor  believed                                                                   
that  extending the  expiration date  on the  cards would  be                                                                   
good business;  senior citizens  would visit the  Division of                                                                   
Motor Vehicles (DMV)  less often. He stressed  that fewer DMV                                                                   
customers  would mean  less staff resource.  Amendment  3 was                                                                   
offered  to make the  cards never  expire for  those over  60                                                                   
years of  age. However, federal  regulation (the Real  ID Act                                                                   
of  2005)  stipulated  that  eight   years  was  the  longest                                                                   
expiration  date  allowed. He  pointed  out  that the  change                                                                   
doubled the expiration date from  five years to ten years and                                                                   
had the  added benefit of  being non-compliant with  the Real                                                                   
ID Act.                                                                                                                         
                                                                                                                                
Mr. Moffet moved to the fourth  change regarding anti-Real ID                                                                   
language related  to identification cards to  conform with AS                                                                   
44.99.040,  Limitations  on Certain  State  Expenditures.  He                                                                   
read the language added in version  P to page 2, lines 27-29,                                                                   
stating  that  the Commissioner  of  Administration  may  not                                                                   
adopt regulations  related to identification cards  solely to                                                                   
bring the state into compliance  with the requirements of the                                                                   
federal Real ID Act of 2005.                                                                                                    
                                                                                                                                
Mr. Moffet  detailed that the  fifth change also  added anti-                                                                   
Real ID  language related  to driver  licenses. Language  was                                                                   
added on pages 2 and 3, lines  30-31 stating that for section                                                                   
four,  AS 28.05.011  is omitted  by adding  a new section  to                                                                   
read that  the Commissioner of  Administration may  not adopt                                                                   
regulations related  to driver  licenses solely to  bring the                                                                   
state into compliance with the Real ID Act.                                                                                     
                                                                                                                                
4:12:04 PM                                                                                                                    
                                                                                                                                
Mr.  Luckhaupt  explained  that  the  language  changes  were                                                                   
requested  to  make sure  the  Department  of  Administration                                                                   
(DOA) does  not try to bring  the state into  compliance with                                                                   
the Real ID  Act through regulation. He noted  that the added                                                                   
language had necessitated the title change.                                                                                     
                                                                                                                                
Mr.  Moffet concluded  with the  sixth  change, anti-Real  ID                                                                   
disclaimer  language on  page  5, lines  15-17. Language  was                                                                   
added to emphasize  non-cooperation with the Real  ID Act. He                                                                   
spoke of two  amendments adding the anti-Real  ID language to                                                                   
HB 3; neither accomplished the  desired goal and language was                                                                   
drafted adding  language congruent  with Real ID  statute yet                                                                   
tailored  to deal with  the subject  of identification  cards                                                                   
and  driver licenses.  The anti-Real  ID disclaimer  language                                                                   
was  also  added  to clarify  that  although  the  state  has                                                                   
adopted  legal  presence  law,   the  bill  was  deliberately                                                                   
drafted  to  be  non-compliant  with  the Real  ID  Act.  The                                                                   
sponsors  believed that  Alaska should  determine for  itself                                                                   
the perimeters of good business practice.                                                                                       
                                                                                                                                
4:14:48 PM                                                                                                                    
                                                                                                                                
Representative Foster  did not think the issue  was a problem                                                                   
for his  constituents and  wondered why  the issue  was being                                                                   
brought up. Mr.  Moffet replied that currently  in regulation                                                                   
the primary  document must be  brought to DMV when  getting a                                                                   
license for the first time. The  requirement will be put into                                                                   
statute by the legislation.                                                                                                     
                                                                                                                                
Representative  Foster questioned  the need  for putting  the                                                                   
requirement in statute. Mr. Moffet  replied that the sponsors                                                                   
believe the policy is good. He  emphasized that the bill also                                                                   
allows the DMV  to be flexible about the expiration  date. He                                                                   
acknowledged  that  the  provision  would  not  affect  rural                                                                   
communities.                                                                                                                    
                                                                                                                                
Representative  Foster reiterated  his questions. Mr.  Moffet                                                                   
explained the desire  to keep people who are in  Alaska for a                                                                   
limited  time period from  allowing their  legal presence  to                                                                   
expire and still be able to keep  an Alaska driver's license.                                                                   
                                                                                                                                
4:17:12 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  pointed out  that  the changes  wanted  by                                                                   
committee  members   had  been   covered.  He  WITHDREW   his                                                                   
OBJECTION.  There  being no  further  OJBECTION,  the CS  was                                                                   
adopted.                                                                                                                        
                                                                                                                                
Representative  Kelly commented that  his questions  had been                                                                   
answered. He agreed that people  who were in Alaska illegally                                                                   
should not  be allowed to drive.  He spoke in support  of the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Representative  Joule asked whether  the passage of  the bill                                                                   
would give law enforcement an  excuse to stop people to check                                                                   
their  identifications.   Mr.  Luckhaupt  replied   that  the                                                                   
measure would not  allow law enforcement to  pull anyone over                                                                   
without  justification.  In Alaska,  there  must be  probable                                                                   
cause of a violation of law in order to pull someone over.                                                                      
                                                                                                                                
