Legislature(2015 - 2016)HOUSE FINANCE 519

04/14/2016 08:30 AM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+= HB 81 EXEMPTION: LICENSING OF CONTRACTORS TELECONFERENCED
Moved CSHB 81(FIN) Out of Committee
+ SB 196 POWER COST EQ FUND: RESERVE ACCT;DIVIDEND TELECONFERENCED
Heard & Held
+ SB 210 COMMUNITY REVENUE SHARING/ASSISTANCE TELECONFERENCED
Heard & Held
+= HB 194 AK SECURITIES ACT; PENALTIES; CRT. RULES TELECONFERENCED
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 14, 2016                                                                                            
                         9:09 a.m.                                                                                              
                                                                                                                                
9:09:32 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Thompson   called  the  House   Finance  Committee                                                                    
meeting to order at 9:09 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Mark Neuman, Co-Chair                                                                                            
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                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Senator  Lyman Hoffman,  Sponsor; Shirley  Marquardt, Mayor,                                                                    
Unalaska;   Kathie  Wasserman,   Alaska  Municipal   League;                                                                    
Senator  Anna MacKinnon,  Sponsor;  Alexi Painter,  Analyst,                                                                    
Legislative  Finance  Division,  Alaska  State  Legislature;                                                                    
Laura Cramer,  Staff, Senator Anna MacKinnon;  Jane Pierson,                                                                    
Staff, Representative  Steve Thompson;  Representative Cathy                                                                    
Tilton,  Sponsor; Christopher  Clark, Staff,  Representative                                                                    
Cathy Tilton.                                                                                                                   
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Rick Koch,  City Manager, City  of Kenai; Dr.  Jon Erickson,                                                                    
Manager, City  and Borough of Yakutat;  Richard Carr, Owner,                                                                    
Bema  Construction; Andre  Spinelli, President,  Alaska Home                                                                    
Builders  Association;  Patrick  Dalton,  Contractor,  Delta                                                                    
Junction;   James  Squyres,   Self,  Rural   Deltana;  Terry                                                                    
Dusynski, Member, Alaska State Homebuilder's Association;                                                                       
Al Nagel, Department of Labor and Workforce Development.                                                                        
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 81     EXEMPTION: LICENSING OF CONTRACTORS                                                                                   
                                                                                                                                
          CSHB 81(FIN) was REPORTED out  of committee with a                                                                    
          "do  pass" recommendation  and with  one new  zero                                                                    
          fiscal note  from the House Finance  Committee for                                                                    
          the   Department   of  Commerce,   Community   and                                                                    
          Economic Development and one  new zero fiscal note                                                                    
          from  the   Department  of  Labor   and  Workforce                                                                    
          Development.                                                                                                          
                                                                                                                                
HB 194    AK SECURITIES ACT; PENALTIES; CRT. RULES                                                                              
                                                                                                                                
          HB 194 was SCHEDULED but not HEARD.                                                                                   
                                                                                                                                
CSSB 196(FIN)                                                                                                                   
         POWER COST EQ FUND: RESERVE ACCT;DIVIDEND                                                                              
                                                                                                                                
          CSSB 196(FIN) was HEARD and  HELD in committee for                                                                    
          further consideration.                                                                                                
                                                                                                                                
CSSB 210(FIN) am                                                                                                                
          COMM. REV. SHARING;PROP. TAX EXEMPTIONS                                                                               
                                                                                                                                
          CSSB 210(FIN)  am was HEARD and  HELD in committee                                                                    
          for further consideration.                                                                                            
                                                                                                                                
9:10:06 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:12:45 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 196(FIN)                                                                                               
                                                                                                                                
     "An Act  relating to the amount  appropriated for power                                                                    
     cost  equalization;  relating  to the  use  of  certain                                                                    
     unexpended  earnings from  the power  cost equalization                                                                    
     endowment fund; and providing for an effective date."                                                                      
                                                                                                                                
