Legislature(2011 - 2012)HOUSE FINANCE 519

02/27/2012 01:30 PM FINANCE


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HJR 16 CONST. AM: EDUCATION FUNDING TELECONFERENCED
Heard & Held
+ HB 250 EXTEND RENEWABLE ENERGY GRANT FUND TELECONFERENCED
Heard & Held
+= HB 224 SALES OF NICOTINE PRODUCTS TO MINOR TELECONFERENCED
Moved CSHB 224(FIN) Out of Committee
+= SB 30 RETURN OF SEIZED PROPERTY TELECONFERENCED
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 302 REPEAL PICK-CLICK-GIVE AUDIT REQUIREMENT TELECONFERENCED
Moved CSHB 302(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 27, 2012                                                                                          
                         1:32 p.m.                                                                                              
                                                                                                                                
                                                                                                                                
1:32:26 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:32 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Co-Chair                                                                                        
Representative Anna Fairclough, Vice-Chair                                                                                      
Representative Mia Costello                                                                                                     
Representative Mike Doogan                                                                                                      
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Reggie Joule                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mark Neuman                                                                                                      
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Representative  Wes Keller,  Sponsor; Kaci  Schroeder-Hotch,                                                                    
Staff,  Representative   Bill  Thomas;   Sarah  Fisher-Goad,                                                                    
Executive Director,  Alaska Energy Authority,  Department of                                                                    
Commerce, Community  and Economic Development;  Peter Crimp,                                                                    
Deputy Director,  Alternative Energy and  Energy Efficiency,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Chuck   Kopp,   Chief   of  Staff,   Senator   Fred   Dyson;                                                                    
Representative  Paul  Seaton,  Sponsor; Joe  Michel,  Staff,                                                                    
Representative  Bill   Stoltze;  Mary  Jane   Shows,  Staff,                                                                    
Representative  Paul  Seaton, Sponsor;  Representative  Fred                                                                    
Dyson.                                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Richard  Kromer,  Senior  Attorney, Institute  for  Justice,                                                                    
Arlington,   Virginia;   Andrew  Walker,   Owner,   Computer                                                                    
Renaissance,  Soldotna; Victor  Kester, Executive  Director,                                                                    
Alaska  Office  of   Victims'  Rights,  Legislative  Branch;                                                                    
Andrew   Harrington,   Attorney,  Commercial/Fair   Business                                                                    
Section,  Department   of  Law;  Jordan   Marshall,  Special                                                                    
Projects  Manager,  Rasmuson   Foundation,  Anchorage;  Mike                                                                    
Walsh, Vice President, Foraker Group, Fairbanks.                                                                                
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HJR 16    CONST. AM: EDUCATION FUNDING                                                                                          
                                                                                                                                
          HJR  16  was  HEARD  and  HELD  in  Committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 224    SALES OF NICOTINE PRODUCTS TO MINOR                                                                                   
                                                                                                                                
          CSHB 224(FIN)  was REPORTED out of  committee with                                                                    
          a  "do  pass"  recommendation and  with  one  zero                                                                    
          fiscal  note from  the  Department  of Health  and                                                                    
          Social Services and one zero  fiscal note from the                                                                    
          Department of Law.                                                                                                    
                                                                                                                                
HB 250    EXTEND RENEWABLE ENERGY GRANT FUND                                                                                    
                                                                                                                                
          HB  250  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 302    REPEAL PICK-CLICK-GIVE AUDIT REQUIREMENT                                                                              
                                                                                                                                
          CSHB 302(FIN)  was REPORTED out of  committee with                                                                    
          a "do  pass" recommendation and with  one new zero                                                                    
          fiscal note from the Department of Revenue.                                                                           
                                                                                                                                
CSSB 30(2nd Jud)                                                                                                                
          RETURN OF SEIZED PROPERTY                                                                                             
                                                                                                                                
          CSSB  30(2nd Jud)  was REPORTED  out of  committee                                                                    
          with  a "do  pass" recommendation  and with  three                                                                    
          previously published  fiscal notes  including, one                                                                    
          indeterminate  note:  FN4   (LAW);  and  two  zero                                                                    
          notes: FN3 (DPS) and FN5 (LEG).                                                                                       
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 16                                                                                                 
                                                                                                                                
     Proposing amendments to the Constitution of the State                                                                      
     of Alaska relating to state aid for education.                                                                             
                                                                                                                                
1:34:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WES KELLER,  SPONSOR, thanked  the committee                                                                    
for  hearing  the  legislation. He  discussed  that  Richard                                                                    
Kromer with  the Institute of  Justice had been  involved in                                                                    
various  private  education  school  scholarship  cases.  He                                                                    
opined  that the  bill  represented a  step  forward in  the                                                                    
education system. He explained that  the purpose of the bill                                                                    
was to  expand education  choice options by  allowing public                                                                    
money  to  follow  children  to  private  schools  based  on                                                                    
parental choice.  The bill  provided a  legislative response                                                                    
to past Alaska Supreme  Court decisions (Matthews v. Quinlan                                                                    
and  Sheldon  Jackson  v.  State  of  Alaska)  that  broadly                                                                    
interpreted  the  restriction  of  state  funds  paying  for                                                                    
private education.  He communicated that the  Alaska Supreme                                                                    
Court  had determined  that the  state constitution  did not                                                                    
allow state money to pay for private religious schools.                                                                         
                                                                                                                                
Representative   Keller  believed   that  there   were  some                                                                    
exciting private  sector options available such  as ITunes U                                                                    
and  Khan Academy.  He  relayed that  the  bill allowed  the                                                                    
private sector  to be more  involved. He had  introduced the                                                                    
bill  because he  believed that  Alaskans solidly  supported                                                                    
the  idea;   he  had   received  a   number  of   calls  and                                                                    
encouragement on  the issue. He explained  that a "credible"                                                                    
survey had been done that  showed "solid support" related to                                                                    
the Blaine Amendment. He relayed  that the Alaska Federation                                                                    
of  Natives (AFN)  had  passed a  resolution  in support  of                                                                    
school  choice. Tom  Fink, former  legislator  and mayor  of                                                                    
Anchorage  had  worked "tirelessly"  on  the  issue and  was                                                                    
available for  questions. He  observed that  charter schools                                                                    
had waitlists and  homeschools were not a  viable option for                                                                    
many working  parents. He stated  that private  schools cost                                                                    
less, but  were prohibitive  to many  parents who  could not                                                                    
afford  to  pay  private  school tuition  on  top  of  other                                                                    
expenses such as  property tax. He relayed  that 2.5 percent                                                                    
of  Alaskan students  were in  private  schools. He  thought                                                                    
that  private schools  could  be used  to  help the  current                                                                    
situation.                                                                                                                      
                                                                                                                                
1:38:23 PM                                                                                                                    
                                                                                                                                
Representative  Keller  opined  that  the  issue  was  large                                                                    
enough that the public should  be able to make the decision.                                                                    
He  stated  that  the   constitutional  amendment  would  be                                                                    
"simple in  size" to  allow for school  choice and  money to                                                                    
follow students into private schools.                                                                                           
                                                                                                                                
Co-Chair  Stoltze discussed  that the  committee would  hear                                                                    
the  bill multiple  times. He  explained that  the immediate                                                                    
fiscal impact  would be the  cost of printing an  extra page                                                                    
in  the ballot  book; there  were other  potential financial                                                                    
implications that were currently not known.                                                                                     
                                                                                                                                
Co-Chair  Thomas   pointed  out   that  AFN  had   passed  a                                                                    
resolution in support of the legislation (copy on file).                                                                        
                                                                                                                                
Representative Keller was excited  about the opportunity the                                                                    
bill presented. He believed AFN  and rural communities would                                                                    
come up with  innovative options if given the  ability to do                                                                    
so.                                                                                                                             
                                                                                                                                
Co-Chair  Stoltze relayed  that  public  testimony would  be                                                                    
held at a future meeting.                                                                                                       
                                                                                                                                
1:41:46 PM                                                                                                                    
                                                                                                                                
Representative   Keller   discussed  that   Richard   "Dick"                                                                    
[Kromer] was  an attorney for  the Institute of  Justice who                                                                    
litigated school  choice cases in federal  and state courts.                                                                    
Several of his current  cases involved the constitutionality                                                                    
of  including religious  schools among  the private  schools                                                                    
that  could  participate  in   school  choice  programs.  He                                                                    
relayed  that Mr.  Kromer was  a resident  expert on  Blaine                                                                    
Amendments. Mr. Kromer had worked  as a federal civil rights                                                                    
attorney  and  had  worked  for   the  U.S.  Departments  of                                                                    
Education  and   Justice,  and  for  the   Equal  Employment                                                                    
Opportunity Commission.                                                                                                         
                                                                                                                                
Representative Gara  asked whether the sponsor  had compiled                                                                    
transcripts   from   the  Constitutional   Convention   that                                                                    
included  the provision  banning  public  funds for  private                                                                    
schools.                                                                                                                        
                                                                                                                                
Representative  Keller  replied  that he  had  compiled  the                                                                    
transcripts,  but   not  in  a   way  that  was   ready  for                                                                    
distribution. He remarked  that he found the  history of the                                                                    
constitution  process  fascinating.  He discussed  that  the                                                                    
Blaine  Amendment had  originally been  an attempt  to amend                                                                    
the U.S.  Constitution by Congressman Blaine;  the amendment                                                                    
had  failed by  one vote.  He  detailed that  laws had  been                                                                    
passed that required  new states, which included  all of the                                                                    
western states  and others, to  have a Blaine  Amendment. He                                                                    
furthered  that   several  of  the  states   had  amendments                                                                    
specifying that  no money should  be directly  or indirectly                                                                    
made  available  to  private  schools.  He  noted  that  the                                                                    
transcripts  were in  the context  of  the Blaine  Amendment                                                                    
history.                                                                                                                        
                                                                                                                                
Representative  Doogan   asked  for  a  background   on  the                                                                    
Institute of Justice.                                                                                                           
                                                                                                                                
1:46:14 PM                                                                                                                    
                                                                                                                                
RICHARD  KROMER,  SENIOR  ATTORNEY, INSTITUTE  FOR  JUSTICE,                                                                    
ARLINGTON,  VIRGINIA  (via  teleconference),  described  the                                                                    
organization  as  a  public interest  law  firm  located  in                                                                    
Arlington, Virginia.  The firm  litigated in  four different                                                                    
areas  including school  choice,  private property  practice                                                                    
(e.g. the  Kelo imminent  domain case), economic  liberty in                                                                    
efforts to open  up entry level occupations  that were over-                                                                    
regulated by state agencies (e.g.  African hair braiding and                                                                    
shoeshine provisions, licensure to  sell caskets and other),                                                                    
and  first  amendment  free  speech  issues  (e.g.  campaign                                                                    
finance reform).  The firm had  been involved in  all school                                                                    
choice cases  including the U.S.  Supreme Court  case Zelman                                                                    
v.  Simmons-Harris, which  upheld the  Cleveland scholarship                                                                    
program against  the challenge  of a  violation of  the Ohio                                                                    
state  constitution and  the  federal establishment  clause.                                                                    
The  prior  year  the  firm  had been  involved  in  a  case                                                                    
involving  Arizona's tax  credit  for  donations to  private                                                                    
scholarship funds that  provided scholarships to individuals                                                                    
planning  to use  private education.  He  relayed that  both                                                                    
school choice cases had been  victories for the firm, but it                                                                    
had lost several other cases.                                                                                                   
                                                                                                                                