4:19:59 PM                                                                                                                    
                                                                                                                                
Mr.  Luckhaupt added  that the  issue  had come  up in  other                                                                   
states  as well  when states  have  wanted to  set up  check-                                                                   
points. He  stated that  the only  way a state  can set  up a                                                                   
check point is to check U.S. citizenship  where the state had                                                                   
entered   into  an   agreement  with   the  Immigration   and                                                                   
Naturalization  Service (INS) or  Customs and Border  Patrol.                                                                   
Florida  has  entered  into  the   agreement  with  some  law                                                                   
enforcement, but most states have not.                                                                                          
                                                                                                                                
Co-Chair  Stoltze assumed  the  present administration  would                                                                   
not embrace the issue.                                                                                                          
                                                                                                                                
4:21:30 PM                                                                                                                    
                                                                                                                                
Representative  Crawford  asked   a  question  regarding  the                                                                   
statement that the Commissioner  of DOA being unable to adopt                                                                   
regulation related to identification  cards in order to bring                                                                   
the  state  into  compliance   with  the  Real  ID  Act.  Mr.                                                                   
Luckhaupt replied  that the word  "solely" was added  so that                                                                   
regulation could be added for other valid reasons.                                                                              
                                                                                                                                
Mr.  Luckhaupt  added  regarding  a  previous  question  that                                                                   
people  can  be  stopped  in Alaska  for  probable  cause  or                                                                   
reasonable  suspicion  of  imminent physical  danger  to  the                                                                   
public. He provided an example.                                                                                                 
                                                                                                                                
Co-Chair  Stoltze  described  experience  with  local  police                                                                   
setting  up DUI (drinking  under the  influence) road  blocks                                                                   
and questioned  the legality of  the practice.  Mr. Luckhaupt                                                                   
replied that  in Alaska, the question  is open as  to whether                                                                   
sobriety  checkpoints  are  legal.  He added  that  the  U.S.                                                                   
Supreme Court  has said  that the  checkpoints are  legal for                                                                   
purposes of the U.S. Constitution;  that has not been decided                                                                   
in Alaska.                                                                                                                      
                                                                                                                                
4:24:44 PM          AT EASE                                                                                                   
4:24:52 PM          RECONVENED                                                                                                
                                                                                                                                
Representative  Crawford  pointed  out that  the  provision's                                                                   
wording actually could allow regulation  adopting the Real ID                                                                   
Act  and  questioned  the  use  of  the  word  "solely."  Mr.                                                                   
Luckhaupt explained  that the  only purpose of  the provision                                                                   
was regulation  authority. He  added that another  previously                                                                   
passed  provision prevents  any  state agency  from  adopting                                                                   
regulations to  implement the Real  ID Act; this will  be the                                                                   
fourth place in statute stating  that Alaska would not comply                                                                   
with the Real ID Act.                                                                                                           
                                                                                                                                
Representative Crawford believed  that the offending word was                                                                   
"solely."  He read  the  passage without  the  word: "If  the                                                                   
Commissioner  of Administration  may not  adopt a  regulation                                                                   
related  to identification  cards  to  bring  the state  into                                                                   
compliance." He thought the passage  would make it clear that                                                                   
regulation  could  not comply  with  the act.  Mr.  Luckhaupt                                                                   
responded that  the word "solely" would mean  that regulation                                                                   
can be adopted for another valid reason.                                                                                        
                                                                                                                                
Representative Crawford  proposed saying "with  the intent to                                                                   
bring  the state  into compliance"  instead  of "solely."  He                                                                   
thought  the intent  would  be clear.  He  asked whether  the                                                                   
presence of  the word "solely" would  say that it is  fine to                                                                   
adopt the Real ID Act as long as there is another purpose.                                                                      
                                                                                                                                
4:27:26 PM                                                                                                                    
                                                                                                                                
Mr. Luckhaupt  replied  that the word  "solely" allows  other                                                                   
reasons.                                                                                                                        
                                                                                                                                
Representative  Crawford  asked if  the  word "solely"  could                                                                   
allow the Real  ID Act to be adopted. Mr.  Luckhaupt answered                                                                   
that   the  word   "solely"   allows  the   Commissioner   of                                                                   
Administration   to   adopt  any   regulation   relating   to                                                                   
identification  cards providing it  is not solely  adopted in                                                                   
order to  implement the Real ID  Act. He interpreted  this to                                                                   
mean that  if there  is any other  valid reason for  adopting                                                                   
the  regulation,  the fact  that  it  brings the  state  into                                                                   
compliance with  the Real ID Act  does not matter.  He stated                                                                   
that he  had drafted the language  as he was  instructed, but                                                                   
added   that   the  way   it   is   drafted  leads   to   the                                                                   
interpretation. As  long as there is any other  valid reason,                                                                   
bringing  the state  into compliance  is okay  with the  word                                                                   
"solely"  present, even  if the commissioner  wants  to bring                                                                   
the state into compliance with the Real ID Act.                                                                                 
                                                                                                                                