9:13:26 AM                                                                                                                    
                                                                                                                                
SENATOR LYMAN  HOFFMAN, SPONSOR,  thanked the  committee for                                                                    
hearing  the bill.  He relayed  that he  had introduced  the                                                                    
bill  due  to ongoing  dialogue  about  how to  utilize  the                                                                    
excess earnings  in the Power Cost  Equalization (PCE) fund.                                                                    
The legislation was designed to  strengthen and save the PCE                                                                    
fund.  He recounted  that the  program existed  for over  30                                                                    
years  and initially  relied on  general  funds but  evolved                                                                    
into  a  true  endowment  that currently  did  not  rely  on                                                                    
appropriations.  Several years  ago the  legislature changed                                                                    
the  way the  fund  was invested  due to  the  high rate  of                                                                    
return of 7 percent. He  indicated that SB 196 addressed two                                                                    
issues; how  much could  be taken from  the earnings  of the                                                                    
fund  and   how  excess  earnings   were  dealt   with.  The                                                                    
withdrawable  amount was  changed from  7 to  5 percent.  He                                                                    
elaborated  that the  legislation  identified  two ways  the                                                                    
excess earnings  were made available;  50% not to  exceed 30                                                                    
million  of  the excess  earnings  were  distributed to  the                                                                    
Community  Assistance  Program  and  20% not  to  exceed  25                                                                    
million were  distributed to the Renewable  Energy Fund, the                                                                    
Bulk Fuel  Revolving Loan Fund,  and the Rural  Power System                                                                    
Upgrades. He  pointed out that  in the  last 12 or  so years                                                                    
the  earnings would  have  met  the needs  for  PCE and  the                                                                    
provisions  for  excess  earnings.  He  recounted  that  the                                                                    
program funded up  to the first 500 kilowatts  of energy. He                                                                    
spoke to  the high power  costs in rural areas.  The program                                                                    
only addressed  the first 500  kilowatts and  many residents                                                                    
in urban  Alaska utilized much  more than that.  He believed                                                                    
it was  good legislation  that ensured  the solvency  of the                                                                    
fund by changing the payout from  7 percent to 5 percent. In                                                                    
addition, the  bill reduced the  dependency on  General Fund                                                                    
(GF)  appropriations  for  the  revenue  sharing  and  rural                                                                    
energy programs.                                                                                                                
                                                                                                                                
9:18:39 AM                                                                                                                    
                                                                                                                                
Representative Gara  spoke to lowering the  payout and asked                                                                    
whether the  amount was taken  from the corpus of  the fund.                                                                    
Senator Hoffman  replied in the  affirmative. Representative                                                                    
Gara  asked  for the  current  total  of the  fund.  Senator                                                                    
Hoffman  replied  that  the   amount  was  approximately  $1                                                                    
billion. Representative Gara stated  that 5 percent amounted                                                                    
to $50  million. Senator Hoffman replied  in the affirmative                                                                    
and  stated  that  currently   PCE  cost  approximately  $43                                                                    
million. Representative  Gara deduced that $7  million would                                                                    
be available for excess funding.  Senator Hoffman replied in                                                                    
the affirmative.                                                                                                                
                                                                                                                                
9:21:21 AM                                                                                                                    
                                                                                                                                
Representative Edgmon  asked the sponsor to  address how the                                                                    
PCE  program  would remain  the  underlying  purpose of  the                                                                    
endowment.  He   wondered  about  how  bundling   the  items                                                                    
together were mutually beneficial  for all programs. Senator                                                                    
Hoffman answered  that the  legislation authorized  that the                                                                    
first use  of the funds were  for PCE. He explained  that if                                                                    
the earnings were  less than $43 million  the earnings would                                                                    
be  depleted and  the remainder  would be  taken out  of the                                                                    
corpus  of the  fund. He  provided  a scenario  that in  the                                                                    
second  year,  if  the  fund earned  100  million  then  $43                                                                    
million  would  pay  PCE,  the   excess  earnings  would  be                                                                    
appropriated and  the remainder would be  deposited into the                                                                    
corpus  of the  fund to  protect it  in case  of lower  than                                                                    
expected  earnings again  in the  future.  The bill  ensured                                                                    
that the  primary purpose  was to  protect the  fund itself.                                                                    
Senator  Hoffman elaborated  that  bundling  the items  were                                                                    
mutually  beneficial   by  assisting  the   revenue  sharing                                                                    
program that would  fund up to the 30 percent  for rural and                                                                    
urban Alaska and  reduced the need for GF as  well as assist                                                                    
with  other energy  programs. He  summarized  that the  bill                                                                    
ensured a solid endowment for  PCE and in good years offered                                                                    
assistance  to  GF  in  the  areas  of  energy  and  revenue                                                                    
sharing.                                                                                                                        
                                                                                                                                
