Legislature(2009 - 2010)HOUSE FINANCE 519

04/12/2010 08:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ HB 294 USE, REGULATION, AND OPERATION OF BOATS TELECONFERENCED
Moved CSHB 294(FIN) Out of Committee
+= HB 410 AIDEA LOANS TELECONFERENCED
Scheduled But Not Heard
+ SB 300 AIDEA LOANS TELECONFERENCED
Scheduled But Not Heard
+= HB 412 MICROLOAN REVOLVING FUND TELECONFERENCED
Moved CSHB 412(FIN) Out of Committee
+ SB 301 POWER PROJECT FUND TELECONFERENCED
Scheduled But Not Heard
+ HB 283 PURCHASE/CONSUMPTION OF ALCOHOL TELECONFERENCED
Heard & Held
+ HB 126 FOSTER CARE/CINA/EDUCATION OF HOMELESS TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 12, 2010                                                                                            
                         8:15 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
8:15:52 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 8:15 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Mike Doogan                                                                                                      
Representative Anna Fairclough                                                                                                  
Representative Neal Foster                                                                                                      
Representative Les Gara                                                                                                         
Representative Reggie Joule                                                                                                     
Representative Mike Kelly                                                                                                       
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative Mark  Neuman; Captain  John Kenyon,  Chief of                                                                    
Prevention Division,  District 17,  Juneau, US  Coast Guard;                                                                    
Greg  Winegar,   Division  of  Investments,   Department  of                                                                    
Commerce;  Representative   Harry  Crawford;   Diane  Casto,                                                                    
Project Manager, Department of Health and Social Services.                                                                      
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Shirley  Gifford,  Alcohol  Board; Kerry  Hennings,  Drivers                                                                    
License   Manager,  Driver   Services,  Division   of  Motor                                                                    
Vehicles.                                                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
                                                                                                                                
HB 126         FOSTER CARE/CINA/EDUCATION OF HOMELESS                                                                           
                                                                                                                                
               HB 126 was SCHEDULED but not HEARD.                                                                              
                                                                                                                                
HB 283         PURCHASE/CONSUMPTION OF ALCOHOL                                                                                  
                                                                                                                                
               HB 283 was HEARD and HELD in Committee for                                                                       
               further consideration.                                                                                           
                                                                                                                                
HB 294         USE, REGULATION, AND OPERATION OF BOATS                                                                          
                                                                                                                                
               CS HB 294 (FIN) was REPORTED out of                                                                              
               Committee with a "do pass" recommendation                                                                        
               and with previously published fiscal note:                                                                       
               FN1 (DNR)                                                                                                        
                                                                                                                                
HB 410         AIDEA LOANS                                                                                                      
                                                                                                                                
               HB 410 was SCHEDULED but not HEARD.                                                                              
                                                                                                                                
HB 412         MICROLOAN REVOLVING FUND                                                                                         
                                                                                                                                
               CS HB 412(FIN) was REPORTED out of Committee                                                                     
               with no recommendations and with previously                                                                      
               published fiscal note: FN1 (CED)                                                                                 
                                                                                                                                
                                                                                                                                
8:16:00 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 294                                                                                                            
                                                                                                                                
     "An  Act  amending  the  termination  date  of  certain                                                                    
     statutes   relating   to   the  use,   operation,   and                                                                    
     regulation of  boats, a uniform state  waterway marking                                                                    
     system, and civil liability  for boat owners; providing                                                                    
     for an  effective date by  amending the  effective date                                                                    
     of secs. 3,  5, 7, 9, 11,  14, 16, 18, 20,  23, 26, and                                                                    
     27, ch. 28, SLA 2000,  as amended; and providing for an                                                                    
     effective date."                                                                                                           
                                                                                                                                
8:17:58 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas MOVED  CS HB  294(FIN), 26-LS1282\E  as a                                                                    
working document.                                                                                                               
                                                                                                                                
Co-Chair Stoltze OBJECTED for the purpose of discussion.                                                                        
                                                                                                                                
REPRESENTATIVE  MARK NEUMAN  presented  an  overview of  the                                                                    
bill.  He  noted that  he  worked  closely with  the  United                                                                    
States Coast  Guard on the  legislation, which  includes the                                                                    
Kids Don't Float program.                                                                                                       
                                                                                                                                
Co-Chair Stoltze asked if the  bill remains unchanged and HB
294  merely   extends  the  sunset.   Representative  Neuman                                                                    
concurred.                                                                                                                      
                                                                                                                                
8:19:07 AM                                                                                                                    
                                                                                                                                
CAPTAIN JOHN KENYON, CHIEF  OF PREVENTION DIVISION, DISTRICT                                                                    
17,  JUNEAU,  US  COAST  GUARD  discussed  the  recreational                                                                    
boating  safety  program. The  goal  of  the program  is  to                                                                    
encourage  boating safety  and education  in the  state. The                                                                    
program  distributes funding  for  the  safety program.  The                                                                    
program produces educated boat  owners. In 2009, 12 Alaskans                                                                    
lost lives,  which is the  lowest number since  inception of                                                                    
the program. The  program saves lives and  promotes safe use                                                                    
of the waters.                                                                                                                  
                                                                                                                                