4:28:48 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze   noted  that  the  same   issue  had  been                                                                   
contentious in a previous meeting.                                                                                              
                                                                                                                                
Representative  Gara pointed out  that the word  "solely" was                                                                   
proposed because no one has come  up with acceptable language                                                                   
for the provision;  what is clear is that the  state does not                                                                   
want  DMV  to implement  the  Real  ID  Act. He  thought  the                                                                   
response to  Representative Crawford's  question was  yes. He                                                                   
presented  a  hypothetical:  A commissioner  has  the  secret                                                                   
intent to implement the Real ID  Act, but says the purpose is                                                                   
to save  money. He  asked whether  the hypothetical  would be                                                                   
possible  even  though  it  violates  the  intention  of  the                                                                   
legislation.                                                                                                                    
                                                                                                                                
Mr. Moffet clarified  that he word "solely"  was used because                                                                   
the  Real ID  Act would  not allow  DMV staff  to be  trained                                                                   
regarding  fraudulent  document  detection, for  example.  He                                                                   
stated  that many current  good business  practices  would be                                                                   
discarded  if the committee  wanted a  strict prohibition  on                                                                   
anything in the Real ID Act. He  described the Real ID Act as                                                                   
a "laundry list"  of all the good ideas that  the states came                                                                   
up with; he opined  that some of the ideas are  good and some                                                                   
bad. For example, the sponsor  thought that putting the legal                                                                   
presence expiration  date directly on someone's  card was not                                                                   
a good business  practice, even though the Real  ID Act would                                                                   
allow it.  All Alaskan cards would  look the same  except for                                                                   
the  expiration  date;  only  looking  very  closely  at  the                                                                   
expiration  date  would  indicate  the legal  status  of  the                                                                   
holder.                                                                                                                         
                                                                                                                                
Mr. Moffet stated  that the sponsor wanted the  word "solely"                                                                   
left in the provision in order  to conform to what is already                                                                   
in statute and not re-write the  anti-Real ID Act legislation                                                                   
already passed.                                                                                                                 
                                                                                                                                
Representative  Gara  wanted  his  question  answered.    Mr.                                                                   
Luckhaupt replied that the answer would be yes.                                                                                 
                                                                                                                                
Representative Gara described  the conundrum: the legislature                                                                   
does  not want  DMV to  implement the  Real ID  Act, but  the                                                                   
language makes it possible for  a DMV person to implement it.                                                                   
He asked  whether the legislative  intent in the CS  was good                                                                   
enough to  protect the state  from a commissioner  who wanted                                                                   
to implement  the Real  ID Act. Mr.  Moffet replied  that the                                                                   
legislature oversees the DMV and  can change anything they do                                                                   
not want through  statute; the division cannot  implement the                                                                   
Real ID Act.                                                                                                                    
                                                                                                                                
4:34:15 PM                                                                                                                    
                                                                                                                                
Mr. Luckhaupt noted that the provision  passed last year said                                                                   
the  division   should  not  be  implementing   the  act.  He                                                                   
acknowledged  that the hypothetical  of the director  wanting                                                                   
to implement the act was possible.                                                                                              
                                                                                                                                
Representative Gara stated for  the record that the intention                                                                   
is to prevent DMV from implementing  the Real ID Act and that                                                                   
no language has  been found to make that clearer.  He thought                                                                   
Representative  Crawford's question was  still a  concern but                                                                   
he could not find better language.                                                                                              
                                                                                                                                
Representative  Foster  queried  possible penalties  for  not                                                                   
complying with the federal requirements.                                                                                        
                                                                                                                                
WHITNEY  BREWSTER,  DIRECTOR,  DIVISION  OF  MOTOR  VEHICLES,                                                                   
DEPARTMENT OF ADMINISTRATION (via  teleconference), testified                                                                   
that  there are  some penalties  for not  complying with  the                                                                   
Real ID Act by  the end of 2009. She detailed  that residents                                                                   
of  states   that  do  not   issue  Real  ID   Act  compliant                                                                   
identification cards  or driver licenses will not  be able to                                                                   
access  federal facilities  and  will not  be  able to  board                                                                   
airplanes without secondary screening.                                                                                          
                                                                                                                                
4:36:48 PM                                                                                                                    
                                                                                                                                
Co-Chair  Hawker  spoke to  difficulties  in  Alaska and  the                                                                   
necessity of identification. He  pointed to state statute and                                                                   
regulations  connected with  obtaining identification  cards.                                                                   
He  queried   the  additional  difficulties  that   might  be                                                                   
incurred   for   renewing   identification   cards   if   the                                                                   
legislation passed.                                                                                                             
                                                                                                                                