Mr. Kromer relayed that the  firm was approximately 20 years                                                                    
old;  it advised  people working  on drafting  school choice                                                                    
legislation and  helped defend the legislation  if it passed                                                                    
and  was  challenged. He  relayed  that  most school  choice                                                                    
programs  were challenged  by teachers'  unions and  allies,                                                                    
but the  firm had been  successful in defending most  of the                                                                    
cases. He explained  that in the firm's cases  the state was                                                                    
the primary  defendant and the firm  represented parents who                                                                    
intervened  in  the  litigation.   The  institute  had  been                                                                    
involved in  the Milwaukee Program,  which was  the paradigm                                                                    
for   the  urban   programs  that   existed  in   Milwaukee,                                                                    
Cleveland, Washington D.C., and  New Orleans. Other types of                                                                    
school choice  programs had  been developed  in the  past 20                                                                    
years;  there were  seven  or eight  that  were specific  to                                                                    
children  with disabilities,  which typically  had not  been                                                                    
challenged.                                                                                                                     
                                                                                                                                
1:50:36 PM                                                                                                                    
                                                                                                                                
Mr.  Kromer communicated  that the  institute had  typically                                                                    
encouraged  states with  "bad law"  under  the state  Blaine                                                                    
Amendment  to  create  school choice  programs  via  private                                                                    
contributions that the states  encouraged through tax credit                                                                    
legislation.  There were  over  20  different school  choice                                                                    
programs that  involved private schools, which  had resulted                                                                    
in  the firm  gaining expertise  in state  Blaine Amendments                                                                    
because  the  opponents  of school  choice  programs  always                                                                    
preferred to strike a law  down under the state constitution                                                                    
versus the  U.S. Constitution.  He furthered  that opponents                                                                    
were  afraid that  the U.S.  Supreme  Court would  determine                                                                    
that  school choice  programs did  not  violate the  federal                                                                    
establishment  clause  as  long  as  they  were  religiously                                                                    
neutral and did  not encourage the use  of religious schools                                                                    
over other schools.                                                                                                             
                                                                                                                                
Mr.  Kromer   discussed  that   Blaine  Amendments   were  a                                                                    
"peculiar"  development of  the  1800s.  Public schools  had                                                                    
originally  been conceived  and designed  to be  generically                                                                    
Protestant schools,  but not  to reflect  the ideology  of a                                                                    
particular sect.  He expounded  that as an  increased number                                                                    
of  Catholics moved  to  the U.S.  the  Protestants saw  the                                                                    
schools as a way to  "wean" Catholics away from their faith.                                                                    
The Catholic  Church resisted the  efforts and  the required                                                                    
reading  of  the  Protestant bible  in  public  school,  the                                                                    
singing  of  Protestant hymns,  and  the  use of  Protestant                                                                    
oriented text books that "derogated"  the Catholic faith. He                                                                    
explained  that as  a result  Catholics  requested an  equal                                                                    
share  of  public  education   dollars  directly  for  their                                                                    
parochial  schools.  The  Catholics  were met  in  the  Know                                                                    
Nothing  Movement in  the 1850s,  by the  federal government                                                                    
and the Republican Party in  particular, with a rejection of                                                                    
their demands. The result was  that some state constitutions                                                                    
(including Alaska's)  contained language specifying  that no                                                                    
appropriation  "shall  be  made" to  any  sectarian  school,                                                                    
which had  been code  for Catholic.  He expounded  that five                                                                    
current U.S. Supreme Court judges  had recognized in various                                                                    
cases  that  the  federal  Blaine  Amendment  was  an  anti-                                                                    
Catholic proposed enactment.                                                                                                    
                                                                                                                                
Mr.  Kromer continued  to provide  a history  of the  Blaine                                                                    
Amendment.  He delineated  that  in the  1870s  there was  a                                                                    
Republican  effort  to  disenfranchise Democrats  (who  were                                                                    
typically  Catholic).  Republicans  had proposed  a  federal                                                                    
constitutional  amendment  that   would  have  required  all                                                                    
states to abide by the  language of state constitutions that                                                                    
specified  there would  be no  appropriations for  religious                                                                    
sectarian schools.                                                                                                              
                                                                                                                                
1:55:24 PM                                                                                                                    
                                                                                                                                
Mr. Kromer  detailed that  the amendment  had failed  to get                                                                    
the two-thirds majority  required by a narrow  margin in the                                                                    
U.S. Senate, but it had  passed "overwhelmingly" in the U.S.                                                                    
House, which  meant that the  backers had to vote  to impose                                                                    
the  law through  enabling legislation  on  any new  states;                                                                    
therefore, all  new states after  the 1876  Blaine Amendment                                                                    
failure had Blaine Amendments  in their state constitutions.                                                                    
Alaska's constitution specified that  no money shall be paid                                                                    
from public  funds for the  direct benefit of  any religious                                                                    
or other  private educational institution; the  language was                                                                    
narrower than  was typical and  was intended  to distinguish                                                                    
between  direct aid  to religious  schools and  indirect aid                                                                    
that  benefitted private  school students.  He relayed  that                                                                    
the exception had been accepted  in the Zelman case in 2002.                                                                    
He  viewed  the  legislation  as  an  effort  to  bring  the                                                                    
interpretation of  Alaska's constitutional language  in line                                                                    
with the interpretation of the federal religion clauses.                                                                        
                                                                                                                                
Mr. Kromer  pointed out that  Alaska's constitution  had its                                                                    
own  general religion  clauses under  Article  1, Section  4                                                                    
titled: "Freedom of Religion."  The language was essentially                                                                    
a  verbatim copy  of  the federal  religion  clauses in  the                                                                    
First Amendment that  read "no law shall  be made respecting                                                                    
establishment of  religion or prohibiting the  free exercise                                                                    
thereof."  He   interpreted  that  the  language   had  been                                                                    
included  as an  effort to  convey that  Alaska would  use a                                                                    
standard similar to the U.S.  Constitution. He detailed that                                                                    
there  was a  three part  test for  an establishment  clause                                                                    
violation under the First  Amendment that required religious                                                                    
neutrality and  no excessive entanglement  of the  state and                                                                    
religion  (Lemon v.  Kurtzman). He  stated that  language in                                                                    
Alaska's  constitution  implied  that  the  state's  supreme                                                                    
court should use a similar  test when it addressed issues of                                                                    
a violation of establishment of religion principle.                                                                             
                                                                                                                                
1:59:04 PM                                                                                                                    
                                                                                                                                
Mr. Kromer  believed the impetus  for the legislation  was a                                                                    
result of bad decisions made  by the state supreme court. He                                                                    
explained  that the  court had  interpreted the  language of                                                                    
the two  provisions proposed for amendment  very broadly and                                                                    
in a  way that had been  rejected at Alaska's 1955  and 1956                                                                    
constitutional  conventions; a  movement  had  been made  to                                                                    
expand the  language to include direct  and indirect benefit                                                                    
for any  religious or private  institution, but it  had been                                                                    
rejected.  In  the  Matthews  v.  Quinton  and  the  Sheldon                                                                    
Jackson  cases  the  Alaska Supreme  Court  had  essentially                                                                    
included indirect in its interpretation  and had stated that                                                                    
aid to students indirectly  benefited colleges or elementary                                                                    
schools that  were chosen.  The court  had decided  that the                                                                    
state was  aiding the private  religious schools if  aid was                                                                    
provided  to  students  for transport  to  the  schools.  He                                                                    
opined that the  aid was indirect. He relayed  that the U.S.                                                                    
Supreme Court had determined that  providing aid to students                                                                    
who chose  a private  religious school was  not the  same as                                                                    
providing a  direct grant  to the  school (Zelman  and other                                                                    
cases);   the   court   recognized  a   difference   between                                                                    
incidental  and  direct aid.  He  noted  that under  certain                                                                    
circumstances   direct  aid   could  run   "afoul"  of   the                                                                    
establishment clause; however, indirect  aid to students had                                                                    
been accepted for at least 10  years in the K-12 context and                                                                    
had never been challenged in the post-secondary context.                                                                        
                                                                                                                                
Mr.  Kromer believed  that the  problem  with supreme  court                                                                    
decisions  was that  the courts  had the  final word  unless                                                                    
overruled by  the people  or a  subsequent decision  made by                                                                    
the  same  court.  The  resolution  proposed  to  amend  the                                                                    
language of the particular  provisions to change the outcome                                                                    
with  respect to  student assistance  programs  in order  to                                                                    
bring state constitution in line  with the principles of the                                                                    
federal religion clauses.                                                                                                       
                                                                                                                                
2:03:30 PM                                                                                                                    
                                                                                                                                
Mr.  Kromer  explained  that  in 1968  the  New  York  State                                                                    
Supreme Court  had reversed an earlier  decision because its                                                                    
state   constitution   included  "direct"   and   "indirect"                                                                    
language;   therefore  it   was   determined  that   student                                                                    
assistance programs representing incidental  aid were not in                                                                    
violation of the provision; any  benefit to schools selected                                                                    
by  students who  received aid  was incidental.  He detailed                                                                    
that South  Carolina previously had similar  language to New                                                                    
York that prohibited appropriations  that provided direct or                                                                    
indirect benefits  to private  religious schools.  The state                                                                    
had  struck  down  a  higher  education  student  assistance                                                                    
program  based on  the indirect  language; subsequently  the                                                                    
legislature  and the  population  had  removed the  indirect                                                                    
language and a new assistance  program had been enacted. The                                                                    
New York  and South Carolina  cases were examples  of states                                                                    
that   had   removed   language   prohibiting   "beneficial"                                                                    
programs.                                                                                                                       
                                                                                                                                
Co-Chair  Stoltze  remarked  that  the  testifier  would  be                                                                    
invited to speak  to the committee again during  the wrap up                                                                    
portion   of  the   bill   at  a   later   date.  He   asked                                                                    
Representative Keller  to provide the committee  with a copy                                                                    
of the state decisions discussed by Mr. Kromer.                                                                                 
                                                                                                                                
