Legislature(2015 - 2016)HOUSE FINANCE 519

04/11/2016 01:30 PM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 118 MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS TELECONFERENCED
Moved CSHB 118(FIN) Out of Committee
+ HB 243 CRIM. CONV. OVERTURNED: RECEIVE PAST PFD TELECONFERENCED
<Bill Hearing Canceled>
+ HB 315 ELECTRONIC VISIT VERIFICATION: MEDICAID TELECONFERENCED
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 290 EXTENDING THE REAL ESTATE COMMISSION TELECONFERENCED
Moved HB 290 Out of Committee
+= HB 375 ELECTRONIC TAX RETURNS & REPORTS TELECONFERENCED
Moved CSHB 375(FIN) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 11, 2016                                                                                            
                         1:36 p.m.                                                                                              
                                                                                                                                
1:36:33 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 1:36 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Steve Thompson, Co-Chair                                                                                         
Representative Dan Saddler, Vice-Chair                                                                                          
Representative Bryce Edgmon                                                                                                     
Representative Les Gara                                                                                                         
Representative Lynn Gattis                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Cathy Munoz                                                                                                      
Representative Lance Pruitt                                                                                                     
Representative Tammie Wilson                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Jane  Pierson, Staff,  Representative  Steve Thompson;  Gene                                                                    
Therriault,   Deputy  Director,   Statewide  Energy   Policy                                                                    
Development,   Alaska   Energy  Authority,   Department   of                                                                    
Commerce,   Community   and  Economic   Development;   Kathy                                                                    
Wasserman, Alaska  Municipal League; Laura  Stidolph, Staff,                                                                    
Representative   Kurt   Olson;  Kris   Curtis,   Legislative                                                                    
Auditor,   Alaska  Division   of  Legislative   Audit;  Sara                                                                    
Chambers,  Administrative  Operations Manager,  Division  of                                                                    
Corporations,    Business   and    Professional   Licensing,                                                                    
Department of Commerce,  Community and Economic Development;                                                                    
Konrad  Jackson,  Staff,  Representative Kurt  Olson;  Jerry                                                                    
Burnett, Deputy Commissioner,  Treasury Division, Department                                                                    
of Revenue.                                                                                                                     
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Karl Kassel, Mayor, Fairbanks North Star Borough; Tracy                                                                         
Barickman, Alaska Real Estate Commission, Mat-Su.                                                                               
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 118    MUNI ENERGY IMPROVEMNT ASSESSMNTS/BONDS                                                                               
                                                                                                                                
          CSHB 118 (FIN) was  REPORTED out of committee with                                                                    
          a  "do pass"  recommendation and  with a  new zero                                                                    
          fiscal  note   by  the  Department   of  Commerce,                                                                    
          Community and Economic Development.                                                                                   
                                                                                                                                
HB 290    EXTENDING THE REAL ESTATE COMMISSION                                                                                  
                                                                                                                                
          HB 290  was REPORTED out  of committee with  a "no                                                                    
          recommendation"  recommendation  and  with  a  new                                                                    
          accompanying  zero fiscal  note by  the Department                                                                    
          of Commerce, Community and Economic Development.                                                                      
                                                                                                                                
HB 375    ELECTRONIC TAX RETURNS & REPORTS                                                                                      
                                                                                                                                
          CSHB 375 (FIN) was  REPORTED out of committee with                                                                    
          a  "do   pass"  recommendation  and  with   a  new                                                                    
          accompanying  zero  fiscal   impact  note  by  the                                                                    
          Department of Revenue.                                                                                                
                                                                                                                                
Co-Chair Thompson reviewed the agenda for the day.                                                                              
                                                                                                                                
1:37:35 PM                                                                                                                    
                                                                                                                                
HOUSE BILL NO. 118                                                                                                            
                                                                                                                                
     "An Act adopting the  Municipal Property Assessed Clean                                                                    
     Energy  Act;  authorizing municipalities  to  establish                                                                    
     programs to impose  assessments for energy improvements                                                                    
     in  regions  designated   by  municipalities;  imposing                                                                    
     fees; and providing for an effective date."                                                                                
                                                                                                                                
Vice-Chair Saddler MOVED to ADOPT the proposed committee                                                                        
substitute for HB 118, Work Draft (29-GH1021\P). There                                                                          
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,                                                                             
reviewed the changes to the Committee Substitute by reading                                                                     
from a prepared statement:                                                                                                      
                                                                                                                                
     Sec 1: No change                                                                                                           
                                                                                                                                
     Sec 2: No change                                                                                                           
                                                                                                                                
     Sec 3: New section allowing second class boroughs to                                                                       
    authorize PACE financing under non area wide powers                                                                         
                                                                                                                                
     Sec 4: Renumbered section with no change                                                                                   
                                                                                                                                
     Sec 5: Renumbered section with the following changes:                                                                      
        · Page 3, line 17                                                                                                       
          Modifies language  to allow  PACE financing  to be                                                                    
          implemented  within  a  region of  a  municipality                                                                    
          determined  by the  municipality through  a public                                                                    
          process.                                                                                                              
                                                                                                                                
        · Page 3, lines 30 - 31                                                                                                 
          Modifies language  to allow  PACE financing  to be                                                                    
          implemented  within  a  region of  a  municipality                                                                    
          determined  by the  municipality through  a public                                                                    
          process.                                                                                                              
                                                                                                                                
        · Page 4, line 24 through Page 5, line 3                                                                                
          Replaces proposed AS  29.49.050 with language that                                                                    
          allows  a municipality  wishing to  authorize PACE                                                                    
          financing to do  so by designating an  area of the                                                                    
          municipality  as a  region  for  the program.  The                                                                    
          area   designated    may   include    the   entire                                                                    
          municipality, a  single subset, or subsets  of the                                                                    
          municipality.  However,  the entire  PACE  program                                                                    
          must  be  contained  within the  boundary  of  the                                                                    
          municipality.                                                                                                         
                                                                                                                                
        · Page 5, line 15                                                                                                       
          Requires  a  municipality proposing  to  implement                                                                    
          PACE  financing to  provide a  description of  the                                                                    
          boundaries  for  the proposed  program.  Re-letter                                                                    
          the remaining subsections of  AS 29.49.060 with no                                                                    
          change.                                                                                                               
                                                                                                                                
        · Page 6, line 17                                                                                                       
          Requires  that   a  map   of  the   proposed  PACE                                                                    
          financing  program  boundary  be included  in  the                                                                    
          mandatory report  that must  be made  available to                                                                    
          the   public  before   a  PACE   program  can   be                                                                    
          initiated. Renumber  the remaining  subsections of                                                                    
          proposed AS 29.49.070 with no change.                                                                                 
                                                                                                                                