Co-Chair  Stoltze stated  appreciation for  the Coast  Guard                                                                    
and  their  work  on  the  bill. He  stressed  the  lack  of                                                                    
controversy regarding  the Kids  Don't Float program  or the                                                                    
Coast Guard.                                                                                                                    
                                                                                                                                
8:24:11 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION,  CS HB 294(FIN), 26-LS1282\E  was adopted                                                                    
as a working document.                                                                                                          
                                                                                                                                
Co-Chair Stoltze spoke to the fiscal notes and the impacts.                                                                     
                                                                                                                                
Vice-Chair  Thomas MOVED  to report  CS HB  294(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS HB  294 (FIN) was  REPORTED out  of Committee with  a "do                                                                    
pass"  recommendation and  with previously  published fiscal                                                                    
note: FN1 (DNR)                                                                                                                 
                                                                                                                                
8:25:56 AM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 412                                                                                                            
                                                                                                                                
     "An  Act establishing  the  Alaska microloan  revolving                                                                    
     fund;  making loans  for commercial  purposes from  the                                                                    
     fund;  and   relating  to  the  fund   and  loans;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
GREG  WINEGAR,   DIVISION  OF  INVESTMENTS,   DEPARTMENT  OF                                                                    
COMMERCE  spoke to  the bill.  The loan  program is  modeled                                                                    
after  a similar  program sponsored  by  the Small  Business                                                                    
Administration  (SBA)  currently  available  in  46  states.                                                                    
Alaska has  yet to develop  a comparable loan program  as an                                                                    
intermediary  lender is  currently  unidentified. The  loans                                                                    
would include  up to $35,000  for an individual  and $70,000                                                                    
for two or  more residents. The proceeds  would be available                                                                    
for   working   capital,    equipment,   construction,   and                                                                    
improvements.  The interest  rate  would be  prime plus  one                                                                    
with a  floor of  six and  a ceiling  of eight.  The maximum                                                                    
term is six  years. The submitted fiscal  note includes $3.5                                                                    
million  from  Alaska   Industrial  Development  and  Export                                                                    
Authority (AIDEA) contingent  on the passage of  HB 411. The                                                                    
fund  would be  established as  a revolving  fund. With  the                                                                    
initial capitalization,  75 loans are possible  in the first                                                                    
year and  100 in the  second, with 25  loans per year  on an                                                                    
ongoing basis thereafter.                                                                                                       
                                                                                                                                
8:28:32 AM                                                                                                                    
                                                                                                                                
Representative Fairclough  asked about time  constraints for                                                                    
residency  requirements listed  on Page  3, Line  14-16. Mr.                                                                    
Winegar   responded  that   the  requirements   span  a   12                                                                    
consecutive   month    period.   Representative   Fairclough                                                                    
interpreted the  section differently. Mr.  Winegar suggested                                                                    
a language  change to better  communicate the 12  month time                                                                    
period.                                                                                                                         
                                                                                                                                
Vice-Chair   Thomas   recalled   multiple   definitions   of                                                                    
residency.                                                                                                                      
                                                                                                                                
8:30:32 AM                                                                                                                    
                                                                                                                                
Representative  Doogan  believed  Representative  Fairclough                                                                    
was  right.  He  provided  three  different  definitions  of                                                                    
residency.                                                                                                                      
                                                                                                                                
Representative   Gara  suggested   a  conceptual   amendment                                                                    
imposing the  one year  period used  for the  Permanent Fund                                                                    
Dividend (PFD).                                                                                                                 
                                                                                                                                
Representative  Fairclough clarified  that  the bill  states                                                                    
that  a person  may not  have declared  residency elsewhere.                                                                    
She  noted  that  people   migrate  to  Alaska  occasionally                                                                    
seeking business loans.                                                                                                         
                                                                                                                                
Vice-Chair Thomas  stated that  the definition  of residency                                                                    
at  the   university  is   similar  to   that  of   the  PFD                                                                    
requirement.                                                                                                                    
                                                                                                                                
8:33:16 AM                                                                                                                    
                                                                                                                                
Representative  Doogan   commented  that  the   agency  must                                                                    
understand the  expectation of  a clarifying  amendment. Mr.                                                                    
Winegar offered to communicate with the agency.                                                                                 
                                                                                                                                
Representative Fairclough stressed a time commitment.                                                                           
                                                                                                                                
Representative Kelly  requested a  list of  others concerned                                                                    
with the  bill. Mr. Winegar responded  that discussions with                                                                    
multiple banks did not result  in much concern regarding the                                                                    
lower dollar level.                                                                                                             
                                                                                                                                
8:35:48 AM                                                                                                                    
                                                                                                                                
Representative Gara  asked about the eight  percent cap. Mr.                                                                    
Winegar agreed that  the cap could be  removed. He explained                                                                    
the goal of maintaining a low interest rate.                                                                                    
                                                                                                                                
Representative Gara MOVED Conceptual Amendment 1.                                                                               
                                                                                                                                
          Page 3, line 26, delete after per year:                                                                               
                                                                                                                                