Representative Keller  opined that the Alaska  Supreme Court                                                                    
had allowed  Alaska's Blaine Amendment  to tie the  hands of                                                                    
the  legislature  in  its ability  to  enact  school  choice                                                                    
reform initiatives. He cited the  Sheldon Jackson case as an                                                                    
example; the  legislature had tried  to assist  with tuition                                                                    
in the  past. The passage  of the bill would  allow Alaskans                                                                    
to  decide  whether  to  free  the  legislature's  hands  to                                                                    
encourage school choice in the state.                                                                                           
                                                                                                                                
Co-Chair  Stoltze  requested  Representative  Keller  to  be                                                                    
available  for  questions from  legislators.  Representative                                                                    
Keller agreed.                                                                                                                  
                                                                                                                                
HJR  16  was  HEARD  and   HELD  in  Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
2:07:03 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:08:33 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 250                                                                                                            
                                                                                                                                
     "An Act relating to the renewable energy grant fund                                                                        
     and recommendation program; and providing for an                                                                           
     effective date."                                                                                                           
                                                                                                                                
2:08:46 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  BILL  THOMAS,  SPONSOR introduced  his  staff  who                                                                    
would discuss the bill.                                                                                                         
                                                                                                                                
KACI  SCHROEDER-HOTCH,  STAFF, REPRESENTATIVE  BILL  THOMAS,                                                                    
explained that  the bill  reauthorized the  Renewable Energy                                                                    
Grant  Fund  for an  additional  five  years. The  fund  was                                                                    
established  in  2008  and   had  funded  approximately  200                                                                    
projects statewide;  21 projects  had come  on line  in 2011                                                                    
due  to the  fund. The  bill included  intent language  that                                                                    
would fund the program at $50  million per year, which was a                                                                    
continuation  of  the  intent  language  from  the  enacting                                                                    
legislation.   She  relayed   that  department   staff  were                                                                    
available to answer specific questions.                                                                                         
                                                                                                                                
Co-Chair Thomas  pointed out  that the  proposed legislation                                                                    
would bring in  $100 million in federal  matching funds. One                                                                    
community that had  used the funds to retire  debt had taken                                                                    
its cost  from $0.80 down  to $0.20 once its  hydro facility                                                                    
had come on  line. He noted that the  displacement of diesel                                                                    
was huge  and that an  increasing amount would  be displaced                                                                    
as renewable energy projects continued.                                                                                         
                                                                                                                                
SARAH   FISHER-GOAD,  EXECUTIVE   DIRECTOR,  ALASKA   ENERGY                                                                    
AUTHORITY  (AEA),  DEPARTMENT  OF  COMMERCE,  COMMUNITY  AND                                                                    
ECONOMIC DEVELOPMENT, was available for questions.                                                                              
                                                                                                                                
Representative  Doogan  wondered  why the  proposal  was  to                                                                    
authorize the program for $50  million when it had only used                                                                    
$25 million for  all but its inception  year. Ms. Schroeder-                                                                    
Hotch  explained that  the bill  extended the  existing law.                                                                    
She added that the bill  included intent language that could                                                                    
be changed by the legislature.                                                                                                  
                                                                                                                                
Representative Doogan  surmised that  the bill did  not make                                                                    
any  changes to  the  current  program. Ms.  Schroeder-Hotch                                                                    
responded in the affirmative.                                                                                                   
                                                                                                                                
Co-Chair Thomas noted that the  legislature had the power of                                                                    
appropriation.                                                                                                                  
                                                                                                                                
2:12:55 PM                                                                                                                    
                                                                                                                                
Representative Edgmon supported the  legislation. He did not                                                                    
believe that  the program should  be considered  the panacea                                                                    
for the energy  situation in Alaska. He  believed that while                                                                    
successful,  the program  was narrow  in scope  in terms  of                                                                    
renewable energy  project options. The program  was helpful,                                                                    
but  there were  numerous areas  in the  state that  did not                                                                    
have  renewable energy  options available.  He believed  the                                                                    
program should  be recognized  for "what it  is and  what it                                                                    
isn't."                                                                                                                         
                                                                                                                                
Co-Chair   Thomas  referenced   that  when   he  had   first                                                                    
introduced the  bill it had  included nuclear  energy, which                                                                    
had  kept it  from passing.  He explained  that at  the time                                                                    
"renewable" had been a "hippie" word  and that it had been a                                                                    
significant  leap   forward.  He  relayed  that   the  Palin                                                                    
Administration pressed  for the  bill, which had  been stuck                                                                    
in the Senate  Finance Committee; as a result  it had passed                                                                    
out of committee with an appropriation.                                                                                         
                                                                                                                                
Representative  Edgmon  remembered   that  many  people  had                                                                    
equated renewable  energy with  cheaper energy;  however, in                                                                    
some cases renewable  energy was more expensive  and was not                                                                    
affordable. He asked the department to discuss the issue.                                                                       
                                                                                                                                
Co-Chair Stoltze  provided a hypothetical example  of a wind                                                                    
project that may be successful  in Kodiak, but could fail in                                                                    
Anchorage.                                                                                                                      
                                                                                                                                
2:17:18 PM                                                                                                                    
                                                                                                                                
Ms.  Fisher-Goad explained  that there  had been  an earlier                                                                    
request  from the  House Finance  Committee  for one  year's                                                                    
worth of data  related to the payback period  for several of                                                                    
the  projects.   She  noted  that  she   would  characterize                                                                    
Representative Edgmon's  comments slightly  differently, but                                                                    
it  was important  to recognize  that there  were fuel  cost                                                                    
savings  that  in current  dollars  may  not necessarily  be                                                                    
comparable or cheaper; however,  fuel costs were expected to                                                                    
rise significantly  for the next  20 years.  The expectation                                                                    
was that  the imported fuel  would be traded  to communities                                                                    
in  rural   Alaska  for  projects  that   were  using  local                                                                    
resources  for the  generation, which  would stabilize  fuel                                                                    
costs.  She agreed  that not  all communities  had renewable                                                                    
resources  available  for  development. She  believed  there                                                                    
were challenges  as well as  opportunities for  the program.                                                                    
Through  the rural  energy planning  process (including  the                                                                    
railbelt plan and southeast  integrated resource plan) there                                                                    
was  a  community  and  region-wide  approach  to  plan  for                                                                    
energy. It  was necessary to  begin with a good  rural power                                                                    
system  in order  to successfully  integrate  wind into  the                                                                    
smaller  systems.  She  opined  that  there  was  value  and                                                                    
benefit in the  process, but that work remained  to be done.                                                                    
The agency was working to  ensure that there was appropriate                                                                    
technical assistance  for the projects to  move forward. She                                                                    
relayed  that a  good  diesel displacement  metric had  been                                                                    
shown  related  to the  projects.  There  were currently  14                                                                    
projects that had one full  year of data. She expressed that                                                                    
her  colleague would  provide  more detail  on  some of  the                                                                    
projects that had not shown  the payback in 2011 fuel costs,                                                                    
but had begun to show positive results.                                                                                         
                                                                                                                                
Representative  Edgmon discussed  that a  significant amount                                                                    
of renewable energy projects came  forward that did not make                                                                    
the   cut   for   various    reasons   including   lack   of                                                                    
affordability.  He  had  not meant  to  insinuate  that  AEA                                                                    
approved renewable energy projects  that were not beneficial                                                                    
to consumers.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze  commented that  the decisions  were social                                                                    
as opposed to energy decisions.                                                                                                 
                                                                                                                                
2:21:26 PM                                                                                                                    
                                                                                                                                
Vice-chair Fairclough  asked about the geographic  spread of                                                                    
the 14 projects  and whether the kilowatts  produced had met                                                                    
expectations.                                                                                                                   
                                                                                                                                
PETER CRIMP, DEPUTY DIRECTOR,  ALTERNATIVE ENERGY AND ENERGY                                                                    
EFFICIENCY, DEPARTMENT  OF COMMERCE, COMMUNITY  AND ECONOMIC                                                                    
DEVELOPMENT,  responded that  the  14  projects were  evenly                                                                    
spread throughout  the state  including hydro  in Southeast,                                                                    
biomass in  the Interior and  Southcentral, and wind  in the                                                                    
Southwest.                                                                                                                      
                                                                                                                                
Vice-chair  Fairclough  asked  whether the  total  kilowatts                                                                    
produced in the 14 projects  had met expectations. Mr. Crimp                                                                    
explained that  the assessed projects were  at approximately                                                                    
84 percent  of their goal for  2011. He noted that  the heat                                                                    
versus  power  projects  had  not been  broken  out  by  per                                                                    
kilowatt hour.                                                                                                                  
                                                                                                                                
Vice-chair Fairclough  asked whether  the state  was looking                                                                    
to partner with federal and/or private sector partners.                                                                         
                                                                                                                                
Ms.  Fisher-Goad replied  that  AEA was  always looking  for                                                                    
federal   partners  that   would  provide   matching  funds.                                                                    
Additionally,  the  Denali  Commission  was  currently  very                                                                    
active with  the programs. Independent power  producers were                                                                    
also  eligible program  applicants;  any additional  private                                                                    
sector investments  in the program  were welcome.  There had                                                                    
been increasing  discussion related to the  development of a                                                                    
loan program;  there was a  power project loan  program that                                                                    
allowed  entities  to borrow  in  order  to help  them  gain                                                                    
increased matching funds.                                                                                                       
                                                                                                                                
Vice-chair  Fairclough  asked  whether AEA  was  looking  at                                                                    
power generation regionally to  allow areas to develop plans                                                                    
and transmission  proposals in order to  provide sustainable                                                                    
and affordable  energy into local communities.  She wondered                                                                    
whether  AEA   was  working  to   ensure  that   there  were                                                                    
beneficiaries of  the program  award process  throughout the                                                                    
state.                                                                                                                          
                                                                                                                                
Ms.  Fisher-Goad answered  that  the  renewable energy  fund                                                                    
program  had  helped  to focus  the  issues  and  dovetailed                                                                    
nicely with  the regional planning approach.  The agency had                                                                    
been  building  on  its  pathway   document  that  had  been                                                                    
published  the prior  year and  was moving  towards regional                                                                    
planning;  Sandra Moller,  Deputy Director  of Rural  Energy                                                                    
was heading up  the efforts. The entity had  a contract with                                                                    
Nuvista Light and  Power in the Calista  region to spearhead                                                                    
the approach.  The agency was looking  for regional entities                                                                    
that could do most of  the coordination; AEA would help fund                                                                    
the work  and would  provide technical resource  and support                                                                    
for the  regional development.  She added  that any  type of                                                                    
transmission system and  interconnection between communities                                                                    
should be coming together.                                                                                                      
                                                                                                                                