        · Page 10, lines 9 - 10                                                                                                 
          Adds language to  acknowledge that PACE assessment                                                                    
          payments  may  come  in from  regions  within  the                                                                    
          municipality.                                                                                                         
                                                                                                                                
        · Page 11, line 7, Page 11, line 10 and Page 11,                                                                        
          line 13                                                                                                               
          Clarifies that the  prohibited acts established in                                                                    
          proposed  AS  29.49.160  will   apply  to  a  PACE                                                                    
          financing  program  whether  it is  offered  in  a                                                                    
          portion   of  the   municipality  or   the  entire                                                                    
          municipality.                                                                                                         
                                                                                                                                
Ms.  Pierson referred  to  a legal  opinion  (copy on  file)                                                                    
dated  April 2,  2015 in  the member's  backup packets.  She                                                                    
indicated  the  memo  explained   why  the  changes  in  the                                                                    
Committee Substitute (CS) was necessary.                                                                                        
                                                                                                                                
1:40:59 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg asked  what the  term "municipal"                                                                    
encompassed. He asked whether a  borough was included in the                                                                    
definition.  Ms. Pierson  believed  so but  deferred to  Mr.                                                                    
Therriault for the answer.                                                                                                      
                                                                                                                                
Representative  Kawasaki   asked  about   local  improvement                                                                    
districts.  He  wondered   whether  the  municipality  would                                                                    
determine a  PACE (property  assessed clean  energy program)                                                                    
area  through  a  public  process  or  would  the  municipal                                                                    
government act on behalf of the property owners.                                                                                
                                                                                                                                
1:42:28 PM                                                                                                                    
                                                                                                                                
GENE  THERRIAULT, DEPUTY  DIRECTOR, STATEWIDE  ENERGY POLICY                                                                    
DEVELOPMENT,  ALASKA   INDUSTRIAL  DEVELOPMENT   AND  EXPORT                                                                    
AUTHORITY, ALASKA ENERGY  AUTHORITY, DEPARTMENT OF COMMERCE,                                                                    
COMMUNITY AND ECONOMIC  DEVELOPMENT, answered Representative                                                                    
Kawasaki's question.  He explained  that the  public process                                                                    
was delineated  in the legislation. When  a municipality was                                                                    
considering  a  PACE  program  it  must  pass  a  resolution                                                                    
detailing the  location and  how the  program would  be run.                                                                    
The information  would be  included in  a public  report and                                                                    
ultimately, a local government had  to adopt an ordinance to                                                                    
initiate the program.                                                                                                           
Representative    Guttenberg    asked   about    the    term                                                                    
"municipality"  used in  the legislation  and wondered  what                                                                    
the term encompassed. Mr. Therriault  had consulted with the                                                                    
Department of Law (DOL) and  assured that the terminology in                                                                    
the bill "struck the balance correctly."                                                                                        
                                                                                                                                
1:44:20 PM                                                                                                                    
                                                                                                                                
Representative  Wilson   offered  that  the   bill  provided                                                                    
additional  power to  a second  class borough.  She wondered                                                                    
whether the municipality  then had the ability to  add a tax                                                                    
to the PACE area. Mr.  Therriault responded in the negative.                                                                    
He  explained   that  the  program  allowed   an  individual                                                                    
property owner to use the  financing mechanism and repay the                                                                    
loan through  a voluntary property tax  assessment. He noted                                                                    
that  the  mechanism was  similar  to  a utility  assessment                                                                    
except  that   the  assessment  was  only   levied  for  the                                                                    
individual  property owner  in  the  program. He  emphasized                                                                    
that the bill allowed  for a contractual arrangement between                                                                    
a  property   owner  and  municipality  to   levy  an  extra                                                                    
assessment on  the individual's property  in order  to repay                                                                    
the   loan.   Representative   Wilson  asked   whether   the                                                                    
legislation   was  expanded   to   include  residents.   Mr.                                                                    
Therriault  responded  that  the bill  restricted  the  PACE                                                                    
program to  businesses rather than residents.  He added that                                                                    
in  the  Fairbanks  North  Star   Borough  the  program  was                                                                    
intended to  assist businesses convert  to natural  gas when                                                                    
an expanded  supply was available.  He delineated  that some                                                                    
states were attempting to expand  the program to residential                                                                    
properties  and  experienced  problems  with  the  secondary                                                                    
lending  market purchasers  of  residential property  loans.                                                                    
The authority  decided to avoid any  issues with residential                                                                    
property  and focused  on businesses.  Representative Wilson                                                                    
asked whether  the program was a  voluntary mechanism rather                                                                    
than any  type of "forceful action."  Mr. Therriault replied                                                                    
that  the  program was  completely  voluntary  for both  the                                                                    
municipality and the individual businesses.                                                                                     
                                                                                                                                
Representative Gattis communicated  that the program applied                                                                    
to the building owner rather  than the business owner unless                                                                    
they were the  same. She viewed the  program as advantageous                                                                    
to both the business and property owner.                                                                                        
                                                                                                                                
Representative Munoz asked whether  the municipality was the                                                                    
entity  repaying  the  lending institution.  Mr.  Therriault                                                                    
confirmed that if the source of  the loan was a private bank                                                                    
that  entered   into  a   contractual  agreement   with  the                                                                    
municipality then  the local government would  pay the bank.                                                                    
Another  mechanism a  municipality could  employ would  be a                                                                    
revenue bond that would be  repaid via the local government.                                                                    
The program allowed the local  government the flexibility to                                                                    
search  for federal  sources of  money, private  lenders, or                                                                    
revenue  bonding   at  low  interest  rates   and  pass  the                                                                    
opportunity on to the business owner.                                                                                           
                                                                                                                                
1:50:16 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
1:50:34 PM                                                                                                                    
                                                                                                                                
KATHY WASSERMAN, ALASKA MUNICIPAL  LEAGUE, spoke in favor of                                                                    
the legislation.  She added  that under  state law  the term                                                                    
"municipalities"  included boroughs  and cities.  The league                                                                    
strongly  supported the  legislation as  a tool  that helped                                                                    
businesses and included "safeguards."                                                                                           
                                                                                                                                