9:24:20 AM                                                                                                                    
                                                                                                                                
Co-Chair Neuman  recounted that the  PCE paid for  the first                                                                    
500 kilowatts of  power. He asked what the  average usage in                                                                    
rural Alaska was. Senator Hoffman  answered that average use                                                                    
was  between  500 and  600  kilowatts;  many residents  kept                                                                    
usage at 500 kilowatts due to the high expense.                                                                                 
                                                                                                                                
Representative  Pruitt  addressed the  community  assistance                                                                    
portion.  He asked  whether  the intent  was  that the  bill                                                                    
would help  supplement the normal  level of  revenue sharing                                                                    
funding  or replace  some of  the GF  appropriation. Senator                                                                    
Hoffman  answered  that  the   intent  was  to  relieve  the                                                                    
pressure  on the  general fund  from  the community  revenue                                                                    
sharing by replacing some  GF. Representative Pruitt favored                                                                    
the legislation  and endorsed  the renewable  energy portion                                                                    
of the bill.                                                                                                                    
                                                                                                                                
9:26:18 AM                                                                                                                    
                                                                                                                                
Representative   Munoz   asked   about  the   500   kilowatt                                                                    
threshold.  She asked  whether  the  legislation raised  the                                                                    
threshold.  Senator  Hoffman  replied in  the  negative.  He                                                                    
believed it was more important to protect the endowment.                                                                        
                                                                                                                                
Representative Kawasaki  asked what  the current  PCE payout                                                                    
was.  Senator Hoffman  replied the  amount was  $43 million.                                                                    
Representative Kawasaki pointed to page  2 of FN 2 (CED) and                                                                    
read the following analysis:                                                                                                    
                                                                                                                                
     1) 50% or $30,000,000, whichever is less, to a                                                                             
     community revenue sharing or community assistance                                                                          
     fund;                                                                                                                      
     2)  30%  or  $25,000,000,  whichever is  less,  to  the                                                                    
     renewable  energy grant  fund  (AS  42.45.045), to  the                                                                    
     bulk fuel  revolving loan fund  (AS 42.45.250),  or for                                                                    
     rural power system upgrades; and …                                                                                         
                                                                                                                                
Co-Chair   Thompson  noted   that   David  Teal,   Director,                                                                    
Legislative Finance  Division would  be available  to answer                                                                    
fiscal note questions.                                                                                                          
                                                                                                                                
Representative  Kawasaki  did  not think  that  much  excess                                                                    
funds  would be  available on  a "6  percent draw."  Senator                                                                    
Hoffman answered that  in past years the fund  had earned 13                                                                    
percent  but also  experienced losses.  He noted  that there                                                                    
were years  in the past  that the  earnings had been  in the                                                                    
double  digits. Representative  Kawasaki  observed that  Mr.                                                                    
Teal had provided the actual  PCE earnings rates (Power Cost                                                                    
Equalization Endowment Fund  - Impacts of SB 196  - (copy on                                                                    
file). He was  bewildered about the fund  earning 24 percent                                                                    
one year and negative 13  percent within two years. He asked                                                                    
whether money had been added  to increase the earnings rate.                                                                    
Senator Hoffman  answered that  it did  not matter  if money                                                                    
was added  in relation to  the earnings rate.  He delineated                                                                    
that  in  2007  when  the  Four Dam  Pool  was  sold  $182.7                                                                    
thousand was added  to the fund. The last  infusion had been                                                                    
$400 million in  2012 in order to make it  a true endowment.                                                                    
A  few years  ago  the  fund had  become  a true  endowment.                                                                    
Representative Kawasaki was confused  by the linkage between                                                                    
SB 196  and SB  210 (Community  Revenue Sharing/Assistance).                                                                    
Senator  Hoffman responded  that there  had been  discussion                                                                    
about combining the  two bills, but due to  the single topic                                                                    
rule they had been introduced as two bills.                                                                                     
                                                                                                                                