2:27:00 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  wondered  whether  there  was  a                                                                    
chart  that  showed  the  displacement   of  diesel  by  the                                                                    
alternative  energy over  time  and expectations  on how  to                                                                    
continue  the   savings  into   the  future.   He  discussed                                                                    
alternative ways  for coming up  with power in the  past. At                                                                    
one  time Representative  Joule  had  illustrated that  coal                                                                    
would be a  reliable energy source for some  rural areas. He                                                                    
referred to a  letter from the Alaska  Power Authority (copy                                                                    
on  file) stating  that fuel  displacement  was 3.4  million                                                                    
gallons in  2013 and  that by  the end of  2016 it  would be                                                                    
11.6 million.  He noted that  the data showed a  tripling of                                                                    
the displacement  savings and believed  that the use  of oil                                                                    
would be eliminated if savings continued to increase.                                                                           
                                                                                                                                
Mr. Crimp  responded that AEA had  provided legislators with                                                                    
a CD that included a program  status report and a chart that                                                                    
showed fuel displacement based on rounds 1 through 4.                                                                           
                                                                                                                                
Representative   Guttenberg   wondered  whether   the   disk                                                                    
included information on  what it would take  to increase the                                                                    
displacement going forward.                                                                                                     
                                                                                                                                
Mr.  Crimp  replied  that  AEA   had  projections  based  on                                                                    
projects  that  had been  funded  to  date. He  relayed  the                                                                    
agency  would add  data to  the projections  for round  5 if                                                                    
funds  were   appropriated  for  the  continuation   of  the                                                                    
program.                                                                                                                        
                                                                                                                                
Representative Gara  wondered whether the  current renewable                                                                    
energy fund allowed the state  to pay for transmission if it                                                                    
would result  in a more efficient  renewable energy project.                                                                    
He  discussed the  efficiency of  large projects  that could                                                                    
transmit energy to numerous villages.                                                                                           
                                                                                                                                
2:30:44 PM                                                                                                                    
                                                                                                                                
Ms. Fisher-Goad replied that  a transmission line connecting                                                                    
to a renewable resource was an eligible project.                                                                                
                                                                                                                                
Representative  Gara  queried  whether  AEA  had  worked  to                                                                    
maximize  the state's  ability to  train people  locally who                                                                    
could maintain the energy projects.                                                                                             
                                                                                                                                
Ms.  Fisher-Goad replied  that  AEA had  a training  program                                                                    
that included hydro training; it  was currently expanding to                                                                    
include  training on  wind diesel  systems. The  agency also                                                                    
had  technical assistance  to work  with  local power  house                                                                    
operators on the integration of the diesel systems.                                                                             
                                                                                                                                
Representative  Gara asked  about  a wind  power project  in                                                                    
Anchorage. He believed the cost  of the wind energy produced                                                                    
at  Fire  Island would  have  been  lower  if the  city  had                                                                    
participated. Mr.  Crimp did not have  enough information to                                                                    
answer the question.                                                                                                            
                                                                                                                                
Ms.  Fisher-Goad added  that AEA  was  working with  Chugach                                                                    
Electric  Association  and   the  other  railbelt  utilities                                                                    
including   Golden   Valley   Electric  Association   on   a                                                                    
regulation wind  study to help  integrate the Eva  Creek and                                                                    
Fire  Island projects  into the  system.  She detailed  that                                                                    
some  of the  work would  help any  future wind  development                                                                    
projects  in the  railbelt system  and potentially  with the                                                                    
expansion of the Fire Island project.                                                                                           
                                                                                                                                
Representative Gara advocated for  any expansion of the Fire                                                                    
Island project.                                                                                                                 
                                                                                                                                
Co-Chair  Stoltze wanted  to make  sure  consumers were  not                                                                    
tagged with an expensive project.                                                                                               
                                                                                                                                
2:33:31 PM                                                                                                                    
                                                                                                                                
Ms. Fisher-Goad responded that  the agency was participating                                                                    
in a regulation study in order to address the issues.                                                                           
                                                                                                                                
Representative  Wilson   asked  why   Delta  had   not  been                                                                    
mentioned  in  the  wind   project  study.  Ms.  Fisher-Goad                                                                    
responded  that Delta  project had  been  included, but  was                                                                    
much smaller  than the  Eva Creek  and Fire  Island projects                                                                    
that were coming online.                                                                                                        
                                                                                                                                
Representative Wilson  noted that the Delta  project had the                                                                    
potential to be larger. She  discussed studies that had been                                                                    
done and  items that the  company had learned that  could be                                                                    
utilized. Ms.  Fisher-Goad answered  that the intent  of the                                                                    
regulation study  was to help  put some guidance  around how                                                                    
larger wind  systems could be  integrated into  the railbelt                                                                    
system.                                                                                                                         
                                                                                                                                
2:34:50 PM                                                                                                                    
                                                                                                                                
Co-Chair  Thomas pointed  out that  the hydro  in Metlakatla                                                                    
was over 100-years-old. He stressed  that the facilities did                                                                    
not wear out and would  last for many years. He communicated                                                                    
that  the bill  provided a  balance of  funding for  regions                                                                    
across the  state. He remarked that  regional capital budget                                                                    
funding requests  could be entered into  the Capital Project                                                                    
Submission  Information System  (CAPSIS). He  discussed that                                                                    
some projects  AEA mentioned were  further along  because an                                                                    
energy   consultant/ardor   had   been  put   in   Southeast                                                                    
Conference.  He  recommended  that communities  with  ardors                                                                    
should  make  sure the  ardor  was  capable to  help  obtain                                                                    
funding for projects.                                                                                                           
                                                                                                                                
HB  250  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
2:38:28 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
RECONVENED                                                                                                                      
2:39:00 PM                                                                                                                    
                                                                                                                                
CS FOR SENATE BILL NO. 30(2d JUD)                                                                                             
                                                                                                                                
     "An Act  providing for the release  of certain property                                                                    
     in the custody  of a law enforcement agency  to a crime                                                                    
     victim  under   certain  conditions  and   relating  to                                                                    
     requests  for that  release by  the office  of victims'                                                                    
     rights."                                                                                                                   
                                                                                                                                
2:39:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE TAMMIE  WILSON, CO-SPONSOR,  provided opening                                                                    
remarks on SB 30:                                                                                                               
                                                                                                                                
     Senate Bill 30 is about restorative justice.                                                                               
                                                                                                                                
     When a  victim of  a crime has  their property  held as                                                                    
     evidence  by  law  enforcement agencies,  it  could  be                                                                    
     months  or even  years  before they  are  able to  have                                                                    
     their possessions returned.                                                                                                
                                                                                                                                
     By  holding  a  victim's  property as  evidence  for  a                                                                    
     prolonged  period of  time, extra  burden is  placed on                                                                    
     the property  owner to replace  what has been  taken as                                                                    
     evidence. The  consequences are  even higher  for small                                                                    
     business  owners  who  may  face  bankruptcy  if  their                                                                    
     property  loss is  a crucial  component of  their daily                                                                    
     operations.                                                                                                                
                                                                                                                                
     SB 30 will introduce a  process for victims of property                                                                    
     crime to  petition the court  for relief  in recovering                                                                    
     property held as evidence.                                                                                                 
                                                                                                                                
Representative Wilson  elaborated that the bill  was about a                                                                    
process that would enable victims  to receive their property                                                                    
more quickly.                                                                                                                   
                                                                                                                                
CHUCK KOPP,  CHIEF OF STAFF,  SENATOR FRED  DYSON, addressed                                                                    
the  sectional analysis  (copy on  file). He  explained that                                                                    
currently the  return of property  was discretionary  at the                                                                    
advocate attorney  level; the return of  property could take                                                                    
quite a  bit of time if  the attorneys did not  agree. Often                                                                    
crime victims  were businesses and were  therefore unable to                                                                    
complete a  sale or were  underinsured on a  property, which                                                                    
could  be  very  problematic.  He  referred  to  letters  of                                                                    
support  in  member's  packets  (copy  on  file).  The  bill                                                                    
allowed a  neutral decision maker  the opportunity  to weigh                                                                    
in  on the  decision and  provided the  victims with  direct                                                                    
access  to courts  in order  to ask  the judge  to determine                                                                    
whether the interests of the  victim outweighed those of the                                                                    
other party. He read Section 1 of the sectional analysis:                                                                       
                                                                                                                                
   1. Provides that a crime victim who is the owner of                                                                          
     property  in the  custody of  a law  enforcement agency                                                                    
     may  request  the  agency  for   the  return  of  their                                                                    
     property through the Office of Victims' Rights (OVR).                                                                      
                                                                                                                                
   2. OVR will file the request with the agency after                                                                           
     conducting an  investigation into  the request  to make                                                                    
     an  initial  determination  if   the  crime  victim  is                                                                    
     entitled to return of the  property being claimed under                                                                    
     the  requirements of  proposed 12.36.070(c):  the crime                                                                    
     victim  provides satisfactory  proof of  ownership, and                                                                    
     the party  that objects to  the return of  the property                                                                    
     fails to  prove that the  property must be  retained by                                                                    
     the agency for evidentiary purposes.                                                                                       
                                                                                                                                
   3. Once OVR makes such a determination, they will request                                                                    
     on behalf  of the crime  victim that the  agency return                                                                    
     the property.                                                                                                              
                                                                                                                                
   4. Within 10 days after receipt of request and following                                                                     
     reasonable  notice to  prosecution,  defense and  other                                                                    
     interested parties,  the agency will request  a hearing                                                                    
     before the court to determine  if the property shall be                                                                    
     released to the crime victim.                                                                                              
                                                                                                                                
   5. The court of jurisdiction is identified in cases                                                                          
     involving  a pending  criminal case  and in  situations                                                                    
     where no criminal case is pending.                                                                                         
                                                                                                                                
   6. Establishes the burden of proof to be a preponderance                                                                     
     of  the evidence,  for both  the  crime victim  showing                                                                    
     ownership and the objecting  party proving the property                                                                    
     must be retained by the agency.                                                                                            
                                                                                                                                
2:43:21 PM                                                                                                                    
                                                                                                                                
Mr. Kopp continued  to read from Section 1  of the sectional                                                                    
analysis:                                                                                                                       
                                                                                                                                
   7. Establishes that if the court orders the return of the                                                                    
     property  to the  crime victim,  the  court may  impose                                                                    
     reasonable  conditions on  the return  to maintain  the                                                                    
     evidentiary integrity of the property.                                                                                     
                                                                                                                                
   8. Identifies the term crime victim as having the meaning                                                                    
     given to victim  in AS 12.55.185, the  Code of Criminal                                                                    
     Procedure.                                                                                                                 
                                                                                                                                
Mr.  Kopp   concluded  with  Section  2   of  the  sectional                                                                    
analysis:                                                                                                                       
                                                                                                                                
   1. Establishes within Title 24, Chapter 65 Office of                                                                         
     Victims' Rights the  authority of OVR to  request a law                                                                    
     enforcement agency for return  of property on behalf of                                                                    
     a crime  victim claiming  property after  conducting an                                                                    
     investigation as proscribed in AS 12.36.070(c).                                                                            
                                                                                                                                