1:51:58 PM                                                                                                                    
                                                                                                                                
KARL  KASSEL,   MAYOR,  FAIRBANKS  NORTHSTAR   BOROUGH  (via                                                                    
teleconference),  urged  members  to   support  HB  118.  He                                                                    
strongly endorsed  the legislation. He noted  the support of                                                                    
the communities and  mayors of Fairbanks and  North Pole. He                                                                    
voiced  that the  bill helped  businesses move  forward with                                                                    
cleaner energy and  gas conversions as well  as fostering an                                                                    
economic "boost" for the communities.                                                                                           
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
Mr. Therriault relayed that in  the past year AEA and AIEDEA                                                                    
had been  looking for additional non-state  sources of money                                                                    
that  could  assist  energy  conversion  in  the  state.  He                                                                    
relayed that  according to  Senator Murkowski's  office, the                                                                    
Rural Utility  Service (RUS) division  of the  United States                                                                    
Department of  Agriculture was in  the process of  writing a                                                                    
letter of  support. The RUS  approved the PACE  mechanism as                                                                    
one of  the favored programs  to access federal  loan funds.                                                                    
He reported that  AEA was actively looking  and identified a                                                                    
source  of funding  with a  zero interest  rate for  a local                                                                    
government  and another  that  carried a  2  percent to  2.5                                                                    
percent interest rate.                                                                                                          
                                                                                                                                
Vice-Chair Saddler  asked who was offering  the zero percent                                                                    
interest  rate.  Mr.  Therriault   responded  that  RUS  was                                                                    
offering a zero  percent interest rate loan and  the pool of                                                                    
money  nationwide  was  $70  million   to  $80  million.  He                                                                    
stressed the importance for  municipalities to obtain access                                                                    
to  repayment mechanisms  that lowered  the default  rate on                                                                    
loans.                                                                                                                          
                                                                                                                                
Vice-Chair Saddler  reviewed the  new zero fiscal  note from                                                                    
the   Department  of   Commerce,   Community  and   Economic                                                                    
Development (DCCED).                                                                                                            
                                                                                                                                
Vice-Chair Saddler  MOVED to  REPORT CSHB  118 (FIN)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note(s). There  being NO  OBJECTION, it                                                                    
was so ordered.                                                                                                                 
                                                                                                                                
CSHB  118 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass" recommendation and with a  new zero fiscal note by the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
1:56:57 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:59:00 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 290                                                                                                            
                                                                                                                                
     "An  Act extending  the termination  date  of the  Real                                                                    
     Estate  Commission;  and  providing  for  an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
1:59:24 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH,  STAFF, and REPRESENTATIVE KURT  OLSON, read                                                                    
from a prepared statement:                                                                                                      
                                                                                                                                
     Before  you today  is HB290,  this legislation  extends                                                                    
     the termination  date of the Real  Estate Commission to                                                                    
     June 30, 2018.                                                                                                             
                                                                                                                                
     Each  year the  Division of  Legislative Audit  reviews                                                                    
     state  boards  and  commissions to  determine  if  they                                                                    
     should be  reestablished per AS 24.44.  The Division of                                                                    
     Legislative Audit  reviewed the activities of  the Real                                                                    
     Estate  Commission. The  purpose of  this audit  was to                                                                    
     determine whether  there is a demonstrated  public need                                                                    
     for the board's continued  existence and whether it has                                                                    
     been operating in an effective manner.                                                                                     
                                                                                                                                
     As the  members noted in  their review of the  audit in                                                                    
     their packets, it  is the opinion of  our auditors, the                                                                    
     board is  serving the public's interest  by effectively                                                                    
     licensing real  estate brokers, associate  brokers, and                                                                    
     salespeople.                                                                                                               
                                                                                                                                
     As  the members  also may  have noted  from the  audit,                                                                    
     there    were   two    recommendations.   First,    the                                                                    
     commission's   chair   and   the  DCCED   Division   of                                                                    
     Administrative Services  director should  work together                                                                    
     to  procure  a  masters,  errors  &  omissions  policy.                                                                    
     Second,  the  Division  of Corporation,  Business,  and                                                                    
     Professional  Licensing should  take  action to  ensure                                                                    
     cases are actively investigated.                                                                                           
                                                                                                                                
     To  speak  to  the   recommendations,  Kris  Kurtis  of                                                                    
     Legislative Audit  is here,  Sara Chambers  Director of                                                                    
     the    Division   of    Corporations,   Business    and                                                                    
     Professional   Licensing   with   the   Department   of                                                                    
     Commerce, Community  & Economic Development,  and Nancy                                                                    
     Davis,  the  Chair of  the  Commission  is online  from                                                                    
     Sitka.                                                                                                                     
                                                                                                                                
     In  closing,  the  Real  Estate  Commission  serves  an                                                                    
     important  role by  improving  operations and  industry                                                                    
     practices by modifying and adopting regulations.                                                                           
                                                                                                                                
     Thank you for your support of this legislation.                                                                            
                                                                                                                                
Representative  Kawasaki  asked  about  the  original  audit                                                                    
recommendation.  He wondered  why  the  board extension  was                                                                    
only  two  years.  Ms.  Stidolph   replied  that  the  audit                                                                    
recommended that the commission  procure a master errors and                                                                    
omissions insurance  policy and if  accomplished recommended                                                                    
a 6 year  extension. If the policy was not  acquired, a four                                                                    
year extension  was suggested. She related  that the sponsor                                                                    
decided to  reduce the  extension to  two years  because the                                                                    
policy was  an important part of  the commission's statutory                                                                    
requirement that  should be obtained in  a reasonable amount                                                                    
of time.                                                                                                                        
                                                                                                                                
Representative Guttenberg  asked why the commission  did not                                                                    
obtain the policy.  Ms. Stidolph responded that  in 2008, HB
357 (Real  Estate Licensees/Recovery Fund) [CHAPTER  113 SLA                                                                    
08  06/26/2008]  the  House  Labor  and  Commerce  Committee                                                                    
sponsored a bill  that changed the real  estate surety fund.                                                                    
She delineated that the fund  was changed to the Real Estate                                                                    
Recovery fund  that allowed consumers via  an administrative                                                                    
hearing  to  receive up  to  $15  thousand in  damages.  The                                                                    
legislation mandated that each  realtor would have to obtain                                                                    
the  insurance  policy  in  order  to  protect  the  public.                                                                    
However, a clause in the  bill stated that if the commission                                                                    
did  not obtain  the  umbrella  policy coverage,  individual                                                                    
salespersons  did not  have to  procure  the policy  either.                                                                    
Since  2010,   when  the  bill  regulations   were  written,                                                                    
disagreement ensued about whether  the regulations were "too                                                                    
prescriptive."  The  regulations  stated  that  the  maximum                                                                    
premium for  the insurance  policy was  $300, which  was too                                                                    
low.  She commented  that after  six  years of  bureaucratic                                                                    
wrangling the  solution to require the  commission to obtain                                                                    
the masters policy was warranted.                                                                                               
                                                                                                                                
