Legislature(2013 - 2014)HOUSE FINANCE 519

02/17/2014 01:30 PM FINANCE

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Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 17, 2014                                                                                          
                         1:37 p.m.                                                                                              
1:37:10 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Stoltze called the  House Finance Committee meeting                                                                    
to order at 1:37 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mia Costello                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative David Guttenberg                                                                                                 
Representative Lindsey Holmes                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Steve Thompson                                                                                                   
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Peggy Ann  McConochie, Self, Juneau; Don  Habeger, Director,                                                                    
Division   of   Corporations,  Business   and   Professional                                                                    
Licensing,  Department of  Commerce, Community  and Economic                                                                    
Development;  Konrad  Jackson,  Staff,  Representative  Kurt                                                                    
Olson;  Jo Ellen  Hanrahan, Deputy  Commissioner, Department                                                                    
of Commerce, Community and Economic Development.                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Patricia Senner, Alaska  Nurses Association, Anchorage; Dale                                                                    
Nelson, Alaska Profession Design Council, Anchorage.                                                                            
CSHB 32 (L&C) LINES OF BUSINESS ON BUSINESS LICENSE                                                                             
          CSHB 32 (L&C) was HEARD and HELD in committee for                                                                     
          further consideration.                                                                                                
HB 187    OCCUPATIONAL LICENSING FEES                                                                                           
          HB 187 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HOUSE BILL NO. 32                                                                                                             
     "An  Act providing  for the  issuance  of one  business                                                                    
     license for  multiple lines of business;  and providing                                                                    
     for  reissuance  of a  business  license  to correct  a                                                                    
     mistake on the license."                                                                                                   
1:37:33 PM                                                                                                                    
Vice-Chair Neuman  explained that  version Y  of the  CS was                                                                    
before the committee for discussion.                                                                                            
Representative  Costello  introduced  her  legislation.  She                                                                    
noted that the bill would  allow individuals who apply for a                                                                    
business license  to list several lines  of business through                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development.  The  current  practice   dictated  that  if  a                                                                    
license  fell  into  several  categories,  several  business                                                                    
licenses  were  required.  The CS  proposed  a  common-sense                                                                    
approach to licensing by allowing  applicants to receive one                                                                    
business   license   while   listing   the   activities   or                                                                    
Representative  Costello  mentioned  another aspect  of  the                                                                    
bill allowing a  change to an application to  be made during                                                                    
a 30 day time period.                                                                                                           
Co-Chair  Stoltze  stated  that   most  questions  would  be                                                                    
directed to the fiscal notes. He OPENED public testimony.                                                                       
1:40:59 PM                                                                                                                    
PEGGY ANN  MCCONOCHIE, SELF, JUNEAU testified  in support of                                                                    
the bill.  She stated that  she obtained a  business license                                                                    
as a real estate broker and  was required to have a separate                                                                    
business license  for real estate education.  She encouraged                                                                    
the  committee  to  pass  the  legislation,  as  it  allowed                                                                    
business owners to obtain reasonable fees.                                                                                      
Co-Chair  Stoltze asked  if Ms.  McConochie represented  the                                                                    
National Federation of Independent Business (NFIB).                                                                             
Ms. McConochie  replied that she  was a member of  NFIB, but                                                                    
spoke for herself in favor of the legislation.                                                                                  
Co-Chair Stoltze CLOSED public  testimony. He requested that                                                                    
Don  Habeger testify  with special  attention to  the bill's                                                                    
fiscal notes.                                                                                                                   
1:42:33 PM                                                                                                                    
DON  HABEGER, DIRECTOR,  DIVISION OF  CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT testified on  section 3,                                                                    
which opened  a change for  the business license  within the                                                                    
first  30 days  after  the  issuance. Occasionally  business                                                                    
partners failed  to agree about requested  changes. He noted                                                                    
the  potential that  requests in  those situations  might be                                                                    
submitted repeatedly throughout the 30-day period.                                                                              
1:45:00 PM                                                                                                                    
Representative Wilson asked if the  name of the company must                                                                    
be the same for both activities.  She asked if a new license                                                                    
would  be indicated  if she  wanted to  change the  business                                                                    
Mr. Habeger replied  that if a business  owner had identical                                                                    
owners and  name, then the legislation  allowed for multiple                                                                    
lines  of business.  He added  that business  partners could                                                                    
apply jointly.                                                                                                                  
1:47:01 PM                                                                                                                    
Representative  Wilson asked  about  the  potential for  two                                                                    
different businesses  with different names. She  wondered if                                                                    
she would have two different business licenses.                                                                                 
Mr. Habeger concurred.                                                                                                          
Vice-Chair  Neuman  recalled  that a  brewery  in  Talkeetna                                                                    
wanted to  open a  restaurant. The  statute stated  that you                                                                    
could not own a brewery and then a restaurant.                                                                                  
Mr. Habeger responded  that if the brewery  wished to change                                                                    
the license,  there were  licensing requirements  from other                                                                    
agencies and organizations  unrelated to business licensing.                                                                    
He noted  that the  professional licensing  statute required                                                                    
that   a   professional   license  be   secured   prior   to                                                                    
administration of another  business license. The legislation                                                                    
addressed those  businesses with  the same  name, interested                                                                    
in multiple lines of business.                                                                                                  
1:49:31 PM                                                                                                                    
Co-Chair Stoltze  joked that the  regulation of  the alcohol                                                                    
industry would  remain as complicated  and convoluted  as it                                                                    
always had been.                                                                                                                
Mr. Habeger laughed.                                                                                                            
1:49:51 PM                                                                                                                    
Co-Chair  Austerman asked  if  the goal  was  to help  small                                                                    
businesses in  Alaska. He asked  if the  legislation defined                                                                    
small business.                                                                                                                 
Mr. Habeger responded no.                                                                                                       
Co-Chair  Austerman   provided  an   example  of   a  native                                                                    
corporation   under  the   regional   corporation  and   its                                                                    
subsidiaries  and  business  licenses  could  become  lumped                                                                    