   2. Provides that the victims' advocate may use any of the                                                                    
     powers granted to the advocate  under Title 24, Chapter                                                                    
     65.                                                                                                                        
                                                                                                                                
Representative Guttenberg  wondered about  the preponderance                                                                    
of  evidence in  the situations  presented in  the bill.  He                                                                    
discussed  multiple  agencies  involved.  He  wondered  what                                                                    
would happen  if there  was a lien  or judgment  on property                                                                    
that an individual was trying to get back.                                                                                      
                                                                                                                                
Mr. Kopp  replied that the  language "may order  the return"                                                                    
was included  on line 7, page  2 of the bill,  which allowed                                                                    
flexibility on  contested claims  that the court  could rule                                                                    
on.  The   preponderance  of  evidence  language   had  been                                                                    
recommended by the  Department of Law; it  was more probable                                                                    
that  a  party  deserved  to have  their  property  returned                                                                    
despite  claims  to  the  contrary   by  other  parties.  He                                                                    
delineated that  the court could make  a determination based                                                                    
on the provision in the bill  or any other law that dictated                                                                    
when property could be released.  He pointed to language "if                                                                    
the court orders  the return of the property,  the court may                                                                    
impose reasonable  conditions on  the return" (lines  14 and                                                                    
15, page 2); the specific  language was for situations where                                                                    
a person  needed the property  back quickly,  but conditions                                                                    
were  applied. Conditions  could  include:  a returned  item                                                                    
could not be sold or the  condition of the item needed to be                                                                    
maintained.  He  used  a  heavy piece  of  equipment  as  an                                                                    
example  of   an  item  that   could  be   photographed  and                                                                    
documented and  returned to a  business owner to  allow them                                                                    
to commence business  activities, but the court  may ask the                                                                    
owner not  to sell the item  until the case was  closed. The                                                                    
sponsor  felt that  the language  was  permissive and  broad                                                                    
enough  to allow  the court  the discretionary  authority it                                                                    
needed in the situations.                                                                                                       
                                                                                                                                
2:47:22 PM                                                                                                                    
                                                                                                                                
Co-Chair Thomas referred to a  letter in the packet from Hal                                                                    
Ingalls  (copy on  file)  who had  a  vehicle and  equipment                                                                    
confiscated.  He discussed  deterioration that  could result                                                                    
from  leaving a  vehicle to  sit for  too long.  He wondered                                                                    
whether the  bill required the  state to return  property in                                                                    
the same condition.                                                                                                             
                                                                                                                                
Mr.  Kopp  replied  that  the bill  did  not  guarantee  the                                                                    
condition  of  returned  property.  He  explained  that  the                                                                    
legislation  provided  crime  victims   with  an  avenue  to                                                                    
directly  appeal to  the court  in  circumstances when  they                                                                    
could not get a party to agree to release their property.                                                                       
                                                                                                                                
Co-Chair   Thomas   read   from  the   sectional   analysis:                                                                    
"establishes  that if  the court  orders the  return of  the                                                                    
property  to   the  crime  victim,  the   court  may  impose                                                                    
reasonable  conditions   on  the  return  to   maintain  the                                                                    
evidentiary integrity of the property"  (Section 1, line 7).                                                                    
He  thought the  court  should return  the  property in  its                                                                    
original condition. He  wondered what the point  would be to                                                                    
return a vehicle in a deteriorated condition.                                                                                   
                                                                                                                                
Co-Chair Stoltze understood that  the bill addressed a small                                                                    
portion of the problems  experienced by property victims. He                                                                    
believed  the  process to  a  solution  was incremental  and                                                                    
recognized  the hard  work of  the sponsor.  He pointed  out                                                                    
that small business owners could  not absorb a loss of their                                                                    
only  working  vehicle  or  set   of  tools.  He  had  heard                                                                    
anecdotal remarks by trade union  members who were forced to                                                                    
take a loss  because it was too cumbersome to  deal with the                                                                    
legal system.                                                                                                                   
                                                                                                                                
Mr.  Kopp appreciated  the comments  and noted  that it  had                                                                    
taken three years to develop the current bill.                                                                                  
                                                                                                                                
Vice-chair Fairclough  referred the committee to  letters of                                                                    
support from  the Alaska  Homebuilder's Association  and the                                                                    
National Federation of  Independent Businesses; both letters                                                                    
cited   battles   between   the   government   and   smaller                                                                    
businesses.  She read  an  excerpt from  a  letter from  Hal                                                                    
Ingalls, CEO, Denali Drilling, Inc., Anchorage:                                                                                 
                                                                                                                                
     It  has been  13  months since  that  accident with  no                                                                    
     police report  or indication  that we  will be  able to                                                                    
     get our equipment  back any time soon, nor  are we able                                                                    
     to make a settlement with  the insurance company. If we                                                                    
     were a  smaller business than  we are, we would  be out                                                                    
     of business  by not having  access to our  equipment to                                                                    
     continue to operate. Renting  equipment to replace what                                                                    
     is  in impound  until the  case is  settled would  be a                                                                    
     financial  burden  we would  have  to  incur until  the                                                                    
     troopers complete their paperwork.                                                                                         
                                                                                                                                
Vice-chair Fairclough noted  that at present it  had been 14                                                                    
months  since the  accident had  taken  place. She  observed                                                                    
that it was  difficult to fight the government  and that the                                                                    
bill provided  a process to  help individuals  acquire their                                                                    
property.  She  believed  that  the  bill  would  help  with                                                                    
recourse in  the event  that property  was damaged  while in                                                                    
the possession of the government.                                                                                               
                                                                                                                                
2:52:41 PM                                                                                                                    
                                                                                                                                
Representative Costello asked  whether the legislation would                                                                    
help Mr. Ingalls and others  currently in the same position.                                                                    
Mr. Kopp replied in the affirmative.                                                                                            
                                                                                                                                
Representative   Costello   spoke    in   support   of   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
ANDREW  WALKER, OWNER,  COMPUTER RENAISSANCE,  SOLDOTNA (via                                                                    
teleconference),  explained that  in  2010  the company  had                                                                    
been  defrauded of  a laptop  with a  bad check.  He relayed                                                                    
that the  $1,100 laptop had  been sitting in  police custody                                                                    
since the  fraud had  occurred. He  had received  his laptop                                                                    
during  the last  week, but  the item  value was  worth less                                                                    
than  half  of  its  original value  and  had  been  damaged                                                                    
cosmetically during that time. He  had tried to convince the                                                                    
court to  remove the  hard drive and  to return  the laptop,                                                                    
but that had not occurred. He  explained that he was out the                                                                    
money as  a business owner  because of the court  system and                                                                    
the associated delays. He expressed  that it would have been                                                                    
very helpful  to have had  an avenue  to appeal in  order to                                                                    
get his money back.                                                                                                             
                                                                                                                                
Co-Chair  Stoltze  thanked  Mr.  Walker for  his  time.  Mr.                                                                    
Walker  replied that  he was  happy to  be part  of anything                                                                    
that would help victims of  crime get their property back in                                                                    
an expedient manner.                                                                                                            
                                                                                                                                
2:56:55 PM                                                                                                                    
                                                                                                                                
VICTOR   KESTER,  EXECUTIVE   DIRECTOR,  ALASKA   OFFICE  OF                                                                    
VICTIMS'  RIGHTS, LEGISLATIVE  BRANCH (via  teleconference),                                                                    
spoke  in  "enthusiastic"  support of  the  legislation.  He                                                                    
believed  the  bill  provided  a  valuable  tool  for  crime                                                                    
victims to attain  the return of their  property held during                                                                    
the course of criminal  prosecution. He highlighted positive                                                                    
aspects  of  the  legislation.   He  opined  that  the  bill                                                                    
provided a balanced  means for crime victims  to seek return                                                                    
of their  property thereby  mitigating the  costs associated                                                                    
with  the  underlying  criminal  activity.  The  legislation                                                                    
would  allow  crime victims  to  seek  the return  of  their                                                                    
property  in  a  timely  manner  in  accord  with  principle                                                                    
decision making  through the operation of  OVR, the judicial                                                                    
branch of  government, and other criminal  justice agencies.                                                                    
The bill  aligned with Article  1, Section 24 of  the Alaska                                                                    
Constitution mandating  that crime  victims be  treated with                                                                    
dignity, respect,  and fairness  in a  criminal prosecution.                                                                    
He stated  that the  bill was fair  and established  a legal                                                                    
framework    that   would    consider   the    institutional                                                                    
perspectives of the Department of  Law, law enforcement, the                                                                    
judiciary system, and OVR before  property was returned to a                                                                    
crime victim.                                                                                                                   
                                                                                                                                
Mr.  Kester discussed  that  the  bill promoted  restorative                                                                    
justice by putting the victim  in the position they had been                                                                    
in prior to  the crime and allowing them to  move forward in                                                                    
a  positive and  constructive manner.  He communicated  that                                                                    
the bill amplified the victim's  voice regarding the request                                                                    
for  the return  of  their property  and  added clarity  and                                                                    
specificity to the victim's  constitutional rights. The bill                                                                    
required decision  makers in a criminal  prosecution to hear                                                                    
and consider a victim's voice  regarding the return of their                                                                    
property. He believed  that the justice was  improved when a                                                                    
crime  victim's  voice  was  heard  and  considered  in  the                                                                    
criminal justice  process. The bill helped  victims that may                                                                    
lack  the ability  to hire  a  private attorney  or who  was                                                                    
unfamiliar  with the  legal process.  The  bill allowed  the                                                                    
expertise  of OVR  to assist  crime  victims with  attaining                                                                    
their property.  The office was  dedicated to  helping crime                                                                    
victims and sought to collaborate  and cooperate with others                                                                    
throughout the  criminal justice  system. He  discussed that                                                                    
there  was  a  zero  impact  fiscal  note.  He  thanked  the                                                                    
committee for the ability to testify on the legislation.                                                                        
                                                                                                                                
3:01:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze CLOSED  public testimony.  He referred  to                                                                    
the  indeterminate fiscal  note from  Department of  Law and                                                                    
zero fiscal notes  from Department of Public  Safety and the                                                                    
Legislature.                                                                                                                    
                                                                                                                                
Representative  Costello MOVED  to report  CSSB 30(2nd  Jud)                                                                    
out  of committee  with individual  recommendations and  the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Co-Chair Stoltze OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
Representative Doogan wondered whether  the faster return of                                                                    
property  would  impact  a   victim's  insurance  claims  or                                                                    
ability to make a civil suit.                                                                                                   
                                                                                                                                