2:04:55 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler wondered  whether there  were any  other                                                                    
measures   that  addressed   the  situation.   Ms.  Stidolph                                                                    
indicated  that there  was  currently SB  158  in the  House                                                                    
Labor and  Commerce Committee, which dealt  with real estate                                                                    
broker licenses. The committee  was offering an amendment to                                                                    
repeal the provision in HB  357 that mandated the commission                                                                    
to obtain the umbrella  policy. Vice-Chair Saddler asked for                                                                    
clarification.  Ms.  Stidolph  further explained  that  each                                                                    
individual would be required to  obtain the policy until the                                                                    
commission  obtained the  policy.  Vice-Chair Saddler  asked                                                                    
what  the timeline  was and  how it  comported with  the two                                                                    
year  extension of  the commission.  Ms. Stidolph  indicated                                                                    
that the  repeal would occur  in 2018. The date  granted the                                                                    
industry  time to  obtain the  insurance and  gave the  real                                                                    
estate  commission more  time to  procure the  policy. Vice-                                                                    
Chair  Saddler  asked  what  would  happen  in  the  2  year                                                                    
timeline  with  adoption  of  the  amendment.  Ms.  Stidolph                                                                    
answered that all real estate  salesperson and brokers would                                                                    
operate under the  policy within two years and  in 2.5 years                                                                    
a master policy would be obtained by the commission.                                                                            
                                                                                                                                
2:07:25 PM                                                                                                                    
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT,  reported that the audit  recommended a 6                                                                    
year  extension  because  at   the  time  Legislative  Audit                                                                    
understood that  the commission could procure  the policy by                                                                    
January 2016.  She spoke to  the recommendations.  The first                                                                    
recommendation regarded obtaining the  master policy and the                                                                    
second  recommendation   requested  that  the   Division  of                                                                    
Corporations, Business,  and Professional  Licensing (DCBPL)                                                                    
chief  investigator   take  action  to  ensure   cases  were                                                                    
investigated and completed in a  timely manner. She noted 29                                                                    
cases of "significant periods of  inactivity" in a sample of                                                                    
36.                                                                                                                             
                                                                                                                                
Representative  Kawasaki  asked  when  the  next  audit  was                                                                    
required with only a two  year extension. Ms. Curtis relayed                                                                    
that the division  would conduct the audit in  the spring or                                                                    
summer  of 2017.  Representative  Kawasaki  asked about  the                                                                    
cost  of the  audit.  Ms. Curtis  responded  that the  audit                                                                    
would be succinct and short  having just completed an audit.                                                                    
However, she  was unable to  guarantee the possibility  of a                                                                    
short audit. Representative Kawasaki  cited the audit report                                                                    
that identified 36  of the 235 open  investigative cases and                                                                    
that 29 of the cases  had periods of inactivity ranging from                                                                    
124  to 1,669  total days.  He  noted that  some cases  were                                                                    
closed due  to the length  of investigation. He  thought the                                                                    
situation  appeared  "problematic."   He  wondered  why  the                                                                    
investigations  took so  long. Ms.  Curtis replied  that the                                                                    
finding  was  consistently   discovered  within  DCBPL.  She                                                                    
communicated that  in the current case  "excessive time lags                                                                    
were   due  to   inadequate   monitoring  and   insufficient                                                                    
oversight to  ensure investigations were  completed timely."                                                                    
Representative Kawasaki  thought the  DCBPL was  not serving                                                                    
the  "major  public  purpose" of  the  board.  He  expressed                                                                    
concern  with the  excessive  timelines.  Regardless of  the                                                                    
issues,  he  announced  that he  would  offer  a  conceptual                                                                    
amendment that would increase the  extension "by a couple of                                                                    
years."                                                                                                                         
                                                                                                                                
2:12:30 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg offered that  he was "troubled" by                                                                    
both  recommendations.  He  wondered  what  the  "mechanical                                                                    
problem"  was that  kept the  commission from  obtaining the                                                                    
master  policy.  Ms. Curtis  explained  that  she had  heard                                                                    
various different  reasons why  the policy was  not obtained                                                                    
but that "no one could  really answer the why." She recently                                                                    
discovered that  the original  legislation was  "flawed" and                                                                    
not  in line  with a  policy that  actually was  possible to                                                                    
procure. She added  that "no one could  really pinpoint" why                                                                    
it took  since 2008 and still  no real progress was  made to                                                                    
procure the policy. She shared  that recently the commission                                                                    
and  the  division, in  response  to  the audit  made  great                                                                    
effort towards obtaining the policy.                                                                                            
                                                                                                                                
Representative   Guttenberg    asked   about    the   second                                                                    
recommendation regarding  the timing  and inactivity  of the                                                                    
investigations.  He wondered  whether a  correlation existed                                                                    
between   the  functioning   of  the   board  and   the  two                                                                    
recommendations.  Ms. Curtis  clarified that  he was  asking                                                                    
whether   the   "efforts   of   the   board   impacted   the                                                                    
recommendations."  Representative  Guttenberg  deduced  that                                                                    
regarding  the  first   recommendation  the  commission  was                                                                    
"unfocused" and decide  what to do in the face  of a muddled                                                                    
statute  and  recently sprang  into  action  because of  the                                                                    
sunset.  The  second  recommendations  had to  do  with  the                                                                    
inactivity  regarding complaints.  He  wondered whether  the                                                                    
board was "functional." Ms. Curtis  responded that the board                                                                    
was functioning and  able to serve the  public interest. She                                                                    
commented  that Legislative  Audit would  not recommend  the                                                                    
extension  if  the  audit  determined   the  board  was  not                                                                    
functional.  She  noted  that the  investigative  lags  were                                                                    
"reflective"  of  a  "lack  of  good  case  management"  and                                                                    
constantly  experienced   the  problem.  She   reminded  the                                                                    
committee  that   the  audit  was  "looking   backward"  and                                                                    
currently the issue could have been resolved.                                                                                   
                                                                                                                                
2:17:38 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler asked whether  the licensing fees covered                                                                    
the  commission's  costs   and  investigations.  Ms.  Curtis                                                                    
responded in  the affirmative and  confirmed that  the board                                                                    
had a surplus of $274  thousand as of March 2015. Vice-Chair                                                                    
Saddler wondered how much of  the surplus would remain after                                                                    
the master  policy was obtained  and whether the  cost would                                                                    
affect  the licensing  fees. Ms.  Curtis expected  that some                                                                    
indirect  costs would  be incurred  in obtaining  the policy                                                                    
but  the expense  would not  impact the  surplus. Vice-Chair                                                                    
Saddler asked  whether the  indirect costs  were due  to the                                                                    
policy premium. Ms. Curtis answered  that the licensee would                                                                    
pay the  premiums to  the board  under the  umbrella policy.                                                                    
Vice-Chair Saddler reiterated whether  the surplus would pay                                                                    
the premiums.  Ms. Curtis replied  that the  licensees would                                                                    
participate  and  collectively  pay   for  the  policy.  She                                                                    
suggested that  Vice-Chair Saddler clarify the  question for                                                                    
the  department. Vice-Chair  Saddler  mentioned the  audit's                                                                    
unfavorable findings  of the investigator. He  asked whether                                                                    
the  investigator was  a staffer  or contractor.  Ms. Curtis                                                                    
responded  that  the  investigators were  employees  of  the                                                                    
DCBPL  and  sometimes  an investigator  was  assigned  to  a                                                                    
specific board  and others were  shared among  boards. Vice-                                                                    
Chair Saddler had heard in  the past that some investigators                                                                    
were  independent contractors.  Ms. Curtis  answered in  the                                                                    
negative.                                                                                                                       
                                                                                                                                