under one name. He asked  how many licenses could be wrapped                                                                    
under one  business name. He expressed  discomfort about the                                                                    
lack of parameters in the bill.                                                                                                 
1:51:28 PM                                                                                                                    
Representative  Costello responded  to Co-Chair  Austerman's                                                                    
second  question. If  business name  remained the  same, the                                                                    
lines of  business would involve approximately  20 different                                                                    
categories. She  deferred the  question about  higher levels                                                                    
of categories to Mr. Habeger.                                                                                                   
Mr. Habeger stated that a  current requirement in regulation                                                                    
was  for   businesses  to   operate  their   activities  and                                                                    
advertise with  their licensed  business names.  He believed                                                                    
that a large organization  might choose to consolidate under                                                                    
the corporate  name, which  would not  be prohibited  by the                                                                    
proposed legislation.                                                                                                           
Co-Chair  Austerman saw  many  businesses advertising  under                                                                    
the Doing Business As (DBA)  category. He discussed the need                                                                    
for legislative parameters.                                                                                                     
1:53:29 PM                                                                                                                    
Representative Munoz  asked if  a professional  and business                                                                    
license could be consolidated.                                                                                                  
Mr.  Habeger  replied  that the  department  had  considered                                                                    
consolidating the  two licensing  fees, but the  state faced                                                                    
an  issue   regarding  the   rewrite  of   the  professional                                                                    
licensing  database.  The  upgrade was  necessary  prior  to                                                                    
matching the professional and business licensing databases.                                                                     
Representative   Munoz   asked   if   an   opportunity   for                                                                    
consolidation  existed  with  the upcoming  rewrite  of  the                                                                    
Mr. Habeger replied yes.                                                                                                        
1:55:07 PM                                                                                                                    
Representative Thompson noticed the  $37,500 drop in revenue                                                                    
resulting from the  legislation. He asked if  an increase in                                                                    
business licenses was projected.                                                                                                
Mr.   Habeger   replied   that   the   department   combined                                                                    
corporations  and  business  license activity.  He  believed                                                                    
that the proposed  changes would bring in  more revenue than                                                                    
Representative  Edgmon  added  that  the  benefit  sometimes                                                                    
outweighed  the cost.  He  stated that  $37  thousand was  a                                                                    
small  price   to  pay  to   allow  conveniences   to  small                                                                    
businesses. He  commented that  the native  corporations and                                                                    
subsidiary  companies were  careful  to set  up a  corporate                                                                    
liability  for the  separate  businesses.  He supposed  that                                                                    
additional licenses would not be indicated.                                                                                     
1:57:23 PM                                                                                                                    
Representative Gara asked about businesses that sold hand-                                                                      
made  items once  a year  at a  craft fair.  He opined  that                                                                    
operating  once  a year  was  not  a "regular  business"  as                                                                    
stated  in the  statute. The  division considered  a onetime                                                                    
event a regular license. He  asked if the division continued                                                                    
to interpret the statute in the same way.                                                                                       
Mr. Habeger  stated no. He agreed  that one time a  year was                                                                    
not considered a regular business.                                                                                              
1:59:33 PM                                                                                                                    
Representative Gara stated  that he liked the  bill. He knew                                                                    
that larger businesses combined  multiple services. He spoke                                                                    
about  the  size  of  a  company. He  wondered  if  a  small                                                                    
business could  potentially be identified  by the  number of                                                                    
Representative Costello  stated that the bill's  fiscal note                                                                    
utilized  data  from  750   business  license  holders.  She                                                                    
thought that  the question might  be better directed  to the                                                                    
company.   She  understood   that   an  elaborate   business                                                                    
structure  or  higher  type license  for  a  corporation  or                                                                    
Limited  Liability Corporation  (LLC)  might  not be  served                                                                    
well by the  legislation. The intent was  to target Alaskans                                                                    
that applied  for a business  license with the  intention of                                                                    
providing two  or more of the  specified service categories.                                                                    
She requested  a response from the  department regarding the                                                                    
750  people   affected  by  the  passage   of  the  proposed                                                                    
2:02:15 PM                                                                                                                    
Co-Chair Stoltze pointed out that  many of the state's craft                                                                    
fairs lasted  longer than one  day. He added  that municipal                                                                    
jurisdictions often established  permitting requirements for                                                                    
such  events. He  wished to  omit  the idea  that the  state                                                                    
would exempt state fair or  the Alaska Federation of Natives                                                                    
(AFN) vendors for their multi-day fairs.                                                                                        
2:03:13 PM                                                                                                                    
Representative  Thompson  asked  if there  was  a  projected                                                                    
reduction in the price of Alaskan business licenses.                                                                            
Mr. Habeger stated  that the business licensing  fee was set                                                                    
in  statute and  regulated by  the legislature.  The current                                                                    
licensing fee  was $50 per  year and a biannual  license for                                                                    
two years was also an option.                                                                                                   
Representative  Thompson  asked   about  vendors  that  sell                                                                    
homemade items out of their cars.                                                                                               
Mr.  Habeger replied  that the  privilege of  doing business                                                                    
required  a  business  license. He  stated  that  additional                                                                    
definitions  defined   business  as   one  that   yielded  a                                                                    
financial  benefit to  the business  person. He  appreciated                                                                    
Co-Chair  Stoltze's comments  regarding  financial gain  for                                                                    
any level of business.                                                                                                          
Representative Wilson  asked about the determination  of 750                                                                    
affected businesses.                                                                                                            
2:05:45 PM                                                                                                                    
Mr.  Habeger replied  that a  business  license had  certain                                                                    
elements required  by statute.  A business was  not required                                                                    
to report  their size to the  department. Duplicate business                                                                    
names  were  researched  in  the  department's  database  to                                                                    
arrive  at  the  number.  The  line  of  business  was  also                                                                    
considered   in  the   approximate   determination  of   750                                                                    
businesses  affected. He  clarified that  the figure  was an                                                                    
2:07:13 PM                                                                                                                    