          "and not more than eight percent per year;"                                                                           
                                                                                                                                
Representative   Austerman  OBJECTED   for  discussion.   He                                                                    
discussed  the establishment  of  acceptable interest  rates                                                                    
for these loans.                                                                                                                
                                                                                                                                
Mr.  Winegar stated  that the  prime rate  is three  and one                                                                    
quarter  so prime  plus one  would be  four and  one quarter                                                                    
with a basement  of six. If prime plus one  went higher than                                                                    
eight percent, then eight percent would be the cap.                                                                             
                                                                                                                                
Representative Doogan understood that  if the prime rate was                                                                    
three  and one  half or  four and  one half,  a loan  is not                                                                    
possible because the number is less than six.                                                                                   
                                                                                                                                
Mr.  Winegar explained  that the  language reads  prime plus                                                                    
one with a floor of six percent.                                                                                                
                                                                                                                                
Representative  Doogan  understood   the  intention  of  the                                                                    
amendment yet  was not  clear on the  purpose. If  the prime                                                                    
rate is  four and one half  plus one, why would  the loan be                                                                    
at  six percent?   Mr.  Winegar responded  that six  was the                                                                    
decision for  the floor  as risk and  cost must  be factored                                                                    
in.                                                                                                                             
                                                                                                                                
8:40:15 AM                                                                                                                    
                                                                                                                                
Representative   Austerman  continued   to  object   to  the                                                                    
amendment. He believed that the  reason for the loan was the                                                                    
fostering of  economic development. He stated  that a higher                                                                    
interest rate makes it more  difficult to pay back the loan.                                                                    
He  opined that  an eight  percent cap  with a  $35 thousand                                                                    
loan  allows  a  wonderful   opportunity  for  the  business                                                                    
sector.                                                                                                                         
                                                                                                                                
Representative Kelly  believed that the  committee discussed                                                                    
the topic in a prior meeting. Mr. Winegar agreed.                                                                               
                                                                                                                                
Representative  Kelly stated  that he  does not  support the                                                                    
eight  percent cap.  The intention  of the  loans is  not to                                                                    
compete  with the  banks. He  understood the  floor, as  the                                                                    
loans  are   often  offered  to  those   unable  to  receive                                                                    
traditional bank loans.                                                                                                         
                                                                                                                                
Representative  Foster asked  if the  cost of  capital rises                                                                    
above eight  percent, would AIDEA  subsidize the  loans. Mr.                                                                    
Winegar explained  that an opportunity cost  would have been                                                                    
lost because  the fund is  revolving. The money  returned is                                                                    
the interest rate for any given time.                                                                                           
                                                                                                                                
8:43:40 AM                                                                                                                    
                                                                                                                                
Representative  Gara  commented that  prime  plus  one is  a                                                                    
favorable  interest rate  regardless of  prime. Mr.  Winegar                                                                    
agreed.                                                                                                                         
                                                                                                                                
Representative Fairclough  asked if the issued  loans are on                                                                    
a fixed versus adjustable rate. Mr. Winegar answered yes.                                                                       
                                                                                                                                
Representative  Fairclough  advocated   in  support  of  the                                                                    
amendment  on  the  floor to  eliminate  the  eight  percent                                                                    
ability  to  draw  down.  She  opined  that  offering  loans                                                                    
substantially  below  the  market  value is  unfair  to  the                                                                    
private sector.                                                                                                                 
                                                                                                                                
Representative Doogan  understood the  range of  loans would                                                                    
exist between 6  and 8 percent with the  current language in                                                                    
the CS.  Mr. Winegar  replied yes.  He explained  that rates                                                                    
are reviewed each quarter and  adjusted to create loans on a                                                                    
fixed rate note for the life of the loan.                                                                                       
                                                                                                                                
Representative  Doogan continued  that  the amendment  would                                                                    
create  a rate  between six  and infinity.  He asked  if the                                                                    
legislature  would make  the change  to  allow the  interest                                                                    
rate to float up why  is the committee concerned about loans                                                                    
where interest rate floats down.  Mr. Winegar responded risk                                                                    
and operating costs.                                                                                                            
                                                                                                                                
8:46:53 AM                                                                                                                    
                                                                                                                                
Representative Doogan expressed  confusion. He believed that                                                                    
if the  interest was  lower, the risk  was lower.  He opined                                                                    
that the risk calculation was backwards.                                                                                        
                                                                                                                                
Mr. Winegar agreed  that six percent may not  be the correct                                                                    
number. Adding  one point to  three and one  quarter percent                                                                    
is a very low interest rate  when cost and risk are factored                                                                    
in.                                                                                                                             
                                                                                                                                
Representative Doogan commented that  loans for low interest                                                                    
rates lead  to eventual balance. Mr.  Winegar explained that                                                                    
money  is required  to  operate the  program  and losses  do                                                                    
occur leading to the decision for a moderate interest rate.                                                                     
                                                                                                                                