Representative  Wilson hoped  that  the  quicker receipt  of                                                                    
property  would help  victims  to take  care  of the  issues                                                                    
sooner. She  believed the legislation would  result in fewer                                                                    
court cases because victims would  have direct access to the                                                                    
courts and would receive their property more quickly.                                                                           
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSSB 30(2nd  Jud) was REPORTED  out of committee with  a "do                                                                    
pass"  recommendation and  with  three previously  published                                                                    
fiscal notes  including, one indeterminate note:  FN4 (LAW);                                                                    
and two zero notes: FN3 (DPS) and FN5 (LEG).                                                                                    
                                                                                                                                
3:04:30 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:07:33 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 224                                                                                                            
                                                                                                                                
     "An Act relating to the prohibition of selling or                                                                          
     giving tobacco or a product containing nicotine to a                                                                       
     minor unless prescribed by a licensed physician."                                                                          
                                                                                                                                
3:07:42 PM                                                                                                                    
                                                                                                                                
Co-Chair   Thomas   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for HB  224,  Work  Draft 27-LS0466\X  (Gardner,                                                                    
2/23/12).                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for discussion.                                                                                       
                                                                                                                                
JOE  MICHEL, STAFF,  REPRESENTATIVE BILL  STOLTZE, explained                                                                    
the changes in the CS. Language  on page 1, line 13 had been                                                                    
changed from "under 18 years-of-age"  to "under 19 years-of-                                                                    
age."                                                                                                                           
                                                                                                                                
Co-Chair  Stoltze asked  whether the  change was  consistent                                                                    
with current tobacco statutes.                                                                                                  
                                                                                                                                
Mr. Michel replied in the  affirmative. He communicated that                                                                    
a list had been inserted on page 2, line 5 of the CS:                                                                           
                                                                                                                                
     (A) prescribed by a health care professional;                                                                              
                                                                                                                                
     (B) given to a person by the person's parent or legal                                                                      
          guardian;                                                                                                             
                                                                                                                                
     (C) provided by a state-approved tobacco cessation                                                                         
          program administered by the Department of                                                                             
          Health and Social Services; or                                                                                        
                                                                                                                                
     (D) provided by a pharmacist to a person 18 years of                                                                       
          age or older without a prescription.                                                                                  
                                                                                                                                
Co-Chair  Stoltze  asked  whether an  explanation  would  be                                                                    
provided regarding the disparate age parameters (18 years-                                                                      
of-age and 19 years-of-age)  included in the legislation. He                                                                    
noted that the definition of  the word "is" included on page                                                                    
2, line 5 did not need to be explained.                                                                                         
                                                                                                                                
MARY   JANE  SHOWS,   STAFF,  REPRESENTATIVE   PAUL  SEATON,                                                                    
discussed that it  had come to the  sponsor's attention that                                                                    
there were new products containing nicotine.                                                                                    
                                                                                                                                
Co-Chair Stoltze asked  Ms. Shows to address  the changes in                                                                    
the CS.                                                                                                                         
                                                                                                                                
Ms. Shows  explained that the  language had been  changed to                                                                    
"under 19 years-of-age"  (page 1, line 13)  to allow tobacco                                                                    
cessation programs  to be accessible  to youths who  were 18                                                                    
years-of-age  or older.  Changes in  the bill  addressed the                                                                    
concern  that  tobacco  cessation   programs  had  not  been                                                                    
included in the  list of people who  could provide products.                                                                    
Additionally, 18 year-olds  would be able to  go directly to                                                                    
a pharmacist  for a  nicotine patch in  order to  quit using                                                                    
tobacco.                                                                                                                        
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Work Draft 27-LS0466\X was ADOPTED.                                                                          
                                                                                                                                
3:12:11 PM                                                                                                                    
                                                                                                                                
Representative  Gara asked  whether products  provided by  a                                                                    
pharmacist to a  person 18 years-of-age or  older would only                                                                    
be  used to  help  the individual  quit  smoking. Ms.  Shows                                                                    
replied  in the  affirmative. She  explained that  items (1)                                                                    
and (2) in  the bill referenced products that  could be used                                                                    
under the program that were for cessation only.                                                                                 
                                                                                                                                
Representative Gara  wondered about the necessity  of the 18                                                                    
years-of-age or older provision.  He referenced youths under                                                                    
the age of 18 that wanted to quit smoking.                                                                                      
                                                                                                                                
Ms. Shows replied that Andrew  Harrington with Department of                                                                    
Law  had cited  concern that  the prior  bill version  would                                                                    
prohibit 18 year olds from  receiving the cessation products                                                                    
from a pharmacy. The language  had been changed to under 19-                                                                    
years-of-age  to  ensure  that   18  year  olds  would  have                                                                    
accessibility to the products;  individuals under the age of                                                                    
18 could receive the products from their parents.                                                                               
                                                                                                                                
Representative Gara wondered whether  17 year olds could get                                                                    
a pharmacist  prescription to help  them quit  nicotine. Ms.                                                                    
Shows  replied in  the  negative;  cessation programs  would                                                                    
only  provide literature  to youths  under 18  years-of-age.                                                                    
She expounded that the youth's  parents or a physician could                                                                    
access and provide the product to the youth.                                                                                    
                                                                                                                                
3:15:47 PM                                                                                                                    
                                                                                                                                
Vice-chair Fairclough wondered whether  there were any other                                                                    
products containing  nicotine that  would not  be regulated.                                                                    
She  referenced  caffeinated  energy  drinks.  She  wondered                                                                    
whether research  had been done  on other products  that may                                                                    
contain nicotine and on concentration levels.                                                                                   
                                                                                                                                
Ms. Shows  replied that  the issue had  been brought  to the                                                                    
sponsor's  attention because  of  new nicotine  dissolvables                                                                    
that were  not regulated by the  Federal Drug Administration                                                                    
(FDA). The  products were  currently being  test-marketed in                                                                    
four  or  five  states  and included  nicotine  hand  wipes,                                                                    
lozenges,  water,  tooth picks,  and  orbs.  The bill  would                                                                    
prohibit minors  from purchasing the new  products coming to                                                                    
the market.                                                                                                                     
                                                                                                                                
Vice-chair  Fairclough wondered  whether  research had  been                                                                    
done to determine if other  products contained nicotine. Ms.                                                                    
Shows  replied  that  she could  conduct  the  research  and                                                                    
follow  up  with  the information.  She  detailed  that  the                                                                    
research  had been  limited to  the products  that would  be                                                                    
marketed as "non-cessation."                                                                                                    
                                                                                                                                
Co-Chair  Stoltze asked  how the  sponsor  had obtained  the                                                                    
list  of  products  that  Ms.  Shows  mentioned.  Ms.  Shows                                                                    
replied that a  Virginia youth action group  had compiled an                                                                    
informative packet that had included the products.                                                                              
                                                                                                                                
Co-Chair   Stoltze  wondered   whether  the   products  were                                                                    
currently available.  Ms. Shows responded that  the products                                                                    
were currently in the test  marketing phase in Ohio, Oregon,                                                                    
Indiana, Colorado, and North Carolina.                                                                                          
                                                                                                                                
Representative Costello asked about  a $300 fine included in                                                                    
the  bill and  wondered  whether there  had been  discussion                                                                    
around increasing the fine in order to act as a deterrent.                                                                      
                                                                                                                                
Ms. Shows answered that there  had been discussion of having                                                                    
the  fine mirror  a  fine  related to  the  sale of  tobacco                                                                    
products; however, it was determined  that the specific fine                                                                    
would  make  it  onerous for  businesses  selling  cessation                                                                    
products and would create a  statutory problem. To avoid the                                                                    
difficulty, the fine had been limited to $300.                                                                                  
                                                                                                                                
3:19:55 PM                                                                                                                    
                                                                                                                                
Representative Gara clarified that  the language included in                                                                    
the bill stated that the fine  was "not less than $300." Ms.                                                                    
Shows agreed.                                                                                                                   
                                                                                                                                
Co-Chair Stoltze referred to the zero fiscal notes.                                                                             
                                                                                                                                
Representative  Gara asked  whether the  sale or  gifting of                                                                    
nicotine products to a minor was a misdemeanor or a felony.                                                                     
                                                                                                                                
ANDREW   HARRINGTON,   ATTORNEY,  COMMERCIAL/FAIR   BUSINESS                                                                    
SECTION,  DEPARTMENT OF  LAW, (via  teleconference), replied                                                                    
that  the offence  was a  violation  and did  not reach  the                                                                    
misdemeanor level.                                                                                                              
                                                                                                                                
Representative Gara  asked for  verification that  the store                                                                    
would be committing a violation and not a crime.                                                                                
                                                                                                                                
Mr.  Harrington  responded  that  the  individual  clerk  or                                                                    
employee  making  the  sale would  be  responsible  for  the                                                                    
violation if they acted negligently.  He detailed that under                                                                    
the parallel tobacco sale statute  (AS 11.76.100) there were                                                                    
sanctions that could be imposed on  the store if there was a                                                                    
negligent sale of tobacco to  a minor; there was no parallel                                                                    
provision for  the sale of  other nicotine  products because                                                                    
there was no endorsement required on the business license.                                                                      
                                                                                                                                
Representative  Gara pointed  to the  language related  to a                                                                    
fine of not less than $300.  He wondered whether there was a                                                                    
cap on  the maximum  fine. Mr.  Harrington replied  that the                                                                    
maximum fine was $500.                                                                                                          
                                                                                                                                
Representative  Gara queried  whether the  legislature could                                                                    
increase the cap  on the fine. Mr.  Harrington answered that                                                                    
there was no requirement for  a public defender, jury trial,                                                                    
or  other  procedure  protections  that  would  accompany  a                                                                    
misdemeanor or  felony. The dividing  line for how  high the                                                                    
fine might  before the Alaska Supreme  Court determined that                                                                    
criminal  protections  would  apply   was  not  defined.  He                                                                    
furthered  that it  may be  constitutionally permissible  to                                                                    
increase the $500 maximum, but  at some point the fine would                                                                    
hit the constitutional ceiling.                                                                                                 
                                                                                                                                
3:25:03 PM                                                                                                                    
                                                                                                                                
Representative Doogan  asked whether the  determination that                                                                    
an offense was  a minor violation was related  to the amount                                                                    
of money that  could be levied against it or  whether it was                                                                    
a separate function that was not connected to the amount.                                                                       
                                                                                                                                
Mr. Harrington  replied that  both items  played a  part. He                                                                    
explained  that  criminal  statutes classified  offenses  as                                                                    
felonies,  misdemeanors, or  minor offences.  Minor offenses                                                                    
included  violations and  the maximum  fine was  $500; there                                                                    
was  no  jail  time  available  for  a  minor  offense.  The                                                                    
legislature could  amend the statute  to change  the maximum                                                                    
fine, but at  some point due process  protections would kick                                                                    
in, which  would change the  prosecution procedures  and the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
Representative Doogan surmised that  the crime would have to                                                                    
be  reclassified if  the  fine  was increased  substantially                                                                    
above $500.                                                                                                                     
                                                                                                                                