REPRESENTATIVE   BOB  LYNN,  SPONSOR,   explained   that  the                                                                   
provision  would  not  change  things for  Alaskans  but  for                                                                   
people  coming  from  out-of-state  and for  people  who  are                                                                   
temporarily on a visa or work permit.                                                                                           
                                                                                                                                
Co-Chair Hawker agreed  that the additional burden  is not on                                                                   
state residents but on other classes of individuals.                                                                            
                                                                                                                                
4:40:31 PM                                                                                                                    
                                                                                                                                
Representative Foster  described difficulties  experienced by                                                                   
people in the Bush  who have to travel long  distances to get                                                                   
identification cards.                                                                                                           
                                                                                                                                
Co-Chair Hawker asked Mr. Moffet  to respond to his question.                                                                   
                                                                                                                                
Mr. Moffet  described changes  the bill  would put  in place.                                                                   
Alaskans  who renew  driver licenses  will not  have to  show                                                                   
primary documents.  Alaskans who have allowed  their driver's                                                                   
license  to expire  will be allowed  90 extra  days to  renew                                                                   
without showing primary documents;  this provision was put in                                                                   
for  people in  rural  areas. The  90-day  window was  chosen                                                                   
because statute stipulates that  people new to Alaska have 90                                                                   
days  to change  their  license to  an  Alaska state  drivers                                                                   
license.                                                                                                                        
                                                                                                                                
4:43:09 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  queried additional  difficulties that  would                                                                   
be caused by the legislation.  Ms. Brewster did not think the                                                                   
provision would  increase the burden on people  who currently                                                                   
hold  an  Alaska driver's  license.  She  addressed  concerns                                                                   
about  people from  rural areas.  She  recognized the  bigger                                                                   
challenges to  those who do not  have direct access  to a DMV                                                                   
office, but  pointed out  that people  can renew through  the                                                                   
mail.                                                                                                                           
                                                                                                                                
Ms. Brewster referred to future  legislation that would allow                                                                   
for renewing online. She explained  that the issue is the new                                                                   
digital license.  The last of the old Polaroid  licenses will                                                                   
expire this  year, requiring people  to come to an  office in                                                                   
person to capture a digital likeness.                                                                                           
                                                                                                                                
4:45:18 PM                                                                                                                    
                                                                                                                                
Representative  Foster commented  on  the federal  government                                                                   
directing state decisions.                                                                                                      
                                                                                                                                
Co-Chair Hawker MOVED to report  CSHS 3 (FIN) as amended from                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative  Gara OBJECTED  for  discussion. He  commented                                                                   
that the rules in place already  keep illegal immigrants from                                                                   
getting a  driver's license  and the  proposed law  would not                                                                   
change  the  rules  aside from  extending  renewal  time  for                                                                   
senior  citizens.  He  noted  that  legislation  on  divisive                                                                   
issues increases problems and does not change anything.                                                                         
                                                                                                                                
Representative Gara WITHDREW his OBJECTION.                                                                                     
                                                                                                                                
Representative  Foster commented  on the  situation in  rural                                                                   
Alaska where everyone knows each other.                                                                                         
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSHS 3 (FIN) was  REPORTED out of Committee with  a "do pass"                                                                   
recommendation and  with a previously published  fiscal note:                                                                   
FN1 (ADM).                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 98                                                                                                             
                                                                                                                                
     "An Act relating to minor consuming and repeat minor                                                                       
     consuming; and providing for an effective date."                                                                           
                                                                                                                                
4:49:02 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker noted  that there would be two  amendments to                                                                   
the bill.                                                                                                                       
                                                                                                                                
JANE  PIERSON,  STAFF,  REPRESENTATIVE  JAY  RAMAS,  SPONSOR,                                                                   
provided  history regarding  HB 98, explaining  that  HB 359,                                                                   
legislation  amending  minors  consuming statutes,  had  been                                                                   
passed  the previous  year,  but had  created  a new  problem                                                                   
related to convictions.                                                                                                         
                                                                                                                                
Co-Chair Hawker  clarified that new language  would provide a                                                                   
technical correction.                                                                                                           
                                                                                                                                
Representative   Gara   MOVED  Amendment   1,   26-LS005\A.4,                                                                   
Luckhaupt, 4/1/09 (copy on file):                                                                                               
                                                                                                                                
     Page 1, line 1, following both occurrences of                                                                              
     "consuming":                                                                                                               
          Insert "or in possession or control"                                                                                  
                                                                                                                                