Co-Chair Austerman  pointed out  the change of  wording from                                                                    
line  of   businesses  to  trade,  service,   protection  or                                                                    
activities.   He  asked   if  the   words  trade,   service,                                                                    
protection and activities were defined in statute.                                                                              
Mr. Habeger replied yes.                                                                                                        
Co-Chair  Austerman   asked  if   the  definitions   were  a                                                                    
component  of  the  research leading  to  the  750  affected                                                                    
business licenses.                                                                                                              
Mr.  Habeger  replied  that   the  department  searched  the                                                                    
database  and  the  terms   trade,  service,  profession  or                                                                    
activity provided a definition in statute.                                                                                      
Co-Chair  Austerman  stated  that   he  would  look  up  the                                                                    
Vice-Chair Neuman  asked if the department  offered fines or                                                                    
penalties  for Alaskans  doing business  without a  business                                                                    
Mr.  Habeger  replied   that  a  fine  limit   of  $300  was                                                                    
established in  statute for a  business operating  without a                                                                    
business  license.   He  noted  that  an   investigation  to                                                                    
determine  the  standard  was expensive  for  the  state.  A                                                                    
letter citing  the statute was delivered  to business owners                                                                    
alerting them of the licensing requirement.                                                                                     
Vice-Chair Neuman  stated that  the combined  licenses might                                                                    
prove advantageous to the department.                                                                                           
2:10:08 PM                                                                                                                    
Representative  Edgmon  asked  about potential  federal  tax                                                                    
complications  that might  arise from  the establishment  of                                                                    
multiple businesses.                                                                                                            
Mr.  Habeger  stated  that  he was  not  familiar  with  the                                                                    
federal tax statutes.                                                                                                           
Co-Chair Stoltze stated that  each individual business could                                                                    
decide how to address their tax issues.                                                                                         
Representative  Edgmon noted  his  support of  the bill.  He                                                                    
offered to research the tax issue.                                                                                              
Co-Chair Stoltze  recalled an amendment  he submitted  for a                                                                    
business license fee reduction  for seniors during his first                                                                    
legislative  term.  He  opined  that the  bill  would  prove                                                                    
advantageous  to  seniors.  He  appreciated  the  industrial                                                                    
nature of Alaskans.                                                                                                             
2:13:55 PM                                                                                                                    
Representative  Gara  revisited  the   idea  of  a  business                                                                    
license exemption  for those people  doing a  minimal amount                                                                    
of business.                                                                                                                    
Mr.   Habeger   replied   that  he   would   get   back   to                                                                    
Representative Gara with an answer.                                                                                             
Co-Chair Stoltze asked if  the department refunded licensing                                                                    
fees  for  businesses  that  did  not  fit  the  established                                                                    
Mr.  Habeger  replied  stated that  refunds  were  sometimes                                                                    
Co-Chair Stoltze shared a story.                                                                                                
Mr.  Habeger replied  that businesses  were offered  refunds                                                                    
for business and professional licensing when required.                                                                          
Co-Chair  Stoltze   asked  about  a  business   license  for                                                                    
solicitous or  illegal activity.  He recalled that  that the                                                                    
Division  of  Motor  Vehicles  did  not  allow  the  use  of                                                                    
profanity when creating a personalized license plate.                                                                           
Mr.  Habeger replied  that  a  business license  application                                                                    
must  include  the  line  of  business.  The  state  adopted                                                                    
multiple lines of business.                                                                                                     
2:18:10 PM                                                                                                                    
Co-Chair  Austerman  supported   the  bill's  intention  and                                                                    
wished to  help small businesses  in Alaska. He asked  for a                                                                    
definition of small business and  wished for additional time                                                                    
to read and analyze the bill.                                                                                                   
Co-Chair  Stoltze  stated  that  he wished  to  discuss  the                                                                    
fiscal note during the current hearing.                                                                                         
2:19:31 PM                                                                                                                    
Representative  Munoz asked  about non-profit  organizations                                                                    
with commercial lines of business.  She wondered if the non-                                                                    
profits were required to have a business license.                                                                               
Mr.  Habeger replied  that a  non-profit did  not require  a                                                                    
business  license,   but  many  chose  to   have  them.  The                                                                    
financial benefit was the deciding  factor. A non-profit may                                                                    
or may not solicit funding through the state.                                                                                   
Co-Chair Stoltze  clarified that Mr. Habeger  was discussing                                                                    
an intentional non-profit.                                                                                                      
Mr.  Habeger replied  that non-profits  may do  service work                                                                    
within Alaska while funding was  derived from outside of the                                                                    
Co-Chair Stoltze stated that a  business that did not earn a                                                                    
profit was required to purchase a business license.                                                                             
Mr. Habeger concurred.                                                                                                          
Representative  Munoz asked  about a  retail store  owned by                                                                    
the  non-profit  organization.  She wondered  if  the  store                                                                    
would require a business license.                                                                                               
Mr. Habeger  replied yes, because  of the  financial benefit                                                                    
offered to  the non-profit  organization through  the retail                                                                    
2:21:30 PM                                                                                                                    
Vice-Chair Neuman  stated that  he appreciated the  bill. He                                                                    
hoped that municipalities might  adopt a similar concept. He                                                                    
wondered if  Representative Costello had discussed  the idea                                                                    
with municipalities.                                                                                                            
Representative  Costello stated  that she  had an  afternoon                                                                    
appointment with  Mayor Dan Sullivan and  offered to discuss                                                                    
the issue.                                                                                                                      
Co-Chair  Stoltze commented  that Mayor  Sullivan might  not                                                                    
see a financial  benefit in the proposal.  He cautioned that                                                                    
some municipalities  might attempt to benefit  from the bill                                                                    
by charging more from businesses for municipal needs.                                                                           
Co-Chair   Stoltze  asked   Mr.   Habeger  about   potential                                                                    
complications   with  the   fiscal   note.   He  noted   the                                                                    
anticipated reduction  of $37.5  thousand. He asked  how the                                                                    
estimations complicated the adjustments.                                                                                        
Mr. Habeger  explained the  difficulty estimating  the level                                                                    
of  activity impacted  by HB  32.  He stated  that the  name                                                                    