2:20:52 PM                                                                                                                    
                                                                                                                                
SARA CHAMBERS,  ADMINISTRATIVE OPERATIONS  MANAGER, DIVISION                                                                    
OF  CORPORATIONS,   BUSINESS  AND   PROFESSIONAL  LICENSING,                                                                    
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                     
                                                                                                                                
Co-Chair  Thompson  understood  that the  division  was  "in                                                                    
charge"  of investigators  and investigations.  Ms. Chambers                                                                    
answered  in the  affirmative. Co-Chair  Thompson asked  why                                                                    
the problem with investigators  repeatedly happened over the                                                                    
years.  Ms. Chambers  confirmed  that the  problem had  been                                                                    
identified over the "last few  years." She detailed that the                                                                    
scope of the  audit was 2010 through 2015. In  the summer of                                                                    
2014,  the  division hired  a  new  chief investigator  that                                                                    
created a  management shift.  The new  manager had  put into                                                                    
place  some  new  policies and  procedures  and  supervisory                                                                    
restructuring in an attempt to  resolve the issues that were                                                                    
due to  a lack of management  in a particular unit  prior to                                                                    
2014.  She suspected  that  the samples  in  the audit  were                                                                    
prior to  late 2014. She  blamed the issue on  a "management                                                                    
oversight  responsibility." She  pointed  out  that the  new                                                                    
measures resulted in a reduction  in caseload and turnaround                                                                    
time.                                                                                                                           
                                                                                                                                
2:23:08 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  hoped  that  the  situation  was                                                                    
remedied.   He   asked   about  conflicting   statues   that                                                                    
interfered with  the commission  obtaining a  master policy.                                                                    
He  wondered what  mechanism was  preventing the  board from                                                                    
purchasing  the  policy.  Ms. Chambers  explained  that  the                                                                    
statute required  individual licensees  to carry  the policy                                                                    
but  the commission  was not  required  by use  of the  word                                                                    
"may."  However, the  other clause  stated that  individuals                                                                    
were not required  to carry the policy  until the commission                                                                    
obtained an umbrella policy.  She summarized that individual                                                                    
brokers  and salesperson  were not  required  to obtain  the                                                                    
policy until the commission procured  an umbrella policy yet                                                                    
everyone was  required to obtain  it and the  commission was                                                                    
not required to procure the  umbrella policy all at the same                                                                    
time.  She could  not speak  to the  situation prior  to her                                                                    
involvement  in  mid-2014  but   "sensed  that  someone  was                                                                    
dragging  their feet."  She reported  that she  "dug in"  to                                                                    
remedy the situation  and was hopeful that  the policy could                                                                    
be attained  by January  2016. The  "intent to  bid" process                                                                    
was initiated  and the  department received  "zero response"                                                                    
from the  market. She indicated  that the premium  level set                                                                    
in statue  was far  too low and  the potential  bidders were                                                                    
concerned  that   they  did  not  have   enough  information                                                                    
regarding the brokers  and agents they would  be covering to                                                                    
assess the  risk. In response,  the division  reexamined the                                                                    
regulation  setting   process  to  evaluate   resetting  the                                                                    
premium. She  stated that the insurance  process was complex                                                                    
and the procurement process was  unusual. The policy covered                                                                    
individuals and  was not  just "a  simple contract  with the                                                                    
state."                                                                                                                         
                                                                                                                                
2:27:42 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  restated his concern  that action                                                                    
only took place  when the commission was  bumping up against                                                                    
the  sunset  date.  He  agreed  that  the  insurance  policy                                                                    
sounded complex. He wondered whether  the two year extension                                                                    
was an  adequate amount of  time to  clear up the  issue. He                                                                    
asked  her to  comment on  the 2-year  sunset. Ms.  Chambers                                                                    
shared her concern that the  length of time was not adequate                                                                    
due the short time period  before the new sunset audit would                                                                    
commence.                                                                                                                       
                                                                                                                                
Vice-Chair  Saddler   asked  about   the  reasons   for  the                                                                    
shortcomings with the investigation  process and whether she                                                                    
was confident the issue was  remedied. Ms. Chambers was very                                                                    
confident in  the actions and progress  of the investigators                                                                    
under  the  new  management.  She  referred  to  a  detailed                                                                    
department response  on page 26  of the audit  that provided                                                                    
great   feedback.  She   delineated   that   prior  to   the                                                                    
restructuring, the  investigations unit  had one  manager to                                                                    
19  investigators. The  department added  a level  of senior                                                                    
investigators working under the  chief to allow "more hands-                                                                    
on" supervision  and accountability to meet  guidelines. She                                                                    
reported  that a  new guideline  was that  every 30  days an                                                                    
investigator   reviewed  her   caseload   and  worked   with                                                                    
management to  discern why any  inactivity occurred  and how                                                                    
to address  it. She relayed  that other audit's  results and                                                                    
end of  fiscal year  statistics proved  that the  remedy was                                                                    
working.                                                                                                                        
                                                                                                                                