     Page 1, following line 3:                                                                                                  
          Insert a new bill section to read:                                                                                    
     "*Section 1. AS 04.16.050(b) is amended to read:                                                                           
               (b) A person who violates (a) of this section                                                                    
          and  who  has  not  been  previously  convicted  or                                                                   
          received a  suspended imposition of  sentence under                                                                   
          (1)   of  this  subsection   is  guilty   of  minor                                                                   
          consuming  or  in  possession   or  control.  Minor                                                                 
          consuming   or  in  possession  or  control   is  a                                                                 
          violation.  Upon conviction in the  district court,                                                                 
          the court                                                                                                             
               (1) may grant a suspended imposition of                                                                          
          sentence  under AS 12.55.085  and place  the person                                                                   
          on probation  for up to one year if  the person has                                                                   
          not been  convicted of a violation  of this section                                                                   
          previously; among the  conditions of probation, the                                                                   
          court  shall,  with  the  consent  of  a  community                                                                   
          diversion  panel, refer  the person  to the  panel,                                                                   
          and  require the person  to comply with  conditions                                                                   
          set by the panel, including  counseling, education,                                                                   
          treatment, community  work, and payment of fees; in                                                                   
          this paragraph,  "community diversion  panel" means                                                                   
          a youth court or other  group selected by the court                                                                   
          to  serve  as  a sentencing  option  for  a  person                                                                   
          convicted under this section; or                                                                                      
                    (s) shall impose a fine of at least $200                                                                    
          but not  more than $600,  shall require  the person                                                                   
          to attend alcohol information  school if the school                                                                   
          is  available,  and   shall  place  the  person  on                                                                   
          probation  for up  to one  year under  (e) of  this                                                                   
          section;  the court  may suspend  a portion  of the                                                                   
          fine  imposed  under  this paragraph  that  exceeds                                                                   
          $200  if   the  person  is  required   to  pay  for                                                                   
          education or  treatment required under  (e) of this                                                                   
          section."                                                                                                             
                                                                                                                                
     Page 1, line 4:                                                                                                            
          Delete "Section 1"                                                                                                    
          Insert "Sec. 2"                                                                                                       
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 1, line 9, following "section.":                                                                                      
          Insert "Repeat minor  consuming or in possession or                                                                 
          control is a violation."                                                                                            
                                                                                                                                
     Page 2, following line 15:                                                                                                 
          Insert new bill sections to read:                                                                                     
     "*Sec.  4. AS 04.16.050(l)  is amended  by adding  a new                                                                   
     paragraph to read:                                                                                                         
               (4) "violation" has the meaning given in AS                                                                      
     11.81.900  and the penalties  that are provided  in this                                                                   
     section.                                                                                                                   
     *Sec. 5.  The uncodified law  of the State of  Alaska is                                                                   
     amended by adding a new section to read:                                                                                   
          LEGISLATIVE RECOGNITION OF EFFECT OF DEFINITION.                                                                      
     The legislature recognizes that                                                                                            
               (1) the definition of "violation" in AS                                                                          
     11.81.900(b)(63)  provides that  persons charged  with a                                                                   
     violation  are not  entitled to  counsel or  a trial  by                                                                   
     jury; and                                                                                                                  
               (2)   notwithstanding    the   definition   of                                                                   
     "violation"  in  AS  11.81.900(b)(63),  persons  charged                                                                   
     with a  first offense minor  consuming or  in possession                                                                   
     or  control  or  with  repeat   minor  consuming  or  in                                                                   
     possession  or control under  AS 04.16.050  are entitled                                                                   
     to counsel  and a  trial by jury  under the  decision of                                                                   
     the Alaska Court of Appeals  in State v. Auliye, 57 P.3d                                                                   
     711 (Alaska App. 2002)."                                                                                                   
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Co-Chair Hawker OBJECTED for DISCUSSION.                                                                                        
                                                                                                                                
Representative Gara explained  that the amendment would clear                                                                   
up whether  the first two  convictions would be  considered a                                                                   
crime. He  did not want a young  person to be charged  with a                                                                   
crime   for   the  first   two   violations.   He   expressed                                                                   
frustration.                                                                                                                    
                                                                                                                                
4:52:23 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  queried the position  of the sponsor  on the                                                                   
amendment. Ms. Pierson stated  that Representative Ramras did                                                                   
not support the amendment. She  spoke to the sponsor's desire                                                                   
to keep the bill clean regarding  the minor consuming statute                                                                   
and his feeling that the amendment could cloud the issue.                                                                       
                                                                                                                                
4:53:17 PM                                                                                                                    
                                                                                                                                
DOUG WOOLIVER, ADMINISTRATIVE  ATTORNEY, ALASKA COURT SYSTEM,                                                                   
understood the desire  to have the statute clear  so that the                                                                   
courts would understand  that the first two  offenses are not                                                                   
criminal  offenses. He  stated  that the  law  itself is  not                                                                   
unclear  and that  the court  will  not count  the first  two                                                                   
offenses as  crimes. He acknowledged  that the  defendants do                                                                   
not always know that.                                                                                                           
                                                                                                                                
Mr. Wooliver declared that the  concern about adding the word                                                                   
"violation"  is its definition  in statute;  this offense  is                                                                   
contrary  to  that  definition  in almost  all  respects.  He                                                                   
pointed out that  adding the word "violation" would  not be a                                                                   
simple  fix and  judges  agree that  an  additional layer  of                                                                   
confusion would be added. The  definition of "violation" is a                                                                   
crime  that is  punishable only  by  a fine,  which does  not                                                                   
apply  to  the  statute.  The  definition  also  includes  an                                                                   
offense for which  the defendant does not get  counsel, which                                                                   
also does  not apply.  Another definition  is an offense  for                                                                   
which the  defendant is not entitled  to a jury  trial, which                                                                   
also does not apply.                                                                                                            
                                                                                                                                