search in connection with lines  of business was the optimal                                                                    
way  to  discern  the  data required.  He  noted  that  each                                                                    
business paid $50  per year, so the  750 businesses impacted                                                                    
were spread across the years as an average.                                                                                     
2:25:47 PM                                                                                                                    
Co-Chair  Austerman asked  how many  business licenses  were                                                                    
issued in the state.                                                                                                            
Mr. Habeger replied approximately 60 thousand.                                                                                  
Co-Chair Austerman  stated that the relatively  small impact                                                                    
on the  overall budget made  him wonder why the  savings was                                                                    
not spread  among all business  licenses. He  wondered about                                                                    
opportunities  to help  all small  businesses  and not  only                                                                    
those wishing to consolidate.                                                                                                   
Representative Gara noted that  multiple lines of businesses                                                                    
existed on  the business  license application. He  liked the                                                                    
idea of  the bill, but wondered  if the bill was  limited to                                                                    
small businesses.                                                                                                               
2:28:17 PM                                                                                                                    
Vice-Chair  Neuman  asked  about businesses  that  collected                                                                    
taxes  for  cigarettes or  alcohol.  He  wondered about  tax                                                                    
codes for federal or municipality needs.                                                                                        
Mr.  Habeger   replied  that   business  licensing   had  an                                                                    
endorsement  for  retail  sales  of  tobacco  products.  The                                                                    
annual fee was  $100 per establishment. He  was unsure about                                                                    
the tax implications.                                                                                                           
Representative  Guttenberg   asked  if   business  insurance                                                                    
requirements   would   be   complicated  by   the   proposed                                                                    
legislation.  He wondered  if multiple  businesses appearing                                                                    
on one license might confuse insurers.                                                                                          
Representative  Costello  clarified   that  the  legislation                                                                    
would not require  people to apply for  multiple lines under                                                                    
one  business  name. If  the  business  owner would  receive                                                                    
greater benefit from  using one name per  business, the cost                                                                    
and benefit was best weighed.                                                                                                   
2:31:43 PM                                                                                                                    
Representative Guttenberg believed  the recommendation would                                                                    
be made by the business's insurance company as well.                                                                            
Co-Chair Stoltze  remarked that small businesses  make daily                                                                    
decisions that change their risk assessment.                                                                                    
Representative  Costello thanked  the committee  for hearing                                                                    
the bill. She  believed it was incumbent  upon the committee                                                                    
to consider the value created in governmental efficiencies.                                                                     
HB  32  was   HEARD  and  HELD  in   committee  for  further                                                                    
2:35:12 PM                                                                                                                    
AT EASE                                                                                                                         
2:35:42 PM                                                                                                                    
HOUSE BILL NO. 187                                                                                                            
     "An  Act  relating  to  professional  and  occupational                                                                    
     licensing  fees,  including   renewal  fees,  duplicate                                                                    
     license  fees,  examination  fees,  instructor  license                                                                    
     fees,  temporary  license  fees,  continuing  education                                                                    
     course  certification fees,  out-of-state permit  fees,                                                                    
     delinquency fees,  application fees, penalty  fees, and                                                                    
     trainee license  fees; and  providing for  an effective                                                                    
2:35:46 PM                                                                                                                    
KONRAD  JACKSON, STAFF,  REPRESENTATIVE  KURT OLSON,  shared                                                                    
that  the bill  had been  introduced at  the request  of the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
to levelize  the dramatic changes in  professional licensing                                                                    
fees.  The stability  provided  by the  concept  in the  out                                                                    
years  would be  of  great benefit  to Alaskan  professional                                                                    
license  holders.  The  bill's   fiscal  note  proposed  the                                                                    
transfer  of  costs  using general  fund  dollars  to  cover                                                                    
investigatory costs.  The current  costs were  spread across                                                                    
other   like  license   holders.  The   investigations  were                                                                    
important because  they provided  a consumer  protection for                                                                    
Alaskans.  He deemed  it appropriate  for  the consumers  to                                                                    
bear some of the cost, as  the issue was related to consumer                                                                    
2:38:34 PM                                                                                                                    
JO  ELLEN  HANRAHAN,   DEPUTY  COMMISSIONER,  DEPARTMENT  OF                                                                    
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT                                                                                    
     Thank  you  for  the  opportunity  to  discuss  HB  187                                                                    
     related to professional licensing fees                                                                                     
     The  purpose of  the  bill before  you  is to  mitigate                                                                    
     spiking  of the  licensing program  costs, and  provide                                                                    
     alternatives  for smoothing  the potential  for license                                                                    
     fee spiking.  The bill allows for:                                                                                         
     •    GF support, for investigations  which at times are                                                                    
     an unpredictable cost of consumer protection                                                                               
     o     Of  the 39  professional  licensing programs,  36                                                                    
     experienced  at least  one year  with a  25 percent  or                                                                    
     greater  change   in  investigative  costs   from  2008                                                                    
     through  2012.   The impact  on small  programs can  be                                                                    
     o    During  this same  time  period, the  investigator                                                                    
     cost  charged  directly  to licensing  programs  varied                                                                    
     from a low of $876.0 to $1.7 million.                                                                                      
     o    These variances  -  speak  to the  dramatic effect                                                                    
     an "outlier"  year can have  on licensing fees and   to                                                                    
     the uneven nature of investigations.                                                                                       
     o    Investigations    are   a    consumer   protection                                                                    
     function,  and perhaps  should really  be  viewed as  a                                                                    
     public  benefit as  all Alaskans  are beneficiaries  of                                                                    
     professional licensees and their services.                                                                                 
     •    Averaging  of revenue  and  expenses from  current                                                                    
     and prior biennium's                                                                                                       
     •    Extend  the fee  collection  period over  multiple                                                                    
     biennium's - leveling out the fees over time                                                                               
     •    Consolidate  fee  types  into a  single  fee  (ex-                                                                    
     license,      examination,     registration)      where                                                                    
     administrative efficiency could be gained)                                                                                 
     These proposed  changes are permissive,  not mandatory,                                                                    