Mr. Harrington replied that when  the amount got high enough                                                                    
the crime would have to  be reclassified. He did not believe                                                                    
there would  be any problem  increasing the fine to  $400 or                                                                    
$500, but  a conforming  amendment may  be necessary  if the                                                                    
amount was higher.  He furthered that the crime  may need to                                                                    
be  increased to  a misdemeanor  in order  for criminal  due                                                                    
process protections  to kick  in if  the fine  was increased                                                                    
substantially (e.g. to $1000 or $2000).                                                                                         
                                                                                                                                
Co-Chair Stoltze  noted that under  the scenario  the fiscal                                                                    
notes  would  change  substantially. He  asked  the  sponsor                                                                    
about the decision to set the minimum fine at $300.                                                                             
                                                                                                                                
REPRESENTATIVE   PAUL   SEATON,  SPONSOR,   explained   that                                                                    
currently  it  was not  illegal  to  distribute nicotine  to                                                                    
minors;  therefore, stores  were  not required  to keep  the                                                                    
products  behind the  counter and  were not  prohibited from                                                                    
selling the products  to youths. The bill  would help ensure                                                                    
that  stores  would  be   responsible  for  controlling  any                                                                    
nicotine  products  they  sold.  He relayed  that  the  bill                                                                    
represented  a  preemptive  move   to  prevent  minors  from                                                                    
becoming addicted to nicotine;  the $300 minimum fine helped                                                                    
to act as  a deterrent without getting into  the due process                                                                    
issue.                                                                                                                          
                                                                                                                                
3:29:48 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  wondered whether the $300  fine would                                                                    
apply  towards   the  individual   and  the   business  that                                                                    
committed the crime.                                                                                                            
                                                                                                                                
Representative  Seaton  replied  that   the  fine  would  be                                                                    
charged to  the individual  who sold  the product.  The fine                                                                    
was not a business tax and  was not attached to the business                                                                    
license to avoid challenges  from occupational licensing and                                                                    
to business  licenses. He felt  that the bill  represented a                                                                    
clean  and  financially  reasonable  way for  the  state  to                                                                    
accomplish its goals without trying  to increase the offense                                                                    
to  a  misdemeanor or  felony,  which  would result  in  due                                                                    
process arguments.                                                                                                              
                                                                                                                                
Representative Edgmon  thought that the legal  definition of                                                                    
the word "person" expanded beyond a single individual.                                                                          
                                                                                                                                
Mr.  Harrington   replied  that  the  term   "person"  could                                                                    
encompass  a  business;  however,   there  was  a  practical                                                                    
limitation, given  that in circumstances in  which a product                                                                    
was negligently  sold it  would be  relatively easy  to show                                                                    
that  an  individual had  been  negligent  because they  had                                                                    
failed  to  check  an  ID.  He  furthered  that  it  may  be                                                                    
difficult to  show that a  business was negligent if  it had                                                                    
policies and procedures in place  that required employees to                                                                    
check for  ID. He agreed  that in some circumstances  a case                                                                    
could be made  against a business if it  had not implemented                                                                    
procedures specifying  that the  sale of nicotine  to minors                                                                    
was illegal. He noted that the occurrence was unlikely.                                                                         
                                                                                                                                
Representative  Gara  stated  that   the  bill  provided  no                                                                    
incentive for  businesses to  train their  employees because                                                                    
the  employee held  all of  the responsibility.  He wondered                                                                    
how the sponsor would feel  about adding language that would                                                                    
fine a business  if they negligently allowed  an employee to                                                                    
sell nicotine products to minors.                                                                                               
                                                                                                                                
Representative   Seaton  answered   that   there  had   been                                                                    
significant concern  that things became very  difficult if a                                                                    
violation was attached to the  business license. He believed                                                                    
that if businesses knew that  the sale of nicotine to minors                                                                    
was  illegal  that  they  would have  to  take  measures  to                                                                    
prevent  minors from  having access  to  the products  (e.g.                                                                    
placing products behind the counter).  He opined that rather                                                                    
than trying to include everything,  the goal could be met by                                                                    
making the sale of the products illegal.                                                                                        
                                                                                                                                
Representative Gara understood and  agreed with the concern;                                                                    
however, he was  concerned that all of  the liability rested                                                                    
on employees.                                                                                                                   
                                                                                                                                
3:36:10 PM                                                                                                                    
                                                                                                                                
Representative  Seaton replied  that the  products were  not                                                                    
being test-marketed  in Alaska.  He believed  that marketers                                                                    
would have a  difficult time getting businesses  to sell the                                                                    
products in  the state if  the distribution of  the products                                                                    
to  the target  audience  was illegal.  He  opined that  the                                                                    
direction of  the legislation was  a matter  of perspective.                                                                    
He  had found  that  concern  about attaching  a  fine to  a                                                                    
business license  was great enough  that it would  have been                                                                    
difficult  to  garner  enough  support   for  the  bill.  He                                                                    
believed it was  better to have a bill in  place that showed                                                                    
businesses that  there would be  a $300 fine to  an employee                                                                    
that  sold the  products to  minors. He  hoped the  products                                                                    
would never come to Alaska.                                                                                                     
                                                                                                                                
Co-Chair  Stoltze  did  not  want  to  make  the  bill  more                                                                    
complicated. He  discussed that the  bill was  preemptive in                                                                    
nature  and  was  a   simple  approach  towards  eliminating                                                                    
products that hopefully never made it to Alaska.                                                                                
                                                                                                                                
Representative Doogan  clarified that his  questions related                                                                    
to the amount of the fine had been informational.                                                                               
                                                                                                                                
Co-Chair  Stoltze was  happy the  questions  had been  asked                                                                    
given that the information was informative.                                                                                     
                                                                                                                                
Co-Chair Stoltze CLOSED public  testimony. He pointed to two                                                                    
zero  fiscal  notes  from  the Department  of  Law  and  the                                                                    
Department of Health and Social Services.                                                                                       
                                                                                                                                
Representative  Gara would  follow  up with  the sponsor  to                                                                    
discuss his concerns  that there should be  an incentive for                                                                    
businesses to provide training to employees.                                                                                    
                                                                                                                                
Vice-chair  Fairclough  discussed that  Anchorage  currently                                                                    
provided compliance; businesses had  been shut down based on                                                                    
the  sale  of  cigarettes   to  minors.  She  believed  that                                                                    
procedures  were  currently  in  place and  the  bill  would                                                                    
dovetail on the training  requirements that were included in                                                                    
current  law.   She  opined  that   the  bill  was   a  good                                                                    
preventative strike  and hoped  that the products  would not                                                                    
make it to Alaska for sale.                                                                                                     
                                                                                                                                
Co-Chair Stoltze shared  that he was proud of  a business in                                                                    
Chugiak  (Alice Mae's)  for electing  to limit  the sale  of                                                                    
tobacco products to individuals over the age of 21.                                                                             
                                                                                                                                
Vice-chair Fairclough  MOVED to report CSHB  224(FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  224(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with one  zero fiscal note from the                                                                    
Department  of  Health  and Social  Services  and  one  zero                                                                    
fiscal note from the Department of Law.                                                                                         
                                                                                                                                
3:42:20 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
3:43:25 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 302                                                                                                            
                                                                                                                                
     "An Act repealing certain audit requirements for                                                                           
     entities receiving contributions from permanent fund                                                                       
     dividends."                                                                                                                
                                                                                                                                
3:43:43 PM                                                                                                                    
                                                                                                                                
Co-Chair   Thomas   MOVED   to  ADOPT   proposed   committee                                                                    
substitute  for  HB  302, Work  Draft  27-LS1264\I  (Kirsch,                                                                    
2/23/12).                                                                                                                       
                                                                                                                                
Co-Chair Stoltze OBJECTED for purpose of discussion.                                                                            
                                                                                                                                
KACI  SCHROEDER-HOTCH,  STAFF, REPRESENTATIVE  BILL  THOMAS,                                                                    
explained that the CS added new  Sections 1 and 2. Section 1                                                                    
clarified that the University of  Alaska was required to pay                                                                    
a $250 application fee to  the Pick, Click, Give program for                                                                    
every  program  or  campus that  was  submitted.  Section  2                                                                    
outlined that  the university should  apply for  the program                                                                    
in a manner described by the department.                                                                                        
                                                                                                                                
Co-Chair Thomas  noted that the  university had found  a way                                                                    
to not  pay the  application fee for  the Pick,  Click, Give                                                                    
program in  the past.  The bill  worked to  treat applicants                                                                    
equally and required all applicants  to pay the $250 fee. He                                                                    
discussed that there was a  cost associated with running the                                                                    
program.                                                                                                                        
                                                                                                                                
Representative  Doogan asked  for  more detail  on the  term                                                                    
"university program."                                                                                                           
                                                                                                                                
Co-Chair  Thomas noted  that there  were different  programs                                                                    
within the university system.                                                                                                   
                                                                                                                                
Co-Chair Stoltze  suspected that there were  elements of the                                                                    
university   that   had   more  fundraising   success   than                                                                    
individual campuses.                                                                                                            
                                                                                                                                
Representative Doogan  wondered how  much it would  cost the                                                                    
university if the fee was applied program by program.                                                                           
                                                                                                                                
Co-Chair  Thomas  explained  that  non-profit  organizations                                                                    
included in the  program all paid the fee  to the Department                                                                    
of Revenue (DOR) to be  listed as a recipient. He reiterated                                                                    
that the goal was to treat all applicants equally.                                                                              
                                                                                                                                
Co-Chair   Stoltze  discussed   the   minimum  barrier   fee                                                                    
requirement  that had  been  set  at $250  to  show that  an                                                                    
entity  was  a   serious  fund-raiser.  Ms.  Schroeder-Hotch                                                                    
responded in the affirmative.                                                                                                   
                                                                                                                                
Vice-chair   Fairclough   noted    her   support   for   the                                                                    
legislation. She discussed that  the university was included                                                                    
in the drop down list  in multiple areas. She clarified that                                                                    
the university would be required  to pay $250 to receive the                                                                    
benefit of  each of its  advertising opportunities.  She had                                                                    
received multiple  solicitations from the university  in her                                                                    
legislative  and  private  email  inboxes;  somehow  it  had                                                                    
figured  out how  to avoid  paying  the $250  fee that  non-                                                                    
profits were required to pay to the program.                                                                                    
                                                                                                                                
3:48:43 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze WITHDREW  his  OBJECTION.  There being  NO                                                                    
further OBJECTION, Work Draft 27-LS126\I was ADOPTED.                                                                           
                                                                                                                                