8:50:08 AM                                                                                                                    
                                                                                                                                
Representative  Austerman delivered  an  explanation of  the                                                                    
necessity of interest rates with  state or bank loans. Those                                                                    
loan recipients  who make their  payments balance  those who                                                                    
cannot, allowing for cash flow.                                                                                                 
                                                                                                                                
Representative  Doogan understood  that the  amendment would                                                                    
allow the state to provide bank  luxuries at the low end but                                                                    
not at the high end.                                                                                                            
                                                                                                                                
Representative Austerman  reminded about the  revolving loan                                                                    
program. If the  operational cost is covered  at six percent                                                                    
there is no need to increase.                                                                                                   
                                                                                                                                
Representative Kelly  asked if  six percent provided  a good                                                                    
rate. Mr. Winegar replied yes.                                                                                                  
                                                                                                                                
Representative Kelly asked if  lowering the percentage would                                                                    
compete  with  banks.  He  advocated  for  six  percent  and                                                                    
removal of the cap.                                                                                                             
                                                                                                                                
8:52:58 AM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas reminded  that the  interest rate  was 23                                                                    
percent  in  the 1980s.  He  was  in  support of  the  eight                                                                    
percent cap.                                                                                                                    
                                                                                                                                
Representative  Foster stated  that his  concern was  in the                                                                    
state  adopting  bank  like policies.  He  asked  about  the                                                                    
interest rate structure with the  SBA microloan. Mr. Winegar                                                                    
noted research  showing rates  at eight  percent for  SBA in                                                                    
the lower forty eight.                                                                                                          
                                                                                                                                
Representative Foster asked about a  cap in the other loans.                                                                    
Mr. Winegar  believed no, but  he was unfamiliar  with every                                                                    
plan.                                                                                                                           
                                                                                                                                
8:54:49 AM                                                                                                                    
                                                                                                                                
Representative Gara requested that  AIDEA consider the issue                                                                    
and contact the  committee with an answer by the  end of the                                                                    
day.  He  stressed that  he  understood  both sides  of  the                                                                    
argument.                                                                                                                       
                                                                                                                                
Vice-Chair Thomas recalled the time constraints.                                                                                
                                                                                                                                
Representative   Fairclough   suggested   a  vote   on   the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative Austerman  pointed out  that the  major banks                                                                    
are  not interested  in these  loans. The  objective of  the                                                                    
microloan  program  is to  help  people  who cannot  receive                                                                    
traditional  bank   loans.  He  stated  opposition   to  the                                                                    
amendment.                                                                                                                      
                                                                                                                                
Representative  Kelly asked  if interest  rates are  fifteen                                                                    
percent  and the  state is  loaning at  eight percent,  what                                                                    
would  happen  to  the  value of  the  corpus.  Mr.  Winegar                                                                    
responded  that the  corpus  of the  fund  will continue  to                                                                    
grow.                                                                                                                           
                                                                                                                                
Representative  Kelly asked  if  the  growth would  continue                                                                    
with a differential between inflation  of three percent. Mr.                                                                    
Winegar responded that the opportunity cost would be lost.                                                                      
                                                                                                                                
Representative  Kelly commented  that with  inflation of  12                                                                    
percent,  the  value of  the  corpus  would decrease  by  50                                                                    
percent.                                                                                                                        
                                                                                                                                
Mr. Winegar added that the  fund might earn more without the                                                                    
restriction of eight percent.                                                                                                   
                                                                                                                                
Representative Kelly  wondered if the fund  would depreciate                                                                    
in real  value. Mr. Winegar  agreed that when  the situation                                                                    
is  compared  to  the  opportunity   cost,  the  fund  would                                                                    
depreciate.                                                                                                                     
                                                                                                                                
8:59:05 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough stated  support of  the amendment                                                                    
because she  wanted to prevent the  opportunity for citizens                                                                    
to  borrow   money  for  reinvestment   at  a   higher  rate                                                                    
elsewhere. Vice-Chair Thomas agreed.                                                                                            
                                                                                                                                
9:00:03 AM          AT EASE                                                                                                   
9:01:08 AM          RECONVENED                                                                                                
                                                                                                                                
Vice-Chair Thomas restated the amendment.                                                                                       
                                                                                                                                
Representative  Fairclough commented  on  the amendment  and                                                                    
the  discussion   that  lifting   the  cap  would   open  up                                                                    
competition with  the banking industry so  that people would                                                                    
not access  the microloan  account and  place it  in another                                                                    
financial institution to receive a larger rate of return.                                                                       
                                                                                                                                
Representative Austerman  continued to oppose  the amendment                                                                    
because  of  the  plea   from  small  businesses  expressing                                                                    
difficulty achieving equipment and inventory loans.                                                                             
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Fairclough,  Foster, Gara,  Joule, Kelly,  Salmon,                                                                    
Doogan                                                                                                                          
                                                                                                                                
OPPOSED: Thomas, Austerman, Stoltze, Hawker                                                                                     
                                                                                                                                
The MOTION PASSED (7-4).                                                                                                        
                                                                                                                                
9:05:15 AM                                                                                                                    
                                                                                                                                
Representative Fairclough MOVED Conceptual Amendment #2                                                                         
                                                                                                                                
          Page 3, line 17, add after "state,"                                                                                   
                                                                                                                                