    and they do not reduce the authority of the boards.                                                                         
     As I've stated previously in  this committee, we have a                                                                    
     collective responsibility to  balance the encouragement                                                                    
     of a  positive business  climate with  the requirements                                                                    
     of  appropriate accountability  and  the protection  of                                                                    
     consumers.    This  conversation includes the  push and                                                                    
     pull  between  proposed  regulation, public  input  and                                                                    
     policy decisions.                                                                                                          
     This  bill is  a continuation  of the  department's on-                                                                    
     going  commitment  to  address  professional  licensing                                                                    
     issues, while focusing on the  business climate and the                                                                    
     need to  stabilize cost  and establish  consistency for                                                                    
     the professions.                                                                                                           
     I say "on-going"  as there are a number  of efforts and                                                                    
     solutions the  department has grappled with  to address                                                                    
     the  errors  and  issues that  accumulated  ,over  what                                                                    
     records show is an eight year time period.                                                                                 
     In  summary,  HB 187  provides  tools  for the  boards,                                                                    
     commissions, and the  division to modulate professional                                                                    
     licensing  fee  adjustments  and encourage  a  positive                                                                    
     business climate.                                                                                                          
2:42:54 PM                                                                                                                    
Vice-Chair  Neuman  asked  Mr.  Habeger  if  the  state  had                                                                    
collected  fees  or  penalties if  the  profession  operated                                                                    
without a license.  He wondered why the  department spent so                                                                    
much  time  on license  enforcement  if  a penalty  was  not                                                                    
Mr. Habeger replied that  professional licensing occupied 90                                                                    
percent of the department's investigative time.                                                                                 
Vice-Chair  Neuman assumed  that  the professional  licenses                                                                    
were different than standard business licenses.                                                                                 
Mr. Habeger agreed.                                                                                                             
Co-Chair Stoltze  asked about  the legislation's  process of                                                                    
leveling out expenses for licensed professionals.                                                                               
Ms. Hanrahan  replied that the professional  licensees would                                                                    
obtain a  benefit through obtaining  an average  of biennium                                                                    
costs  when calculating  fees. The  fee collection  would be                                                                    
spread over two or three biennium.                                                                                              
Co-Chair Stoltze asked about the  general fund impact of the                                                                    
proposed legislation.                                                                                                           
Ms. Hanrahan replied $1.8 million.                                                                                              
2:46:48 PM                                                                                                                    
Representative  Wilson  agreed  that  the  licensing  boards                                                                    
should not  have to  pay for  the investigations.  She asked                                                                    
how  many  investigations  were embarked  on  and  how  many                                                                    
licensed professionals  were found guilty. She  asked if the                                                                    
department collected fees from those found guilty.                                                                              
Mr. Hanrahan  replied that  approximately 1300  matters were                                                                    
brought  to   the  staff  of  investigators   annually.  The                                                                    
department had  18 investigators  on staff. Not  all matters                                                                    
resulted in a case; some were  moved to civil authority if a                                                                    
violation of statute occurred. The  amount fined was limited                                                                    
by statute.                                                                                                                     
Mr.  Habeger stated  that the  investigative processes  were                                                                    
established by the department.  Complaints must be submitted                                                                    
in writing. Regulations must be  addressed in the complaint.                                                                    
Evidence  must  be gathered  to  indicate  that a  violation                                                                    
occurred.  If the  evidence was  present a  licensing action                                                                    
would occur. He recalled 230 actions last year.                                                                                 
Representative   Wilson  clarified   that   70  cases   were                                                                    
addressed  per position,  or 6  per month.  She described  a                                                                    
process   where  those   found  guilty   were  charged   the                                                                    
investigation fee.  She asked if the  department embarked on                                                                    
a similar process.                                                                                                              
Mr.  Habeger  replied that  the  department's  system had  a                                                                    
civil  fine  penalty system.  The  department  did not  have                                                                    
authority to assign an investigative fine.                                                                                      
Representative  Wilson wanted  additional information  about                                                                    
the  proposed  investigations.  She  agreed  that  the  fees                                                                    
should  not   be  the  responsibility  of   the  board.  She                                                                    
requested additional  details about the 80  percent of cases                                                                    
reviewed.  She  opined  that  those  licensed  professionals                                                                    
found guilty should pay the investigation costs.                                                                                
2:52:51 PM                                                                                                                    
Representative  Costello  understood  that  the  information                                                                    
regarding an  ongoing investigation was limited  to only one                                                                    
board member. She  asked if the entire board  would be privy                                                                    
to the  information if the  legislation passed.  She thought                                                                    
that  the  investigation  would   benefit  from  the  entire                                                                    
boards' judgment.                                                                                                               
Mr. Habeger replied no because  ultimately a board would sit                                                                    
in judgment over  the license. The Department  of Law deemed                                                                    
the  practice  improper to  allow  too  much information  to                                                                    
board members prior  to the judgment to  preserve the rights                                                                    
of the licensee.                                                                                                                
Representative Costello  asked if the boards  had weighed-in                                                                    
on the legislation.                                                                                                             
Co-Chair  Stoltze noted  that two  boards  were present  for                                                                    
public testimony.                                                                                                               
Mr. Habeger replied  that 14 boards indicated  some level of                                                                    
support. Some boards had motions in their minutes.                                                                              
2:56:04 PM                                                                                                                    
Co-Chair  Austerman appreciated  the  idea of  stabilization                                                                    
offered by  the legislation.  He opined that  the Department                                                                    
of Law  should handle the investigative  cost. He understood                                                                    
that the  single-fine system  denied all  restitution within                                                                    
the statutes.                                                                                                                   
Mr.  Habeger  replied  that  a  board  would  determine  the                                                                    
severity  of an  issue and  may assign  a fee  structure. He                                                                    
provided  an example  of a  continuing education  violation.                                                                    
Any income received  by the division was  deposited into the                                                                    
general fund.                                                                                                                   