REPRESENTATIVE  PAUL  SEATON,  SPONSOR, discussed  that  the                                                                    
bill had been introduced because  he had heard from a number                                                                    
of  small non-profits  including the  Seward Senior  Center.                                                                    
The center had a $260,000  budget; it had been participating                                                                    
[in the  Pick, Click,  Give program],  but audit  costs were                                                                    
$15,000  and it  had only  received approximately  $8,000 in                                                                    
contributions.  The  question  that arose  was  whether  the                                                                    
audit was necessary  for individuals to donate  to a charity                                                                    
that was  required to be  a 501(c)(3). The  program required                                                                    
entities to maintain their  501(c)(3) status, which involved                                                                    
the  completion  of  the lengthy  Internal  Revenue  Service                                                                    
(IRS) 990 form.  There was a federal  audit requirement that                                                                    
kicked in  if the entity  received over $500,000  in federal                                                                    
funds  to   distribute.  There  were   multiple  non-profits                                                                    
throughout the  state (Juneau  Arts and  Humanities Council,                                                                    
Seward  Senior Center,  Ketchikan  library,  etc.) that  had                                                                    
difficulty  with the  $15,000 audit  requirement and  people                                                                    
had challenges donating  to the entities when  they were not                                                                    
included  as non-profits  on the  Pick, Click,  Give program                                                                    
lists.  There had  been a  common misperception  that if  an                                                                    
entity did  not appear on  the program  list that it  was no                                                                    
longer a non-profit organization.                                                                                               
                                                                                                                                
Representative Seaton  explained that  the bill  proposed to                                                                    
delete  the  audit  requirement  for  entities  with  annual                                                                    
budgets  above  $250,000  in order  to  provide  equity  for                                                                    
entities  included in  the program  and  to avoid  confusion                                                                    
about an  organization's non-profit  status. He  opined that                                                                    
that  the   mandatory  annual  IRS  990   form  sufficiently                                                                    
satisfied all the necessary requirements.                                                                                       
                                                                                                                                
3:52:02 PM                                                                                                                    
                                                                                                                                
JORDAN   MARSHALL,   SPECIAL  PROJECTS   MANAGER,   RASMUSON                                                                    
FOUNDATION,  ANCHORAGE  (via  teleconference),  thanked  the                                                                    
committee for its support of  the Pick, Click, Give program.                                                                    
He   reported  that   presently  $1.59   million  had   been                                                                    
contributed to  the program  since January  1, 2012  by more                                                                    
than  17,000  Alaskans,  which was  higher  than  the  prior                                                                    
year's total; the  program was on track to  reach $2 million                                                                    
in donations  to the  400-plus organizations  and university                                                                    
campuses.                                                                                                                       
                                                                                                                                
Mr.  Marshall  highlighted  detail related  to  the  program                                                                    
filing    fee   requirement.    Every   organization    that                                                                    
participated paid  an annual filing  fee, which  covered the                                                                    
cost  of  basic  administration  of  the  program  including                                                                    
vetting  the   eligibility  of  applications,   sending  out                                                                    
checks,  managing the  online donation  form, and  providing                                                                    
technical assistance for non-profits  wishing to enroll. The                                                                    
campuses  of   the  University  of  Alaska   were  the  only                                                                    
organization entities  not paying the fee.  The CS clarified                                                                    
that  all  names on  the  program  list for  permanent  fund                                                                    
dividend charitable  contributions were required to  pay the                                                                    
filing   fee  to   help  pay   the  costs   associated  with                                                                    
administering the program.                                                                                                      
                                                                                                                                
Mr.  Marshall  clarified  that   the  CS  would  allow  each                                                                    
individual campus program to elect  to pay the filing fee to                                                                    
be listed  separately as a  potential beneficiary.  He added                                                                    
that  it  would  be  a non-profit's  prerogative  to  decide                                                                    
whether  to  submit  an application  for  inclusion  in  the                                                                    
program.                                                                                                                        
                                                                                                                                
Vice-chair Fairclough  thanked Mr. Marshall for  his work on                                                                    
the program.  She wondered why  other non-profits  might not                                                                    
follow the example of the  university and submit programs in                                                                    
$250 increments  in order  to be  listed more  frequently on                                                                    
the program list.                                                                                                               
                                                                                                                                
Mr.  Marshall  replied  that   each  organization  was  only                                                                    
entered into  the database  once, but  they could  appear in                                                                    
several different  categories depending  on the  search that                                                                    
an  individual   conducted  when   making  a   donation.  He                                                                    
expounded that  every organization only had  one record, but                                                                    
it  could  be found  in  numerous  ways depending  on  which                                                                    
search characteristics  were applied. For example,  a person                                                                    
searching for  organizations based  in Fairbanks  would find                                                                    
each  of the  University  of Alaska  Fairbanks campuses  and                                                                    
rural  campuses listed;  the campuses  would also  appear if                                                                    
the search was related to educational organizations.                                                                            
                                                                                                                                
3:57:44 PM                                                                                                                    
                                                                                                                                
Vice-chair  Fairclough   referred  to  the  Forget   Me  Not                                                                    
children  program  that  was  housed  within  the  Anchorage                                                                    
Hospice  program.  She believed  she  had  seen the  various                                                                    
campuses  listed  differently  in the  drop-down  menu.  She                                                                    
thought  the university  was represented  in more  than just                                                                    
one form.  She wondered whether  she needed to  direct other                                                                    
non-profits  to  start  entering specific  programs  to  the                                                                    
list.                                                                                                                           
                                                                                                                                
Mr. Marshall responded that each  of the university campuses                                                                    
were listed separately. Currently  none of the programs were                                                                    
listed  in  the Pick,  Click,  Give  program. There  were  a                                                                    
number of  non-profits that listed  a particular  program as                                                                    
their common  name; each  organization had  an option  to be                                                                    
listed as their official name  or a common name (e.g. Anchor                                                                    
Arms  conducted   business  as  Safe  Harbor   Inn  and  was                                                                    
typically listed as Safe Harbor).                                                                                               
                                                                                                                                
Vice-chair Fairclough  had heard several years  earlier that                                                                    
a $500 filing fee came  closer to covering the program costs                                                                    
than the current  $250 fee. She wondered whether  a $500 fee                                                                    
would be more appropriate.                                                                                                      
                                                                                                                                
Mr.  Marshall replied  that  when the  filing  fee had  been                                                                    
reset there had been a couple  of years of data available to                                                                    
establish  the  program's  basic administration  costs.  The                                                                    
$250 fee  was a  very good guess  so that  each organization                                                                    
was  making that  much  or more  through  the program  while                                                                    
paying for  program costs.  He relayed that  to the  best of                                                                    
his  knowledge  $250 had  been  proved  to be  an  excellent                                                                    
number to enable DOR to carry out its work.                                                                                     
                                                                                                                                
4:02:16 PM                                                                                                                    
                                                                                                                                
MIKE WALSH,  VICE PRESIDENT,  FORAKER GROUP,  FAIRBANKS (via                                                                    
teleconference), thanked  the committee for  the opportunity                                                                    
to speak  on the  legislation. He felt  it was  important to                                                                    
discuss the  purpose of the  program audit  requirement, but                                                                    
the group did  not have a position on the  amount or removal                                                                    
of the program audit requirement.  He was very happy to hear                                                                    
the update on the progress  of the program. The initial idea                                                                    
of the legislation  was to help Alaskans  decide where their                                                                    
charitable dollars  should be  best spent.  Another critical                                                                    
piece of the  bill was related to talking  about the ability                                                                    
of a  non-profit to  meet the  IRS requirements  of mission,                                                                    
fiduciary   responsibility,   legal  responsibility,   etc.;                                                                    
however, there  had been  no way  to add  an extra  layer of                                                                    
confidence for  a donor. He  furthered that the  idea behind                                                                    
the  audit requirement  was that  it was  an added  level of                                                                    
scrutiny,  which  allowed  for  an outside  opinion  on  the                                                                    
finances and  general management principles of  a non-profit                                                                    
organization.                                                                                                                   
                                                                                                                                
Dr.  Walsh   discussed  that  the   reason  for   the  audit                                                                    
requirement  was because  donors wanted  to have  confidence                                                                    
that  an organization  would spend  their  funds well  (i.e.                                                                    
being good  stewards of the  dollars and spending them  in a                                                                    
way that made the most of  the money). He believed the audit                                                                    
was also a  very valuable tool for  organizations whether or                                                                    
not they took part in the  Pick, Click, Give program; it was                                                                    
valuable  internally  to   help  organizations  track  their                                                                    
management and financial practices and  to meet the needs of                                                                    
external   funders  who   were   interested  in   management                                                                    
practices.                                                                                                                      
                                                                                                                                
4:07:31 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze CLOSED public  testimony. He referenced the                                                                    
zero fiscal note.                                                                                                               
                                                                                                                                
Co-Chair  Thomas  MOVED  to  report  CSHB  302(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Co-Chair Stoltze  OBJECTED for discussion. He  asked whether                                                                    
there were any amendments.                                                                                                      
                                                                                                                                
Vice-chair  Fairclough mentioned  she  would  work with  the                                                                    
sponsor  to   determine  whether  one  program   could  have                                                                    
multiple donation  streams. She  understood that  a donation                                                                    
to the  university as a  whole could be used  throughout the                                                                    
university;  however, a  donation to  a specific  university                                                                    
program could only  be used for the  particular program. She                                                                    
believed  other  non-profits  should be  provided  the  same                                                                    
opportunity if  the university was allowed  to list multiple                                                                    
programs in the Pick, Click, Give list.                                                                                         
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSHB  302(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with one  new zero fiscal note from                                                                    
the Department of Revenue.                                                                                                      
                                                                                                                                
Co-Chair Stoltze  discussed the  schedule for  the following                                                                    
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
4:11:40 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 4:11 PM.                                                                                           

Document Name Date/Time Subjects
AFN Support Resolution.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 Sponsor Statement.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 SHELDON JACKSON v. State.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 SCOTUS Voucher.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 Rethinking schools.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 DC school article.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HB 250 Sponsor Statement.pdf HFIN 2/27/2012 1:30:00 PM
HB 250
HB 250 -Energy Policy.pdf HFIN 2/27/2012 1:30:00 PM
HB 250
HB 250 - Supporting Letters.pdf HFIN 2/27/2012 1:30:00 PM
HB 250
HJR016-UPDATED NEW-OOG-DOE-2-27-12.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HB302 CS WORKDRAFT 27-LS126-I 2.23.12.pdf HFIN 2/27/2012 1:30:00 PM
HB 302
HJR 16 Response Memo to Rep Garapdf.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 AK Const Conv pages 1512 to 1525.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 Constit. Convention Proceedings pp. 1525-1529.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR16 Zelman v Simmons-Harrispdf.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR16 Sheldon Jackson College v State of Alaskapdf.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR16 Matthews v Quintonpdf.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR16-Alaska-K-12---School-Choice-Survey.pdf.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16
HJR 16 Additional Testimony.pdf HFIN 2/27/2012 1:30:00 PM
HJR 16