Representative  Wilson stated  that the  two bill's  linkage                                                                    
made  the  current  discussion   difficult  to  follow.  She                                                                    
reiterated  the   provisions  in  SB  196   to  confirm  she                                                                    
understood  how the  legislation worked.  She surmised  that                                                                    
the  committee  needed to  pay  attention  when SB  210  was                                                                    
addressed  due to  the  fact that  the  specific payouts  or                                                                    
whether any excess PCE funds  were available in a given year                                                                    
was based  on a "good"  or "bad  year" in the  stock market.                                                                    
She  noted that  in  a  bad year  no  additional funds  were                                                                    
available  for  community  sharing  as  all  of  the  fund's                                                                    
earnings were  needed for  PCE. She  stated that  the fund's                                                                    
corpus was available  to access for the PCE payout  in a low                                                                    
earnings year  but not the  other programs.  Senator Hoffman                                                                    
answered  in  the affirmative.  He  mentioned  that in  good                                                                    
years  30 percent  of the  earnings would  be added  back to                                                                    
replenish the  corpus due  to the fact  that funds  from the                                                                    
corpus could  be spent in  bad years.  Representative Wilson                                                                    
clarified  that in  low earnings  years  the other  programs                                                                    
would not  receive funding from  the PCE  endowment. Senator                                                                    
Hoffman answered in the affirmative.                                                                                            
                                                                                                                                
9:34:06 AM                                                                                                                    
                                                                                                                                
Representative  Gara  spoke  to  a  book  by  Willy  Hensley                                                                    
stating  that electricity  in rural  Alaska brought  "one of                                                                    
the biggest  transformations" to the bush.  He believed that                                                                    
the  PCE "was  an extension  of that"  and the  provision to                                                                    
spend excess funding  on other state needs  was historic. He                                                                    
asked why  the bill  proposed depositing  30 percent  of the                                                                    
excess funds back into the  corpus. Senator Hoffman restated                                                                    
that the  deposits were  needed to  replenish the  fund when                                                                    
money  were withdrawn  in low  earning's years  in order  to                                                                    
"protect" the corpus of the fund.                                                                                               
                                                                                                                                
Senator Hoffman  provided closing  comments on the  bill. He                                                                    
felt  that  PCE made  life  better  for residents  in  rural                                                                    
Alaska.   He  thanked   the   committee   for  hearing   the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
9:37:08 AM                                                                                                                    
                                                                                                                                
SHIRLEY MARQUARDT, MAYOR, UNALASKA,  spoke in support of the                                                                    
bill. She thanked Senator Hoffman  for his work on the bill.                                                                    
She stated that PCE and  revenue sharing were very important                                                                    
to her region.  She appreciated that the bill  created a new                                                                    
funding vehicle  for revenue sharing, realizing  the funding                                                                    
would  ebb and  flow depending  on the  earnings in  a given                                                                    
year. She asked the legislature  to help relieve some of the                                                                    
financial   strain  on   municipalities   by  finding   more                                                                    
alternative funding avenues for communities.                                                                                    
                                                                                                                                
KATHIE  WASSERMAN,  ALASKA  MUNICIPAL LEAGUE,  testified  in                                                                    
support of  the bill. She  relayed her confidence  and trust                                                                    
in Senator  Hoffman's custodial role over  PCE and community                                                                    
revenue  sharing. She  believed  the legislation  stabilized                                                                    
the  funds as  best as  possible under  the state's  current                                                                    
fiscal crisis.                                                                                                                  
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
CSSB 196(FIN)  was HEARD and  HELD in committee  for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 210(FIN) am                                                                                            
                                                                                                                                
     "An  Act  relating  to the  community  revenue  sharing                                                                    
     program;  and  changing  the   name  of  the  community                                                                    
     revenue  sharing program  to  the community  assistance                                                                    
     program."                                                                                                                  
                                                                                                                                