2:33:02 PM                                                                                                                    
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
TRACY BARICKMAN, ALASKA REAL  ESTATE COMMISSION, MAT-SU (via                                                                    
teleconference), supported  HB 290.  She reported  having 20                                                                    
years of experience  in the industry and  was a commissioner                                                                    
on  the board.  She  relayed  that she  was  also a  subject                                                                    
matter expert on  a national level for  Pearson Vue [Testing                                                                    
Services  of Philadelphia,  Pennsylvania  contracted by  the                                                                    
Real Estate  Commission of Alaska].  She noted that  she was                                                                    
sitting in for the chair  of the commission, Nancy Davis who                                                                    
had  medical  issues.  She   supported  the  extension.  She                                                                    
recounted  that  the  commission operated  well  within  its                                                                    
budget due to  adequate licensing fees and was  not a burden                                                                    
the   state's   budget.   She  worked   with   the   state's                                                                    
investigator  to   review  complaints  as  a   result  of  a                                                                    
transaction or  licensees interaction  with the  public. She                                                                    
reported that  most complaints were  legitimate and  in many                                                                    
cases licensees  were disciplined through  education, fines,                                                                    
and at times suspension or  revocation of their license. She                                                                    
stated  that  without  the  board   the  only  recourse  for                                                                    
consumer complaints was through  litigation and the consumer                                                                    
might not  have the resources to  take a case to  court. She                                                                    
believed  the  scenario  would  allow  improper  actions  to                                                                    
continue. She noted  that the audit failed  to recognize the                                                                    
remedies that  were already established  in response  to the                                                                    
investigative  inactivity. The  65 case  backlog took  place                                                                    
from 2011 through 2014 and  the new investigator had cleared                                                                    
all of  the cases. Currently  the investigator had  23 cases                                                                    
with the  oldest dating back  from 2015. She  indicated that                                                                    
the  commission constantly  improved industry  standards via                                                                    
the   modification   and   adoption  of   regulations.   She                                                                    
communicated that the low premium  set in statute and a lack                                                                    
of historical  data prohibited the board  from procuring the                                                                    
master policy.  She suggested that  the simple  solution was                                                                    
to  remove  AS  8.88,172  sub  paragraph  (e).  The  statute                                                                    
eliminated  the requirement  of  the  umbrella policy.  Once                                                                    
that was  established the  insurance companies  could gather                                                                    
the  historical  data. She  stressed  that  the low  premium                                                                    
estimate of  $300 was not  practical. The premium  should be                                                                    
$1,200  to $20,000  per year  depending on  the size  of the                                                                    
brokerage  and what  services were  offered. She  added that                                                                    
property management coverage even was more expensive.                                                                           
                                                                                                                                
2:39:12 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
Ms.  Stidolph noted  that the  Labor and  Commerce Committee                                                                    
was  offering additional  provisions  to  another bill  that                                                                    
removed the  requirement to carry  the Errors  and Omissions                                                                    
insurance  in  two  years. The  provision  was  expected  to                                                                    
rectify the situation.                                                                                                          
                                                                                                                                
2:40:37 PM                                                                                                                    
                                                                                                                                
Representative Kawasaki commented  that the committee should                                                                    
not discuss  other legislation.  He did  not have  a problem                                                                    
with extending the date of  the sunset. He believed that the                                                                    
short  period of  time  for the  sunset  burdened the  audit                                                                    
division. He offered the following conceptual amendment.                                                                        
                                                                                                                                
Representative   Kawasaki  MOVED   Conceptual  Amendment   1                                                                    
extending the sunset year from 2018 to 2022.                                                                                    
                                                                                                                                
Representative Kawasaki WITHDREW Conceptual Amendment 1.                                                                        
                                                                                                                                
Representative   Kawasaki  MOVED   Conceptual  Amendment   2                                                                    
extending the sunset year to 2020.                                                                                              
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative  Wilson  read  from the  audit  Findings  and                                                                    
Recommendations:                                                                                                                
                                                                                                                                
     …  However, the  legislation also  required errors  and                                                                    
     omissions  insurance  as  a condition  of  real  estate                                                                    
     licensure.  The  new   insurance  requirement  has  not                                                                    
     successfully   protected   the   public   because   the                                                                    
     commission  has  not  obtained   a  master  policy  and                                                                    
     licensees  have  continued  to  practice  without  this                                                                    
     important consumer protection in place.                                                                                    
                                                                                                                                
Representative Wilson believed that  the finding pointed out                                                                    
that  an   important  aspect  of  consumer   protection  was                                                                    
lacking. She felt that the  pressure of a sunset would bring                                                                    
about  a  resolution  to the  problem.  She  maintained  her                                                                    
objection to the amendment.                                                                                                     
                                                                                                                                
Vice-Chair Saddler shared Representative Wilson's concerns.                                                                     
He also expressed some concerns  regarding the problems with                                                                    
the commission's  investigations. He acknowledged  that some                                                                    
improvements  were put  into effect  but felt  the two  year                                                                    
sunset was warranted.                                                                                                           
                                                                                                                                
Representative Wilson MAINTAINED her objection.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Kawasaki                                                                                                              
OPPOSED:  Munoz, Pruitt,  Saddler,  Wilson, Edgmon,  Gattis,                                                                    
Guttenberg, Thompson.                                                                                                           
                                                                                                                                
The MOTION FAILED (1/8).                                                                                                        
                                                                                                                                
Representative  Gara and  Representative Neuman  were absent                                                                    
from voting.                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler  reviewed  the fiscal  impact  note.  He                                                                    
noted that  new zero  Department of Commerce,  Community and                                                                    
Economic  Development  fiscal  note  that  appropriated  the                                                                    
amount  of $8.7  thousand dollars  and was  included in  the                                                                    
governor's budget request.                                                                                                      
                                                                                                                                
2:45:45 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler MOVED  to REPORT HB 290  out of committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note(s).                                                                                                                        
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
HB  290   was  REPORTED   out  of   committee  with   a  "no                                                                    
recommendation" recommendation  and with a  new accompanying                                                                    
zero fiscal  note by the  Department of  Commerce, Community                                                                    
and Economic Development.                                                                                                       
                                                                                                                                
2:46:06 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:48:05 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
HOUSE BILL NO. 375                                                                                                            
                                                                                                                                
     "An Act requiring the electronic submission of a tax                                                                       
     return or report with the Department of Revenue; and                                                                       
     providing for an effective date."                                                                                          
                                                                                                                                
2:48:30 PM                                                                                                                    
                                                                                                                                
KONRAD   JACKSON,   STAFF,    REPRESENTATIVE   KURT   OLSON,                                                                    
introduced the bill that  required the electronic submission                                                                    
of a  tax return  or report with  the Department  of Revenue                                                                    
(DOR). He noted  that the governor introduced  six tax bills                                                                    
that all  included provisions for electronic  submissions of                                                                    
tax  returns   and  reports.   He  stated   that  electronic                                                                    
submission  of documents  had become  commonplace and  was a                                                                    
time saving and  cost cutting measure for  both the taxpayer                                                                    
and  the  state.  He  furthered that  there  were  only  two                                                                    
sections that  made substantive changes to  current statute;                                                                    
the  first  authorized  electronic  filing  and  the  second                                                                    
assessed   a    civil   penalty   for   failing    to   file                                                                    
electronically.                                                                                                                 
                                                                                                                                
Co-Chair  Thompson  observed  that  Section 1  of  the  bill                                                                    
allowed for  a waiver if a  taxpayer did not have  access to                                                                    
computers.  Mr.   Jackson  deferred  the  question   to  the                                                                    
department.  Co-Chair  Thompson  wondered how  the  taxpayer                                                                    
would apply for a waiver.  Mr. Jackson deferred the question                                                                    
to the department.                                                                                                              
                                                                                                                                