Mr.  Wooliver stated  that the  courts  were concerned  about                                                                   
adding a definition that in all  respects is contrary to what                                                                   
the  bill actually  does.  He agreed  with  the drafter  that                                                                   
technically the offense would  be a violation, but calling it                                                                   
a  violation  creates  a  lot of  confusion  because  of  the                                                                   
definition. He pointed out that  the courts have been dealing                                                                   
with minor consuming issues in  the legislation for some time                                                                   
and thought the statute was close to working.                                                                                   
                                                                                                                                
Co-Chair Hawker  asked for  clarification regarding  what was                                                                   
meant by  the "host  of judges" who  had been consulted.  Mr.                                                                   
Wooliver replied  that he routinely  asked for  comments from                                                                   
judges  regarding   the  possible   impact  of   legislation.                                                                   
Comments regarding HB 98 had indicated  concerns about adding                                                                   
confusion.                                                                                                                      
                                                                                                                                
Co-Chair Hawker  asked whether  he meant that  seated members                                                                   
of the  Alaska bench  have confided  that they have  examined                                                                   
the language  and expressed concerns regarding  their ability                                                                   
to  implement the  language. Mr.  Wooliver  responded in  the                                                                   
affirmative.                                                                                                                    
                                                                                                                                
4:56:54 PM                                                                                                                    
                                                                                                                                
Representative  Gara admitted frustration  in not  having the                                                                   
judges present  to be questioned.  Mr. Wooliver  replied that                                                                   
the   judges  disagreed   with   him  from   time  to   time.                                                                   
Representative  Gara wondered  how the  language of  the bill                                                                   
was developed.  He felt that  the statute language  should be                                                                   
clearer. He opined that the issue was simple.                                                                                   
                                                                                                                                
Representative  Joule wondered  whether using language  about                                                                   
intent would clarify the issue.                                                                                                 
                                                                                                                                
Co-Chair Hawker  MAINTAINED his OBJECTION to  Amendment 1. He                                                                   
felt that  the court  system should  speak to  Representative                                                                   
Gara's office about his concerns.                                                                                               
                                                                                                                                
Representative  Kelly asked for  clarification. He  felt that                                                                   
the  language needed  revisiting.  He suggested  that  minors                                                                   
might misinterpret  the law upon  reading it,  but summarized                                                                   
that he did not have a problem with the existing language.                                                                      
                                                                                                                                
5:00:35 PM                                                                                                                    
                                                                                                                                
Representative Gara emphasized  that the law is not clear. He                                                                   
reiterated  concerns  that  a  minor  would  think  they  had                                                                   
committed a  crime. He asked  whether the following  language                                                                   
would work: "Minor  consuming or in possession  or in control                                                                   
is not  a crime." Ms. Pierson  pointed out that  the language                                                                   
should  make  it  clear  that only  first  and  second  minor                                                                   
consuming was meant.                                                                                                            
                                                                                                                                
Representative  Gara referred to  the language regarding  the                                                                   
first  and  second  convictions;  he  queried  his  suggested                                                                   
language: "Minor  consumer or in possession or  in control is                                                                   
not a crime." Mr. Wooliver stated  his willingness to work on                                                                   
the  language  with counsel.  Representative  Gara  requested                                                                   
viable language that could be used on the floor. Ms. Pierson                                                                    
stated that the sponsor would not have a problem with                                                                           
language that would work for everyone.                                                                                          
                                                                                                                                
Mr. Wooliver noted that he would continue to work with                                                                          
counsel on the language.                                                                                                        
                                                                                                                                
5:03:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MAINTAINED his OBJECTION to Amendment 1.                                                                        
                                                                                                                                
Representative Gara WITHDREW Amendment 1.                                                                                       
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Amendment 2, 6-LS0051\A.5,                                                                       
Luckhaupt, 4/2/092 (copy on file):                                                                                              
                                                                                                                                
Page 1, line 1, following "consuming;":                                                                                         
Insert "relating to penalties for violations of limitations                                                                     
on possessing, sending, shipping, transporting, or bringing                                                                     
alcoholic beverages to, soliciting or receiving orders for                                                                      
delivery of alcoholic beverages to, and the manufacture,                                                                        
sale, offer for sale, barter, traffic, or possession of                                                                         
alcoholic beverages in, a local option area;"                                                                                   
                                                                                                                                