Co-Chair  Austerman asked  if the  discussed  matrix was  in                                                                    
statute or regulation.                                                                                                          
Mr.  Habeger  replied  that the  matrix  was  considered  an                                                                    
action of the board.                                                                                                            
Co-Chair Austerman  asked if the  process was in  statute or                                                                    
Mr.  Habeger  replied  that  Title   8  allowed  the  boards                                                                    
jurisdiction over the licensees.                                                                                                
Co-Chair Austerman asked  about confidentiality in reference                                                                    
to  the  release  of information.  He  proposed  an  example                                                                    
regarding medical professionals in anchorage.                                                                                   
Mr. Habeger  explained that the  complaint was not  a public                                                                    
issue  until a  board took  an action  or an  accusation was                                                                    
filed.  An  investigation  for  a  healthcare  professional,                                                                    
often took time.  He stated that the one  board member privy                                                                    
to  information about  the  investigation  might advise  the                                                                    
division  about  a  concerning practice  issue.  The  public                                                                    
would not  be notified  until the  end of  the investigative                                                                    
Co-Chair Austerman  asked about the  230 cases that  went to                                                                    
investigation.  He  asked  about   a  general  fund  benefit                                                                    
related to convictions.                                                                                                         
Mr. Habeger  replied that  the figure  changed from  year to                                                                    
year. He noted that various fines were collected.                                                                               
Co-Chair  Austerman asked  if the  $1.8  million in  general                                                                    
funds would cover 100 percent of the investigation.                                                                             
Mr.  Habeger replied  that personal  services  time was  the                                                                    
major issue.  The total cost was  approximately $2.5 million                                                                    
per year. The last 33 percent  was for the Department of Law                                                                    
and   expert   witnesses.   The   licensees   would   assume                                                                    
responsibility for the last third.                                                                                              
3:02:15 PM                                                                                                                    
Co-Chair  Austerman   asked  if  Mr.  Habeger   referred  to                                                                    
administrative     personal    services     including    the                                                                    
commissioner's office.                                                                                                          
Ms. Hanrahan replied  that the $1.8 million  was specific to                                                                    
the  18   investigator  positions.   She  noted   that  true                                                                    
investigations  were distilled  through  a division  process                                                                    
beginning with the 1300 reported  matters. The hesitation to                                                                    
allow the  public access to  the information was  related to                                                                    
the distilling process.                                                                                                         
Co-Chair  Austerman  explained  that some  people  in  small                                                                    
communities were hesitant to file  complaints because of the                                                                    
worry about  small-town politics and public  information. He                                                                    
was   pleased  to   hear  about   the  delay   in  releasing                                                                    
investigative information to the public.                                                                                        
3:03:48 PM                                                                                                                    
Representative Gara  understood that  the cost of  the board                                                                    
was   borne  by   the  members   in  terms   of  fees.   The                                                                    
investigative portion would be held over a number of years.                                                                     
Ms.  Hanrahan agreed.  She  proposed  that the  investigator                                                                    
positions be funded with general funds every year.                                                                              
Representative Gara  asked if the board  members compensated                                                                    
the state for the cost of the investigation.                                                                                    
Ms.  Hanrahan replied  that the  members  of the  profession                                                                    
would  not  compensate  the  state   for  the  cost  of  the                                                                    
investigators'  time. The  members of  the profession  would                                                                    
cover  the cost  of  any mediation  or  expert witness  cost                                                                    
associated with  an investigation  or the Department  of Law                                                                    
Representative  Gara   clarified  that   the  cost   of  the                                                                    
investigation was  transferred to  the general  fund without                                                                    
an avenue for compensation.                                                                                                     
Ms.  Hanrahan  stated  that the  cost  of  the  investigator                                                                    
positions was transferred  to the general fund.  The cost of                                                                    
the  expert  witnesses,  mediations and  hearings  would  be                                                                    
borne by the professional licensees.                                                                                            
Representative  Gara  observed  the  zero  fiscal  note.  He                                                                    
wondered why  the $1.8 million  was not noted on  the fiscal                                                                    
Ms. Hanrahan agreed.                                                                                                            
Representative Gara asked if the state would be reimbursed.                                                                     
Ms.  Hanrahan replied  that the  general fund  would not  be                                                                    
reimbursed.  She   noted  the   fund  change   from  receipt                                                                    
supported services to the general fund.                                                                                         
Representative  Gara noted  that  the  state was  previously                                                                    
compensated with  receipt supported  services, but  would no                                                                    
longer be compensated for investigation costs.                                                                                  
3:07:34 PM                                                                                                                    
Ms.   Hanrahan  replied   that  the   state  would   not  be                                                                    
compensated for the cost of the investigations.                                                                                 
Co-Chair Stoltze  added that the  fiscal note  reflected the                                                                    
change in fund sources.                                                                                                         
Ms. Hanrahan concurred.                                                                                                         
Representative Gara voiced his confusion.                                                                                       
Co-Chair Stoltze believed that the fiscal note was factual.                                                                     
Representative  Gara stated  that his  current understanding                                                                    
was  that members  of the  profession paid  the cost  of the                                                                    
investigation  through receipt  supported services.  Without                                                                    
the  reimbursement,  he wondered  how  the  fiscal note  was                                                                    
Ms. Hanrahan  replied that the  change led to a  zero fiscal                                                                    
note because  the operating budget  showed no  increase with                                                                    
the change in funding source.                                                                                                   
3:09:25 PM                                                                                                                    
Representative Gara asked if the  member fees would increase                                                                    
to cover the cost of the investigations.                                                                                        
Ms. Hanrahan stated that one  purpose of the legislation was                                                                    
to stabilize  the licensing fees  because the  members would                                                                    
no longer cover the cost of the investigator positions.                                                                         
Co-Chair Stoltze  clarified that  he only wished  to explain                                                                    
the department's approach, he did not endorse it.                                                                               
Representative  Munoz  asked  if the  state  collected  $1.8                                                                    
million last year in fees that covered investigations.                                                                          
Ms.  Hanrahan  explained  that   the  statute  required  for                                                                    
collection of any expense incurred by the boards.                                                                               