Representative  Munoz asked  how  the  waiver process  would                                                                    
work. She favored the benefits  of electronic filing but was                                                                    
concerned  about  the segment  of  the  population that  was                                                                    
"disadvantaged" by the requirement.                                                                                             
                                                                                                                                
Vice-Chair Saddler wondered what  electronic meant. He asked                                                                    
whether  the   method  included   a  fillable  form   or  an                                                                    
electronic PDF format. Mr. Jackson  responded that the basic                                                                    
language in  the bill referred  to a form prescribed  by the                                                                    
department.                                                                                                                     
                                                                                                                                
2:53:40 PM                                                                                                                    
                                                                                                                                
JERRY  BURNETT,  DEPUTY   COMMISSIONER,  TREASURY  DIVISION,                                                                    
DEPARTMENT  OF   REVENUE,  responded  that   the  department                                                                    
envisioned the  waiver process to  include a paper  form the                                                                    
taxpayer filled  out to request  a waiver. He  reported that                                                                    
currently all  tax payers  were businesses  or corporations.                                                                    
The  department  expected  a very  small  number  of  waiver                                                                    
requests.                                                                                                                       
                                                                                                                                
Representative  Munoz   asked  whether  the   bill  included                                                                    
employment  security  taxes.   Ms.  Burnett  responded  that                                                                    
employment security taxes were  filed through the Department                                                                    
of Labor  and Workforce Development  (DOLWD). Representative                                                                    
Munoz wondered  what percentage of  current tax  payers used                                                                    
paper filing.  Ms. Burnett replied that  the department only                                                                    
recently  introduced electronic  filing  for businesses  and                                                                    
corporate filing had already mandated electronic filing.                                                                        
                                                                                                                                
Representative Kawasaki asked what  the percentage of filers                                                                    
that  filed by  paper was.  Mr. Burnett  responded that  the                                                                    
department  was transitioning  out of  paper filing.  He did                                                                    
not  have statistics  and expected  that very  few taxpayers                                                                    
would  choose  paper  filing  due   to  the  convenience  of                                                                    
electronic filing.  Representative Kawasaki asked  about the                                                                    
satisfactory evidence  requirement in  the bill in  order to                                                                    
receive a  waiver. Mr.  Burnett responded  that satisfactory                                                                    
evidence   would   entail   not  having   the   ability   or                                                                    
practicality to access the internet.                                                                                            
                                                                                                                                
2:58:06 PM                                                                                                                    
                                                                                                                                
Representative   Kawasaki  referred   to   Section  7   that                                                                    
contained  the transitional  provisions.  He recounted  that                                                                    
DOR will adopt regulations  for implementation of electronic                                                                    
filing.  He  wondered how  long  the  time was  between  the                                                                    
passage of  the bill  and when  electronic filling  would be                                                                    
implemented. Mr.  Burnett expected the regulations  would be                                                                    
quickly  implemented  but was  not  sure  of the  specifics.                                                                    
Representative   Kawasaki   wanted   to  ensure   that   the                                                                    
transition time was sufficient and  allowed tax payers' time                                                                    
to adjust and prepare for  the change. Mr. Burnett commented                                                                    
that the  regulation process would implement  a time period.                                                                    
He explained that  the state did not have a  large number of                                                                    
tax payers in  any area other than corporate  tax payers. He                                                                    
ensured the  committee that the  department would  engage in                                                                    
some kind of  outreach. He did not anticipate  any issues in                                                                    
the transition.  Representative Kawasaki mentioned  that the                                                                    
waiver system included a civil  penalty and wondered whether                                                                    
the bill contained "typical language"  when dealing with tax                                                                    
filing. He preferred that penalties  would be deferred until                                                                    
after  the  first set  of  electronic  filing was  due.  Mr.                                                                    
Burnett relayed that "it was  typical for a taxing agency to                                                                    
have mandatory  language." Representative  Kawasaki wondered                                                                    
about  the zero  fiscal note.  He was  under the  impression                                                                    
that electronic filing saved time  and money and did not see                                                                    
savings reflected  in the fiscal note.  Mr. Burnett answered                                                                    
that most  taxpayers were already filing  electronically. He                                                                    
noted  that  over  the past  several  years  the  department                                                                    
"ramped down" staffing levels as  the electronic system came                                                                    
online. He  indicated that the  effect on  budgetary savings                                                                    
was  gradual  and were  currently  difficult  to define.  He                                                                    
offered  that when  the Permanent  Fund Division  instituted                                                                    
electronic filing  staffing decreased from over  100 to over                                                                    
70 employees.                                                                                                                   
                                                                                                                                
Vice-Chair Saddler wondered whether  the bill was necessary.                                                                    
Mr.  Burnett   responded  that  legislation   was  necessary                                                                    
because  some  taxpayers  were  just  not  willing  to  file                                                                    
electronically.  He  voiced  that  "there  was  no  business                                                                    
reason" for  a taxpayer not  to file electronically  and the                                                                    
few  paper filers  affected  efficiency. Vice-Chair  Saddler                                                                    
asked  about the  digitization  of forms  and  asked if  the                                                                    
taxpayer's   information   was   sent  directly   into   the                                                                    
department's   database.   Mr.   Burnett  replied   in   the                                                                    
affirmative.  He expounded  that  the department  had a  web                                                                    
portal and information went directly into the system.                                                                           
                                                                                                                                
3:05:03 PM                                                                                                                    
                                                                                                                                
Representative Edgmon  related that  broad based  taxes were                                                                    
on the horizon and asked whether  there would be any need to                                                                    
provide  some  exceptions   for  rural  communities  without                                                                    
access to  reliable internet. Mr. Burnett  answered that how                                                                    
DOR  handled  individual  taxes   would  be  examined  as  a                                                                    
separate issue. Representative Edgmon  indicated that if the                                                                    
state  implemented an  income  tax  electronic filing  would                                                                    
certainly aid  the department especially  with non-residents                                                                    
filing.   He  thought   an  exemption   for  smaller   rural                                                                    
communities should  be an option.  Mr. Burnett  replied that                                                                    
the legislation allowed for a  regulatory process as a means                                                                    
for the department to deal with the issue of income taxes.                                                                      
                                                                                                                                
Representative Guttenberg  was happy  to see the  state move                                                                    
forward  electronically.  However,  he  was  concerned  with                                                                    
internet accessibility.  He remarked  that if  he personally                                                                    
had to go  through a portal to complete his  filing he would                                                                    
unlikely not be able to complete  it. He felt that the state                                                                    
was  "not  up  to  speed"  in  terms  of  having  sufficient                                                                    
internet  service   in  Alaska;   much  of  the   state  had                                                                    
inadequate or dysfunctional internet service.                                                                                   
                                                                                                                                