          "in the previous 12 months."                                                                                          
                                                                                                                                
Representative Gara OBJECTED for discussion.                                                                                    
                                                                                                                                
She  explained the  amendment which  would  define the  time                                                                    
limit established in the bill.                                                                                                  
                                                                                                                                
Representative  Gara WITHDREW  his  OBJECTION to  Conceptual                                                                    
Amendment #2. There being NO OBJECTION, it was so ordered.                                                                      
                                                                                                                                
Representative Doogan MOVED Conceptual Amendment #3.                                                                            
                                                                                                                                
          Page 3, line 25 delete after "point"                                                                                  
                                                                                                                                
          "but interest may not be less than six percent                                                                        
          per year"                                                                                                             
                                                                                                                                
Representative Austerman OBJECTED for discussion.                                                                               
                                                                                                                                
Representative  Doogan explained  that because  the cap  was                                                                    
raised with the theory that  costs will rise, this amendment                                                                    
would  account   for  the   possibility  that   costs  might                                                                    
decrease. He  understood that the  interest rate  created by                                                                    
the  amendment  would be  four  and  one half  percent.  The                                                                    
borrowers would receive  the same benefit from  a lower rate                                                                    
that they might receive as a penalty from higher rates.                                                                         
                                                                                                                                
9:09:30 AM                                                                                                                    
                                                                                                                                
Representative  Fairclough   spoke  in  opposition   to  the                                                                    
amendment.  She mentioned  the risk  to  the revolving  loan                                                                    
account as  the interest collected must  be measured against                                                                    
the risk of potential default.                                                                                                  
                                                                                                                                
9:10:34 AM                                                                                                                    
                                                                                                                                
Representative Austerman  objected because he felt  that six                                                                    
percent protects the risk aspect.                                                                                               
                                                                                                                                
Representative  Gara stated  that protection  is offered  in                                                                    
charging a prime  plus one interest rate.  He understood the                                                                    
need for a  minimum floor, and the negotiable  nature of it.                                                                    
He asked if  harm would occur if the minimum  floor was five                                                                    
percent.                                                                                                                        
                                                                                                                                
Mr.  Winegar  responded  that the  proposed  scenario  would                                                                    
increase the  risk slightly.  He pointed  out that  prime is                                                                    
the amount loaned to banks  from other banks. Prime plus one                                                                    
is an attractive rate in terms of risk.                                                                                         
                                                                                                                                
9:12:47 AM     AT EASE                                                                                                        
9:13:56 AM     RECONVENED                                                                                                     
                                                                                                                                
Representative Doogan restated the Conceptual amendment #3.                                                                     
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Foster, Gara, Doogan,                                                                                                 
OPPOSED:  Joule,    Kelly,   Salmon,    Thomas,   Austerman,                                                                    
Fairclough, Hawker, Stoltze                                                                                                     
                                                                                                                                
The MOTION FAILED (3-8).                                                                                                        
                                                                                                                                
9:15:49 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker MOVED to ADOPT Conceptual Amendment #4.                                                                         
                                                                                                                                
          Page 1, lines 5-12, Remove Section 1                                                                                  
                                                                                                                                
Representative  Gara   OBJECTED  for   discussion.  Co-Chair                                                                    
Hawker explained  that the conceptual amendment  entails the                                                                    
ability of  the drafters to  incorporate it into  the entire                                                                    
context of the bill.                                                                                                            
                                                                                                                                
Representative Gara  WITHDREW his OBJECTION. There  being NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair  Stoltze MOVED  to  report CS  HB  412(FIN) out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CS  HB  412(FIN)  was  REPORTED out  of  Committee  with  no                                                                    
recommendations and with previously     published     fiscal                                                                    
note: FN1 (CED)                                                                                                                 
                                                                                                                                
9:17:39 AM     AT EASE                                                                                                        
9:18:35 AM     RECONVENED                                                                                                     
                                                                                                                                
HOUSE BILL NO. 283                                                                                                            
                                                                                                                                
     "An Act relating to the purchasing of and restrictions                                                                     
     concerning alcoholic beverages."                                                                                           
                                                                                                                                
REPRESENTATIVE HARRY CRAWFORD spoke  to the reasoning behind                                                                    
the bill.  He believed that prevention  is crucial regarding                                                                    
alcohol related crimes. The bill  is directed at identifying                                                                    
those  individuals  that  cannot handle  alcohol.  The  bill                                                                    
restricts  a person  who commits  a  felony from  purchasing                                                                    
alcohol.  The  bill  also   restricts  a  third  misdemeanor                                                                    
directly or indirectly caused by  the consumption of alcohol                                                                    
and  prohibits the  purchase alcohol  from a  person who  is                                                                    
restricted   or   has   a    youth   driver's   license   or                                                                    
identification.                                                                                                                 
                                                                                                                                
9:23:20 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  expressed issues with recent  amendments to                                                                    
the bill,  particularly Sections  4 and 5.  He asked  if the                                                                    
sections  were added  to the  original bill.  Representative                                                                    
Crawford replied yes.                                                                                                           
                                                                                                                                