Representative Munoz asked if  the personal services expense                                                                    
was $1.8 million last year.                                                                                                     
Ms. Hanrahan replied that the  state collected fees for more                                                                    
than  the costs  of the  investigators. The  state collected                                                                    
fees  for  the  cost  of processing,  examinations  and  the                                                                    
underlying infrastructure to provide the services.                                                                              
Representative  Munoz  asked for  the  total  cost that  the                                                                    
department collected.                                                                                                           
Ms. Hanrahan agreed to provide the information.                                                                                 
3:11:26 PM                                                                                                                    
PATRICIA SENNER,  ALASKA NURSES ASSOCIATION,  ANCHORAGE (via                                                                    
teleconference), testified  on behalf  of the  Alaska Nurses                                                                    
     The Alaska Board of  Nursing licenses 11.732 Registered                                                                    
     Nurses,  907   Licensed  Practical  Nurses   and  3,399                                                                    
     Certified   Nursing  Aids   for  a   total  of   16,038                                                                    
     licensees.  This  represents  about  one-third  of  the                                                                    
     professionals receiving  licenses from the  Division of                                                                    
     Corporations Business and  Professional Licensing. This                                                                    
     also  means  that nurses  pay  about  one-third of  the                                                                    
     overhead for the Division.                                                                                                 
     The Alaska  Nurses Association has no  objection to the                                                                    
     Division's attempt  to reduce the number  of small fees                                                                    
     it collects.  We also have no  objection in calculating                                                                    
     licensing fees based on a  2-year license renewal cycle                                                                    
     rather  than  yearly.  We  are   also  not  opposed  to                                                                    
     "amortizing"  individual Board  expenses over  a longer                                                                    
     period  of time.  In order  to increase  efficacies and                                                                    
     reduce costs we thing these changes are needed.                                                                            
     We are  however opposed to  shifting the total  cost of                                                                    
     paying  for   investigators  form  licensing   fees  to                                                                    
     general  funds.  In a  time  of  billion dollar  budget                                                                    
     shortfalls it does not make  sense to increase the cost                                                                    
     to  the   general  fund  by  1.7   million.  This  bill                                                                    
     effectively reduces  the income  coming into  the State                                                                    
     by 1.7 million.                                                                                                            
     We  understand  that  smaller  Boards  have  difficulty                                                                    
     covering  expensive  investigations  because  of  their                                                                    
     small licensee  base. We would  suggest that  a cheaper                                                                    
     alternative would be  to create a fund to  help pay for                                                                    
     expensive  investigations. For  instance, a  fund could                                                                    
     be  set up  to pay  for investigations  that cost  over                                                                    
     $10,000.  There are  fewer investigations  that have  a                                                                    
     large cost so  this approach should be  much cheaper to                                                                    
     the State.                                                                                                                 
     From  a historical  perspective, the  decision to  have                                                                    
     licensee fees pay  for the cost of the  Boards was made                                                                    
     during a time of diminishing  state revenues. We do not                                                                    
     think that over the next  several years the Division is                                                                    
     going to want to be  reliant on a diminishing source of                                                                    
     general fund revenues  when they could have  had a more                                                                    
     steady  income  source  with   licensee  fees.  If  the                                                                    
     Division  can't get  enough general  funds  to pay  for                                                                    
     their investigators  how are  they going  to prioritize                                                                    
     There  is also  some  concern about  what the  Division                                                                    
     means by licensing groups. Within  the Board of Nursing                                                                    
     there are  many groups of  licensees, each which  has a                                                                    
     different license fee. These fees  are based in part on                                                                    
     the  income   levels  of   that  particular   group  of                                                                    
     licensees. For  instance, the license fees  for RNs are                                                                    
     higher than those of Nurse Aids.  We do not want to see                                                                    
     all  the Board  of  Nursing licensees  lumped into  one                                                                    
3:15:28 PM                                                                                                                    
DALE  NELSON, ALASKA  PROFESSION  DESIGN COUNCIL,  ANCHORAGE                                                                    
(via teleconference) testified on  behalf of 5000 registered                                                                    
professionals.    He   expressed    confusion   about    the                                                                    
legislation. He  explained that the fees  for his profession                                                                    
doubled  last  year.  He  requested  information  to  better                                                                    
understand  the fees  collected by  the state,  but did  not                                                                    
receive  an answer  from the  department.  He noted  concern                                                                    
about  the  first   section  of  the  bill.   He  wished  to                                                                    
understand  where  the fees  were  spent.  He mentioned  the                                                                    
value of the  investigator working for the  board. He opined                                                                    
that the bill required additional discussion.                                                                                   
Co-Chair  Stoltze asked  Mr. Jackson  if  he preferred  that                                                                    
members contact him or Ms. Hanrahan with questions.                                                                             
3:23:36 PM                                                                                                                    
Mr.  Jackson stated  that his  office worked  well with  the                                                                    
department.   He   believed    that   either   contact   was                                                                    
Co-Chair Stoltze  stated that Mr. Jackson  would provide the                                                                    
voice for discussions.                                                                                                          
Co-Chair Austerman  asked if  public testimony  would remain                                                                    
Co-Chair Stoltze replied yes.                                                                                                   
Co-Chair  Austerman asked  about balancing  revenues over  a                                                                    
two  or three  year cycle.  He wondered  about the  criteria                                                                    
used to establish  the type of board that  would encounter a                                                                    
two or  three year cycle.  He assumed that the  bill allowed                                                                    
the department to make the choice of cycle.                                                                                     
Ms.  Hanrahan  replied that  the  bill  allowed the  boards,                                                                    
commissions and  divisions to use  the tool.  The department                                                                    
would  approach each  board with  the information  about fee                                                                    
changes.  Recommendations would  be received  by each  board                                                                    
for input in the process.                                                                                                       
Co-Chair Austerman asked  if the board would  make their own                                                                    
decisions by regulation.                                                                                                        
Ms.  Hanrahan   replied  that   the  statute   required  the                                                                    
department to have board input when setting fees.                                                                               
Co-Chair  Austerman  asked  if  each board  made  their  own                                                                    
Ms.   Hanrahan  replied   that   the   department  had   the                                                                    
responsibility to  regulate the recommended fee  with public                                                                    
Co-Chair Austerman asked about  the consolidation of certain                                                                    