     Page 2, following line 15:                                                                                                 
          Insert new bill sections to read:                                                                                     
     "* Sec. 3. AS 04.16.200(h) is amended to read:                                                                             
          (h) Upon conviction of a class C felony under (b)                                                                     
     or (e)(2) or (3) of this section, the court                                                                                
          (1) shall impose a fine of not less than                                                                              
     $10,000 and a minimum sentence of imprisonment of                                                                          
          (A) 120 days if the person has not been previously                                                                    
     convicted [ONCE];                                                                                                          
       (B) 240 days if the person has been previously                                                                           
     convicted once [TWO TIMES];                                                                                                
       (C) 360 days if the person has been previously                                                                           
     convicted two [THREE] or more times;                                                                                       
               (2) may not                                                                                                      
          (A) suspend execution of sentence or grant                                                                            
     probation except on the condition that the person                                                                          
          (i) serve the minimum imprisonment under (1) of                                                                       
     this subsection; and                                                                                                       
          (ii) pay the minimum fine required under (1) of                                                                       
     this subsection; or                                                                                                        
          (B) suspend imposition of sentence.                                                                                   
     * Sec. 4. The uncodified law of the State of Alaska is                                                                     
     amended by adding a new section to read:                                                                                   
          APPLICABILITY. AS 04.16.200(h), as amended by sec.                                                                    
     3 of this Act, applies to an offense occurring on or                                                                       
    after the effective date of this Act. References to                                                                         
    previous convictions in sec. 3 of this Act apply to                                                                         
     convictions occurring before, on, or after the                                                                             
     effective date of this Act."                                                                                               
                                                                                                                                
     Renumber the following bill section accordingly.                                                                           
                                                                                                                                
Vice-Chair Thomas OBJECTED.                                                                                                     
                                                                                                                                
Co-Chair Hawker shared that the  language in the amendment is                                                                   
linked to  another bill in  committee related  to limitations                                                                   
on alcohol importation.  He reported that he  had spoken with                                                                   
the co-chair of  the committee, who indicated that  he had no                                                                   
problem with  the amendment  as long  as legal counsel  could                                                                   
provide assurances.                                                                                                             
                                                                                                                                
ANNE CARPENETI,  ASSISTANT ATTORNEY  GENERAL, LEGAL  SERVICES                                                                   
SECTION-JUNEAU,   CRIMINAL  DIVISION,   DEPARTMENT  OF   LAW,                                                                   
testified  that the  amendment attempts  to address  previous                                                                   
mistakes  in SB 265.  The intent  of the  legislation was  to                                                                   
adopt mandatory  minimum penalties for bootlegging  that were                                                                   
the   same  as   mandatory   minimums  for   drunk   driving.                                                                   
Unfortunately,  the definition  of "previously convicted  for                                                                   
bootlegging"  is  different  than for  the  term  "previously                                                                   
convicted for drunk driving."  In terms of felony bootlegging                                                                   
at  least, the  legislation passed  did  not do  what it  was                                                                   
intended to do.                                                                                                                 
                                                                                                                                
Ms. Carpeneti stated that Amendment  2 would make the repair.                                                                   
She reported that  she had spoken with  Representative Herron                                                                   
and assured him regarding the language.                                                                                         
                                                                                                                                
5:07:19 PM                                                                                                                    
                                                                                                                                
Representative  Gara  wondered   about  a  concern  with  the                                                                   
underlying  bill related  to rural Alaska.  He asked  whether                                                                   
Representative Herron objected  to a portion of the bill. Co-                                                                   
Chair Hawker answered yes. He  reiterated that Representative                                                                   
Herron  was  not  concerned  about   the  provisions  in  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
Representative  Gara asked  for  clarification regarding  how                                                                   
the amendment  corrects the bill. Ms. Carpeneti  replied that                                                                   
the amendment  adopts the same mandatory minimum  penalty for                                                                   
first-time  felony bootlegging  and  first-time felony  drunk                                                                   
driving.                                                                                                                        
                                                                                                                                
Representative Gara  felt that the  crimes were not  equal in                                                                   
weight. He felt that the first-time  $10,000 penalty plus 120                                                                   
days  in jail  might  not be  appropriate  for a  bootlegging                                                                   
offense.  Ms.  Carpeneti  replied that  bootlegging  has  had                                                                   
negative consequences  in rural  communities that  have voted                                                                   
to be dry or  damp. She stressed that both  issues have large                                                                   
effects on communities.                                                                                                         
                                                                                                                                
5:11:55 PM                                                                                                                    
                                                                                                                                
Representative   Joule   agreed   with  the   language   with                                                                   
reservations.    He   expressed    concern   regarding    the                                                                   
disproportionate amount of rural  Alaskan males in the prison                                                                   
system. He  shared that  his community  (Kotzebue) is  a damp                                                                   
community,  but  bootlegging is  not  legal.  Alcohol can  be                                                                   
imported  and   consumed,  but  not  sold.  He   described  a                                                                   
community less than 200 miles  away that can import, consume,                                                                   
and sell  alcohol legally. He  stated concerns  about pushing                                                                   
communities into  going wet. He understood the  complexity of                                                                   
the problems,  but worried  that at  some point people  could                                                                   
figure out that  voting to go wet would release  the males in                                                                   
prison.                                                                                                                         
                                                                                                                                