Co-Chair Hawker  stated that Section  5 bothers  him because                                                                    
an  Alaska citizen  turning 21  years  of age  with a  valid                                                                    
driver's license is  unable to purchase alcohol  until he or                                                                    
she obtains a  new license. He pointed out  Section 4, which                                                                    
is  in existing  statute. He  wished to  remove the  section                                                                    
from statute.                                                                                                                   
                                                                                                                                
9:25:53 AM                                                                                                                    
                                                                                                                                
Representative  Crawford commented  that the  operative word                                                                    
is "may" as people will  occasionally buy alcohol with their                                                                    
passport because they have the  red mark on the license. The                                                                    
red mark indicates alcohol restriction.  He explained that a                                                                    
person can drive with a  vertical (junior) license following                                                                    
their 21st birthday, but cannot buy alcohol with it.                                                                            
                                                                                                                                
Co-Chair  Hawker  recalled  certain times  in  the  nation's                                                                    
history   where  different   views  regarding   equity  were                                                                    
observed. He observed insult when  a young person returns to                                                                    
Alaska  after serving  their country  in Afghanistan  and is                                                                    
unable  to purchase  alcohol without  renewing his  driver's                                                                    
license.                                                                                                                        
                                                                                                                                
9:31:09 AM                                                                                                                    
                                                                                                                                
Representative  Joule  echoed  Co-Chair  Hawker's  point  of                                                                    
view. In small  communities, one lacks the  ability to renew                                                                    
their  driver's license  without a  local Division  of Motor                                                                    
Vehicle (DMV) office.                                                                                                           
                                                                                                                                
Representative  Austerman shared  the  concerns of  Co-Chair                                                                    
Hawker. He opined  that a law mandating  the presentation of                                                                    
state identification indicating  a potential alcohol problem                                                                    
may  be  more  effective.  He compared  his  solution  to  a                                                                    
"filtration  system"  for  those with  known  problems  with                                                                    
alcohol.  He  appreciated   the  efforts  of  Representative                                                                    
Crawford.                                                                                                                       
                                                                                                                                
9:34:23 AM                                                                                                                    
                                                                                                                                
Representative Crawford stated that  these two sections were                                                                    
a  high  priority for  the  industry.  Currently an  alcohol                                                                    
restricted  driver's license  has  red stripe.  He spoke  of                                                                    
recent contact  with a woman who  voluntarily deemed herself                                                                    
alcohol restricted  with a  red mark on  her license  as she                                                                    
could not control  her drinking and believed  that this tool                                                                    
would help her. He realized  that prohibition of alcohol did                                                                    
not work,  but another  tool is  necessary for  those people                                                                    
who have proven that they cannot handle alcohol.                                                                                
                                                                                                                                
9:37:51 AM                                                                                                                    
                                                                                                                                
Representative Gara  stated that  the bill makes  it illegal                                                                    
to use  another person's  identification to buy  alcohol. He                                                                    
opined that  Section 4  and 5 make  the bill  more effective                                                                    
and balanced.                                                                                                                   
                                                                                                                                
9:40:08 AM                                                                                                                    
                                                                                                                                
Vice-Chair Thomas  applauded the bill's merits.  He shared a                                                                    
personal  story   regarding  lack  of   identification  upon                                                                    
discharge  from  the military.  He  echoed  the concerns  of                                                                    
Representative  Joule as  his district  was  also rural  and                                                                    
lacking  in  DMV  offices. He  expressed  sympathy  for  the                                                                    
military  and the  rural  portion affected  by  the bill  as                                                                    
written.                                                                                                                        
                                                                                                                                
9:43:09 AM                                                                                                                    
                                                                                                                                
Representative Crawford provided  a personal story regarding                                                                    
lack of  alcohol service  without proper  identification. He                                                                    
understood   that   the    law   can   occasionally   create                                                                    
inconveniences, but the overall  benefits of this bill would                                                                    
outweigh  them. He  suggested  that military  identification                                                                    
would suffice  for the purchase  of alcohol, but he  did not                                                                    
advocate  for use  of a  passport  as proper  identification                                                                    
when purchasing alcohol.                                                                                                        
                                                                                                                                
9:45:40 AM                                                                                                                    
                                                                                                                                
Representative  Foster  echoed  the  concerns  expressed  by                                                                    
Representative Joule.                                                                                                           
                                                                                                                                
Representative Crawford stated that  the industry of package                                                                    
stores in Anchorage requested that  a person with a vertical                                                                    
picture on their license be unable to purchase alcohol.                                                                         
                                                                                                                                
9:47:47 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker  pointed out that  the amendment  as drafted                                                                    
will  remove   the  "illiterate  bartender   provision."  He                                                                    
continued  that  Section  4 is  existing  statute  and  will                                                                    
remain unaffected by the amendment.                                                                                             
                                                                                                                                
Co-Chair  Stoltze clarified  that  bartenders  often have  a                                                                    
wide  variety  of education  levels.  He  asked the  Alcohol                                                                    
Board  about  requirements   for  package  stores  regarding                                                                    
identification and alcohol.                                                                                                     
                                                                                                                                