Representative Munoz  remarked that she was  old fashion and                                                                    
still filed paper federal tax  returns. She thought a longer                                                                    
exemption period  might be  better. She suggested  a 3  or 5                                                                    
year tome period for exemptions.                                                                                                
                                                                                                                                
3:12:05 PM                                                                                                                    
                                                                                                                                
Representative  Gara  thought an  option  to  file by  paper                                                                    
should  remain due  to  the  fact that  in  some places  the                                                                    
capability to file online did  not exist. Mr. Burnett agreed                                                                    
that  a  business  might  be  located  in  a  place  without                                                                    
adequate  internet service  and reported  that an  exemption                                                                    
provision existed in the legislation.                                                                                           
                                                                                                                                
Representative Pruitt  asked whether business  licenses were                                                                    
required  to  be filed  online.  Mr.  Burnett was  uncertain                                                                    
whether  it was  mandated.  Representative Pruitt  supported                                                                    
the  legislation  as  a  step in  the  right  direction  and                                                                    
believed electronic  filing for many state  purposes was the                                                                    
preferred  method  that  increased  efficiency  and  lowered                                                                    
costs. He wondered whether any  of the state's online filing                                                                    
was required.                                                                                                                   
                                                                                                                                
Representative Wilson asked whether  the Department of Labor                                                                    
and Workforce  Development could benefit from  the same kind                                                                    
of bill.                                                                                                                        
                                                                                                                                
Representative Gara  thought that applying for  a waiver was                                                                    
a cumbersome process and thought  that the response might be                                                                    
slow and cause  late filing. He wondered  whether a taxpayer                                                                    
could just call and request  a paper file. Co-Chair Thompson                                                                    
ascertained  that the  waiver process  would  be handled  in                                                                    
regulations.                                                                                                                    
                                                                                                                                
Mr.  Burnett   indicated  that   the  bill   authorized  the                                                                    
department  to  design  the regulations  for  the  exemption                                                                    
process and could be handled  as suggested by Representative                                                                    
Gara.   Representative  Gara   interpreted   Section  1   as                                                                    
prohibiting sending  the form  upon request  without proving                                                                    
necessity. He believed  that the department's administrative                                                                    
costs would  be lowered  if a paper  copy would  be provided                                                                    
upon request  without employing staff time  reviewing waiver                                                                    
criteria. He thought the process was "cumbersome."                                                                              
                                                                                                                                
Representative Gattis  agreed with Representative  Gara. She                                                                    
relayed  from  personal   experience  that  sometimes  paper                                                                    
filing was necessary or preferred.  She wanted to ensure the                                                                    
waiver process was much easier  until the online process was                                                                    
in more universal use in the state.                                                                                             
                                                                                                                                
Co-Chair  Thompson  supported  the legislation.  He  offered                                                                    
that electronic  filing had  already resulted  in efficiency                                                                    
and cost savings  for the department and HB  375 contained a                                                                    
provision to obtain a waiver when necessary.                                                                                    
3:20:25 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
3:20:34 PM                                                                                                                    
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
Representative Munoz MOVED Conceptual Amendment 1.                                                                              
                                                                                                                                
Representative  Munoz moved  conceptual amendment  1 related                                                                    
to page  2, line 4  extending the exemption period  from two                                                                    
years to five years.                                                                                                            
                                                                                                                                
Representative Wilson OBJECTED for discussion.                                                                                  
                                                                                                                                
Representative Munoz  thought 2  years was onerous  for some                                                                    
who needed to  file via paper and would have  to reapply for                                                                    
the waiver after only two years.                                                                                                
                                                                                                                                
Representative Wilson WITHDREW her objection.                                                                                   
                                                                                                                                
Representative   Kawasaki   shared  Representative   Munoz's                                                                    
concern. He  was unsure  whether the amendment  was up  to 5                                                                    
years or extended for a full five years.                                                                                        
                                                                                                                                
Representative Munoz WITHDREW Conceptual Amendment 1                                                                            
                                                                                                                                
Representative  Munoz  MOVED  Conceptual  Amendment  2  that                                                                    
applied  to page  2, line  4 of  the bill  removing "2"  and                                                                    
replacing  it with  "5". She  clarified  that the  amendment                                                                    
extended the exemption period to 5 years.                                                                                       
                                                                                                                                
Representative Kawasaki OBJECTED for discussion.                                                                                
                                                                                                                                
Representative  Kawasaki  related  that the  department  had                                                                    
already  experienced a  savings with  electronic filing  and                                                                    
that it would take time  for the exemption regulations to be                                                                    
written. He  recognized the need  to file paper  returns but                                                                    
felt that  5 years  was "too  long a  time period"  to allow                                                                    
compliance. He opposed the amendment.                                                                                           
                                                                                                                                
Representative Gara did not believe  people were reading the                                                                    
statute correctly.  He deduced  that the exemption  was only                                                                    
granted if a taxpayer was  unable to file electronically and                                                                    
not  because   the  taxpayer  merely  resisted   change.  He                                                                    
supported conceptual amendment 2.                                                                                               
Representative Wilson supported the amendment.                                                                                  
                                                                                                                                
Vice-Chair Saddler indicated he favored the amendment.                                                                          
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Guttenberg, Munoz, Saddler,  Wilson, Edgmon, Gara,                                                                    
Gattis                                                                                                                          
OPPOSED: Kawasaki, Pruitt, Thompson                                                                                             
                                                                                                                                
The MOTION PASSED (7/3).                                                                                                        
                                                                                                                                
Representative Neuman was absent from voting.                                                                                   
                                                                                                                                
3:26:40 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Saddler reviewed  the  zero  fiscal impact  note                                                                    
from DOR.                                                                                                                       
                                                                                                                                
3:26:59 PM                                                                                                                    
                                                                                                                                
Vice-Chair Saddler MOVED to REPORT  HB 375 as amended out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note(s). There  being NO  OBJECTION, it                                                                    
was so ordered.                                                                                                                 
                                                                                                                                
CSHB  375 (FIN)  was REPORTED  out of  committee with  a "do                                                                    
pass"  recommendation  and  with  a  new  accompanying  zero                                                                    
fiscal impact note by the Department of Revenue.                                                                                
                                                                                                                                
Co-Chair  Thompson reviewed  the  agenda  for the  following                                                                    
day.                                                                                                                            
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
3:27:59 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 3:27 p.m.                                                                                          

Document Name Date/Time Subjects
HB 118 AEA Graphic.pdf HFIN 4/11/2016 1:30:00 PM
HB 118