5:14:44 PM                                                                                                                    
                                                                                                                                
Representative Gara  deferred to rural legislators  regarding                                                                   
the scope  of the  problem and  the penalties and  questioned                                                                   
the felony  level for  first-time bootlegging. Ms.  Carpeneti                                                                   
explained how the  current law works. The state  has to prove                                                                   
that the  alcohol was  brought in for  the purposes  of sale.                                                                   
There  is  also  a presumption  that  can  be  rebutted  that                                                                   
bringing in  more than 10.5  liters of distilled  spirits, 24                                                                   
liters  of wine,  or 12  gallons  of malt  liquor amounts  to                                                                   
transporting with the intent to sell.                                                                                           
                                                                                                                                
                                                                                                                                
5:16:39 PM                                                                                                                    
                                                                                                                                
Ms. Carpeneti  continued that  SB 265  included that  a third                                                                   
conviction  of bootlegging  would  be a  Class  C felony  and                                                                   
smaller  amounts   would  be  a  Class  A   misdemeanor.  She                                                                   
indicated  that  past  support   for  the  measure  by  rural                                                                   
representation  had prompted  submission of  the bill  by the                                                                   
department.                                                                                                                     
                                                                                                                                
Representative Foster  thought there was not  disincentive to                                                                   
bootleg because of high profits.                                                                                                
                                                                                                                                
Vice-Chair Thomas  spoke to past  support from  rural members                                                                   
for the provision.                                                                                                              
                                                                                                                                
Co-Chair  Hawker  queried the  sponsor's  position  regarding                                                                   
Amendment  2. Ms. Pierson  replied that  the sponsor  did not                                                                   
have a problem with the amendment.                                                                                              
                                                                                                                                
Vice-Chair  Thomas WITHDREW  his  OBJECTION.  There being  NO                                                                   
further  OBJECTION,  it was  so  ordered.   Amendment  2  was                                                                   
ADOPTED.                                                                                                                        
                                                                                                                                
5:20:17 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  if his  proposed language  "minor                                                                   
consuming or in  possession or control is not  a crime" would                                                                   
successfully  say that  the first and  second violations  are                                                                   
not a crime.                                                                                                                    
                                                                                                                                
JERRY  LUCKHAUPT,  LEGISLATIVE  COUNCIL,  DIVISION  OF  LEGAL                                                                   
SERVICES, testified that he agreed  with the concept that the                                                                   
offense  should  be  denominated.  He pointed  out  that  the                                                                   
legislature  identifies  every   type  of  criminal  statute.                                                                   
However, the  offenses are  violations; the  word is  used in                                                                   
Title  IV for  any  non-criminal offense  dealt  with in  the                                                                   
criminal  justice  system.  He  did not  understand  why  the                                                                   
magistrates had  a problem. He  stated concerns  about saying                                                                   
the offense  is not  a crime,  including that  they would  be                                                                   
considered a  civil offense, necessitating litigation  of all                                                                   
the issues again.                                                                                                               
                                                                                                                                
Representative  Gara noted that  there are only  two offenses                                                                   
in  the state,  civil and  criminal.  He asked  if there  was                                                                   
statute  language  that  the offense  was  a  violation.  Mr.                                                                   
Luckhaupt responded  that it  does not say  the offense  is a                                                                   
violation.                                                                                                                      
                                                                                                                                
Representative  Gara asked  whether the  offenses were  being                                                                   
interpreted as a  violation even though the  statute does not                                                                   
say it that way. Mr. Luckhaupt  responded in the affirmative.                                                                   
                                                                                                                                
5:23:59 PM                                                                                                                    
                                                                                                                                
Representative Gara  stated that he  only wanted to  say that                                                                   
minor consuming  is not a crime,  which does not add  or take                                                                   
away  the  word.  He queried  objections  to  saying  "not  a                                                                   
crime."                                                                                                                         
                                                                                                                                
Co-Chair   Hawker  questioned   the  productiveness   of  the                                                                   
conversation.                                                                                                                   
                                                                                                                                
5:26:02 PM                                                                                                                    
                                                                                                                                
Representative Kelly stated that  he was comfortable with the                                                                   
amendment.                                                                                                                      
                                                                                                                                
Co-Chair  Hawker agreed  that he would  support an  amendment                                                                   
with both Representative Gara and the sponsor's name on it.                                                                     
                                                                                                                                
Co-Chair Hawker noted the zero fiscal notes.                                                                                    
                                                                                                                                
Vice-Chair  Thomas  MOVED to  report  CSHB  98 (FIN)  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal  notes. There being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
CSHB  98 (FIN)  was  REPORTED  out of  Committee  with a  "no                                                                   
recommendation"  and with  a new  zero fiscal  note from  the                                                                   
Department  of Public  Safety  and two  previously  published                                                                   
fiscal notes: FN1 (CRT), FN2 (LAW).                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting was adjourned at 5:27 PM.                                                                                           

Document Name Date/Time Subjects