SHIRLEY GIFFORD,  ALCOHOL BOARD (via  teleconference) stated                                                                    
that clarification in the bill  will prove helpful regarding                                                                    
requirements.  She stressed  that she  was not  available to                                                                    
oppose the bill, but instead to answer questions.                                                                               
                                                                                                                                
Co-Chair  Stoltze  asked  if  the  current  law  prevents  a                                                                    
package store  from requiring  an Alaskan  driver's license.                                                                    
Ms.  Gifford responded  yes, beverage  dispensaries, package                                                                    
stores,  and   restaurants  set  their  own   policies.  The                                                                    
establishments  can  refuse   service  to  anyone.  Licensed                                                                    
establishments  tend to  protect  themselves from  potential                                                                    
liability.                                                                                                                      
                                                                                                                                
Co-Chair  Stoltze asked  if  an  establishment could  create                                                                    
policy  for acceptance  or not  of military  identification.                                                                    
Ms.  Gifford  understood  that   the  licensees  can  refuse                                                                    
service to any person.                                                                                                          
                                                                                                                                
9:55:01 AM                                                                                                                    
                                                                                                                                
Representative Kelly  asked if Section 5  was removed, would                                                                    
the  ability to  force the  training program  under the  new                                                                    
license be  lost. Representative  Crawford responded  that a                                                                    
person  seeking   their  license  must  take   the  training                                                                    
program.                                                                                                                        
                                                                                                                                
Representative Austerman  asked if the time  frame comprised                                                                    
of a  90 day period. Representative  Crawford clarified that                                                                    
a person has 90 days  to renew their license following their                                                                    
21st birthday.                                                                                                                  
                                                                                                                                
9:57:22 AM                                                                                                                    
                                                                                                                                
Representative  Foster  revisited  the  passport  issue.  He                                                                    
communicated that village DMVs  sometimes close for weeks at                                                                    
a time  and the hours  are often restricted. He  opined that                                                                    
the use of a passport would be helpful in that situation.                                                                       
                                                                                                                                
Co-Chair Stoltze CLOSED public testimony.                                                                                       
                                                                                                                                
9:58:58 AM                                                                                                                    
                                                                                                                                
Co-Chair Hawker moved Amendment #1:                                                                                             
                                                                                                                                
     Page 2, line 12 through line 29                                                                                            
                                                                                                                                
     Delete all material                                                                                                        
                                                                                                                                
     Renumber following sections accordingly.                                                                                   
                                                                                                                                
Representative Gara OBJECTED for discussion.                                                                                    
                                                                                                                                
Co-Chair  Hawker explained  that the  amendment removes  the                                                                    
discriminatory  provision of  a person  who has  reached the                                                                    
age of 21 without the opportunity  to visit a DMV office for                                                                    
reissuance  of a  new driver's  license. The  amendment does                                                                    
not alter existing statute.                                                                                                     
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Joule,  Salmon,   Thomas,  Austerman,  Fairclough,                                                                    
Foster, Stoltze, Hawker                                                                                                         
OPPOSED: Gara, Doogan                                                                                                           
                                                                                                                                
The MOTION PASSED (8-2).                                                                                                        
                                                                                                                                
Amendment 2 was adopted.                                                                                                        
                                                                                                                                
Co-Chair Stoltze  addressed the  fiscal notes from  DMV, and                                                                    
the Department of Health and Social Services (DHSS).                                                                            
                                                                                                                                
10:02:06 AM                                                                                                                   
                                                                                                                                
DIANE  CASTO,  PROJECT  MANAGER, DEPARTMENT  OF  HEALTH  AND                                                                    
SOCIAL SERVICES explained the fiscal  notes. She stated that                                                                    
very little enforcement of the  red striped licenses occurs.                                                                    
The Alcohol  Safety Action  program works  with misdemeanant                                                                    
alcohol  offenses.  With  the  bill,  increased  enforcement                                                                    
leads  to   increased  probation  violations.   A  probation                                                                    
violation leads  to additional monitoring  including regular                                                                    
urinalysis testing requiring an increase in staff.                                                                              
                                                                                                                                
Co-Chair Stoltze  asked if  the amendment  has an  impact on                                                                    
the fiscal note. Ms. Casto replied no.                                                                                          
                                                                                                                                
Co-Chair Hawker  expressed concern about the  zero nature of                                                                    
DMV's fiscal  note as it creates  a net of $2  million state                                                                    
revenue.                                                                                                                        
                                                                                                                                
KERRY  HENNINGS, DRIVERS  LICENSE MANAGER,  DRIVER SERVICES,                                                                    
DIVISION OF MOTOR VEHICLES  (via teleconference) agreed that                                                                    
the change was positive.                                                                                                        
                                                                                                                                
Co-Chair  Hawker  asked  about   the  fiscal  note  prepared                                                                    
January 26,  2010 which reflects  the additional  charge for                                                                    
alcohol  restricted  licenses  with  the  agency  estimating                                                                    
40,000   additional  licenses   each   year.  Ms.   Hennings                                                                    
apologized as she was not prepared to answer the question.                                                                      
                                                                                                                                