fee types.                                                                                                                      
Ms.  Hanrahan replied  that a  profession may  have multiple                                                                    
types  of fees  including registration,  examination, permit                                                                    
and license fees. The bill  would allow for consolidation of                                                                    
those  fees  into  one  fee  if the  board  wished  to  gain                                                                    
administrative efficiencies.  She noted that  the department                                                                    
tracked  457 types  of fees  in  the professional  licensing                                                                    
3:28:21 PM                                                                                                                    
Vice-Chair  Neuman asked  how much  money was  recovered for                                                                    
fees and  penalties. Fees were  covered by  the professional                                                                    
licensing and the department wished  to see the general fund                                                                    
cover the cost  of the investigators. He asked  how much was                                                                    
generally collected in  fees as opposed to  the $1.8 million                                                                    
figure provided.                                                                                                                
Ms.  Hanrahan  responded  that  she did  not  have  a  total                                                                    
collection  figure for  the professional  licensing program.                                                                    
She clarified  that the fees  were collected to  support the                                                                    
Vice-Chair Neuman asked  if the fees swept  into the general                                                                    
Ms. Hanrahan  replied no, the  fines swept into  the general                                                                    
fund. The  fees were collected  to support the  program. She                                                                    
stated that she would provide  the total revenue in fees and                                                                    
the total revenue in fines to the committee.                                                                                    
Vice-Chair Neuman  asked if  the fines  were matched  to the                                                                    
cost of the investigations.                                                                                                     
Ms. Hanrahan  replied that the  fines did not match  up with                                                                    
the  cost  of  the  investigation;  they  ranged  from  $150                                                                    
thousand to $300 thousand.                                                                                                      
Vice-Chair   Neuman   understood   that   the   professional                                                                    
licensing members covered the differential.                                                                                     
Ms. Hanrahan concurred.                                                                                                         
Representative Costello stated  that the budget subcommittee                                                                    
discussed  the issue  over several  years.  She requested  a                                                                    
look-back over  time of the  professional licenses  and fees                                                                    
assigned  on   an  annual  basis.  She   believed  that  the                                                                    
information  would be  valuable for  the committee  to solve                                                                    
the problem. She opined that  business planning required the                                                                    
licensing  fee requirements.  She recalled  discussion about                                                                    
posting budgets online.                                                                                                         
3:32:03 PM                                                                                                                    
Ms. Hanrahan responded that  the quarterly financial reports                                                                    
were published online detailing expenditures.                                                                                   
Representative Costello asked if  the look-back spread sheet                                                                    
could also be provided to committee members.                                                                                    
Ms. Hanrahan agreed to provide the spreadsheet.                                                                                 
3:32:41 PM                                                                                                                    
Representative  Gara asked  about page  4, lines  5 -  7. He                                                                    
understood that  the cost to  the professional  group should                                                                    
approximate the regulatory cost  for the licensing group. He                                                                    
asked  if  the  regulatory  cost  for  the  licensing  group                                                                    
included the investigation.                                                                                                     
Ms. Hanrahan replied  that the cost of  regulating the group                                                                    
included the  cost of the  investigators. The  bill language                                                                    
allowed  for  other  appropriations   to  be  included  when                                                                    
calculating the fees.                                                                                                           
Representative Gara understood that  the fees charged to the                                                                    
members should cover the regulatory  cost. He suggested that                                                                    
some years  might require a general  fund supplement because                                                                    
of the higher cost averaged over the course of years.                                                                           
Ms. Hanrahan  stated that the  intent of the section  was to                                                                    
allow the state to  provide other appropriations in addition                                                                    
to the  program receipts.  The fiscal note  identified other                                                                    
appropriations linked to the cost  of the personnel services                                                                    
cost for the investigators on an annual basis.                                                                                  
Representative  Guttenberg asked  about the  42 sections  of                                                                    
the bill  related to various  occupations and  licensing. He                                                                    
assumed that the goal was  to place all occupations on equal                                                                    
3:35:44 PM                                                                                                                    
Ms. Hanrahan replied  that the equal footing  was limited to                                                                    
the cost of investigations for the various occupations.                                                                         
Representative Guttenberg  noted that  the statutes  for the                                                                    
different occupation were different.                                                                                            
Ms. Hanrahan concurred.                                                                                                         
Co-Chair   Stoltze  encouraged   the  department   to  spend                                                                    
additional time with Representative Gara.                                                                                       
Representative Gara  offered to  revisit the issue  with the                                                                    
department after the committee meeting.                                                                                         
Representative  Munoz  asked  Ms.  Hanrahan  for  additional                                                                    
information about the consolidation  of the occupational and                                                                    
business licensing fees.                                                                                                        
Ms. Hanrahan agreed to provide  the requested information to                                                                    
the committee.                                                                                                                  
Co-Chair   Austerman   asked   the  department   about   the                                                                    
consolidation  of  fees  and   the  supplementation  of  the                                                                    
general fees collected for investigators.  He wished to know                                                                    
what the reduced fees would look like.                                                                                          
Co-Chair Stoltze  wished for resolution  of the  issue prior                                                                    
to  close out  of the  operating budget.  He suggested  that                                                                    
more clarity would aid the  department in their presentation                                                                    
of the legislation.                                                                                                             
Mr. Jackson  offered to  work with  Ms. Hanrahan  to provide                                                                    
the committee with answers to their questions.                                                                                  
HB  187  was  HEARD  and   HELD  in  committee  for  further                                                                    
3:39:51 PM                                                                                                                    
The meeting was adjourned at 3:39 p.m.                                                                                          

Document Name Date/Time Subjects
HB 32 Letters of Support.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
HB32 Sectional Summary.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
HB32 Sponsor Statement.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
HB 187 Letters of Support.pdf HFIN 2/17/2014 1:30:00 PM
HB 187
HB 187 Repealed Statutes (section 44-ver C).pdf HFIN 2/17/2014 1:30:00 PM
HB 187
HB 187 Sectional Analysis.pdf HFIN 2/17/2014 1:30:00 PM
HB 187
HB 187 Sponsor Statement.pdf HFIN 2/17/2014 1:30:00 PM
HB 187
HB 32 NEW FN DCCED 21714.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
CSHB 32 - Explanation of Changes.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
HB 187 Testimony ANA Patricia Senner.pdf HFIN 2/17/2014 1:30:00 PM
HB 187
HB 32 Letter from Bridget Lujan.pdf HFIN 2/17/2014 1:30:00 PM
HB 32
HB32 - Business License Counts_2-18-14.pdf HFIN 2/17/2014 1:30:00 PM
HB 32