Representative  Crawford possessed  a different  fiscal note                                                                    
from  DMV  stating expenses  of  $17,500  with a  change  in                                                                    
revenue of $50 thousand.                                                                                                        
                                                                                                                                
10:07:01 AM                                                                                                                   
                                                                                                                                
Representative Austerman  requested committee review  of the                                                                    
new  fiscal note.  He  asked if  the  amendment affects  the                                                                    
fiscal note for  DMV. Ms. Casto repeated  that the amendment                                                                    
does not  change the  fiscal note.  Ms. Hennings  added that                                                                    
the  amendment  does not  change  the  fiscal note  for  DMV                                                                    
either.                                                                                                                         
                                                                                                                                
Representative  Crawford stated  that the  fiscal note  from                                                                    
DHSS  was  created  before  the  last  committee  where  the                                                                    
increase of the fine from $1000 to $2000 was amended out.                                                                       
The former proposal would have increased enforcement.                                                                           
                                                                                                                                
HOUSE BILL NO. 410                                                                                                            
                                                                                                                                
     "An   Act   relating   to   loan   participations   and                                                                    
     development finance  projects of the  Alaska Industrial                                                                    
     Development  and  Export  Authority;  and  relating  to                                                                    
    loans from the rural development initiative fund."                                                                          
                                                                                                                                
                                                                                                                                
HB 410 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
HOUSE BILL NO. 126                                                                                                            
                                                                                                                                
     "An  Act relating  to continuing  the secondary  public                                                                    
     education  of  a  homeless  student;  relating  to  the                                                                    
     purpose  of certain  laws as  they relate  to children;                                                                    
     relating  to   tuition  waivers,  loans,   and  medical                                                                    
     assistance for  a child placed  in out-of-home  care by                                                                    
     the  state;  relating  to   foster  care;  relating  to                                                                    
     children  in  need  of aid;  relating  to  foster  care                                                                    
     transition  to  independent  living;  and  relating  to                                                                    
     juvenile programs and institutions."                                                                                       
                                                                                                                                
HB 126 was SCHEDULED but not HEARD.                                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:09 AM                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
2 HB 294 sponsor statement.pdf HFIN 4/12/2010 8:00:00 AM
HB 294
4 HB 294 Sectional Analysis version R.pdf HFIN 4/12/2010 8:00:00 AM
HB 294
5 Alaska's Boating Safety Dollars at Work 2010.pdf HFIN 4/12/2010 8:00:00 AM
HB 294
admin@aidea org_20100401_145122.pdf HFIN 4/12/2010 8:00:00 AM
Letter from Governor HB410.pdf HFIN 4/12/2010 8:00:00 AM
HB 410
Sectional Analysis HB410.pdf HFIN 4/12/2010 8:00:00 AM
HB 410
HB 412 Sectional Analysis.pdf HFIN 4/12/2010 8:00:00 AM
HB 412
HB 412 Support Letter.pdf HFIN 4/12/2010 8:00:00 AM
HB 412
HB 412 Transmittal Letter.pdf HFIN 4/12/2010 8:00:00 AM
HB 412
Micro loans.pdf HFIN 4/12/2010 8:00:00 AM
HB 412
Microloan Support Letters.pdf HFIN 4/12/2010 8:00:00 AM
HB 412
HB283CS(JUD)-LAW-CRIM-03-05-10NEW.pdf HFIN 4/12/2010 8:00:00 AM
HB 283
Sectional for CS.pdf HFIN 4/12/2010 8:00:00 AM
HB 283
Sponsor Statement HB 283 (2) CS.pdf HFIN 4/12/2010 8:00:00 AM
HB 283
Sponsor Statement HB 283 (2) CS.pdf HFIN 4/12/2010 8:00:00 AM
HB 283
Backup for (H)FIN hearing request.pdf HFIN 4/12/2010 8:00:00 AM
CASA letter of support.pdf HFIN 4/12/2010 8:00:00 AM
CSHB 126(FIN) workdraft - Summary of Changes from HB 126 (HSS).doc HFIN 4/12/2010 8:00:00 AM
HB 126
CSHB 126(HSS) Sectional Analysis.pdf HFIN 4/12/2010 8:00:00 AM
HB 126
CSHB 126(HSS) Sponsor Statement.pdf HFIN 4/12/2010 8:00:00 AM
HB 126
CSHB 126(HSS) Summary of Changes from HB 126.pdf HFIN 4/12/2010 8:00:00 AM
HB 126
FFCA letter of support.pdf HFIN 4/12/2010 8:00:00 AM
HB 126 Backup[1].pdf HFIN 4/12/2010 8:00:00 AM
HB 126
HB 126 Departments Affected[1].pdf HFIN 4/12/2010 8:00:00 AM
HB 126
new HB 126 material including new fiscal notes[1].pdf HFIN 4/12/2010 8:00:00 AM
HB 126
SB300SupplementalBackup[1].pdf HFIN 4/12/2010 8:00:00 AM
SB 300
SB300SectionalAnalysis[1].pdf HFIN 4/12/2010 8:00:00 AM
SB 300