9:40:23 AM                                                                                                                    
                                                                                                                                
SENATOR  ANNA MACKINNON,  SPONSOR,  spoke to  the bill.  She                                                                    
related  that the  legislation  changed  the program's  name                                                                    
from  Community Revenue  Sharing  Program  to the  Community                                                                    
Assistance Program due to the  fact that the state currently                                                                    
"did not have anything to  share." She discussed that SB 210                                                                    
was  a  step  to  continue  providing  assistance  to  rural                                                                    
communities.  She   shared  that   some  members   of  urban                                                                    
communities  were pointing  to  rural communities  reproving                                                                    
them of  not contributing  their fair share  in the  form of                                                                    
taxes. In response,  she engaged in a  dialogue with Senator                                                                    
Hoffman  regarding  finding a  way  PCE  could help  support                                                                    
community revenue  sharing. She related that  the result was                                                                    
SB 196 proposing  the mechanism to provide  the support. She                                                                    
recounted that  50 percent of  the extra earning on  the PCE                                                                    
endowment   would   support    community   assistance.   She                                                                    
reiterated that  the bill  changed the  name of  the program                                                                    
from revenue  sharing to  community assistance.  She pointed                                                                    
to page  5, line 3 and  explained that the bill  changed the                                                                    
amount from  $220 thousand based  on the  population formula                                                                    
to $300 thousand  in order to create an  equitable spread to                                                                    
account for years of high  or low investment and ensure that                                                                    
the  larger communities  would still  receive assistance  in                                                                    
the  same "proportionate  way as  the smaller  communities."                                                                    
She  added  that if  the  revenue  sharing program  remained                                                                    
unchanged, she believed her hometown  would receive up to 40                                                                    
percent of revenue sharing and  was not attempting to "harm"                                                                    
her constituents, but felt that  the bill struck a "balance"                                                                    
between  rural  and urban  areas.  She  stated that  SB  196                                                                    
provided  a   revenue  stream  dependent  on   earnings  and                                                                    
safeguarded  that  rural  communities were  contributing  to                                                                    
help  with  community  assistance;   the  bill  reduced  the                                                                    
state's  obligation by  $30 million.  She detailed  that the                                                                    
bills took  a $180  million program stepped  it down  to $90                                                                    
million  within   three  years,  provided  $30   million  in                                                                    
assistance  and shared  the assistance  equitably throughout                                                                    
the state.                                                                                                                      
                                                                                                                                
Representative  Wilson spoke  to a  handout titled  "SB 210:                                                                    
Community Assistance  Payments FY 16-18 with  $300,000 Base"                                                                    
(copy  on file)  and  remarked that  the  payments were  not                                                                    
based  on population.  She asked  how  the percentages  were                                                                    
formulated.  Senator  MacKinnon  answered that  the  payouts                                                                    
were based on  a mathematical equation on page 5,  line 3 of                                                                    
SB  210.  She delineated  that  the  sponsors evaluated  the                                                                    
current distribution under the  $220 thousand multiplier for                                                                    
population and developed a formula  that was included in the                                                                    
original version  of the  bill. The  Senate did  not believe                                                                    
the  proportional spread  was fair  because the  new formula                                                                    
significantly reduced the payment  to larger communities and                                                                    
actually  increased  assistance  to rural  communities.  The                                                                    
sponsors  chose  a  formula  that  spread  the  proportional                                                                    
distribution  of  the reduction  more  fairly.  Under a  $20                                                                    
million, $30 million and $50  million program, the amount of                                                                    
$300  thousand was  the "ideal"  number where  the decreases                                                                    
were spread most proportionately.                                                                                               
                                                                                                                                
9:46:27 AM                                                                                                                    
                                                                                                                                
Representative  Wilson   pointed  out   that  the   city  of                                                                    
Fairbanks received  a 66 percent  reduction while  the North                                                                    
Star Borough received  a 64 percent reduction,  and the city                                                                    
of North Pole was reduced by  44 percent and the North Slope                                                                    
Borough received a 32 percent  reduction. She indicated that                                                                    
the  North  Slope Borough  was  capable  of generating  more                                                                    
money than  the North  Pole. She  was having  trouble making                                                                    
sense of  the distribution. Senator MacKinnon  answered that                                                                    
the  sponsors did  not "mess"  with the  underlying existing                                                                    
formula that prorated the distribution  of a revenue sharing                                                                    
plan. She stated that the  $300 thousand figure created "the                                                                    
appropriate  fairness  spread  in   the  reduction"  of  the                                                                    
program  while   creating  "the   least  impact"   on  small                                                                    
communities  because they  possessed "the  least ability  to                                                                    
respond" to  the reduction in  the program. She  stated that                                                                    
the  Legislative Finance  Division (LFD)  was available  for                                                                    
questions.                                                                                                                      
                                                                                                                                
ALEXI  PAINTER,   ANALYST,  LEGISLATIVE   FINANCE  DIVISION,                                                                    
ALASKA  STATE  LEGISLATURE,  explained  that  the  community                                                                    
assistance  program  provided  two payments;  a  per  capita                                                                    
payment   and  a   basic  amount.   The  basic   amount  was                                                                    
distributed  to all  communities  regardless of  population,                                                                    
the  $300   thousand  was  the   base  amount,   cities  and                                                                    
unincorporated  municipalities received  differing fractions                                                                    
of  that  amount.  Additionally,  there  was  a  per  capita                                                                    
distribution.  The bill  reduced the  base amount  from $384                                                                    
thousand  to   $300,000  and  changed  the   manner  of  the                                                                    
proration. In  the current formula,  the base began  at $384                                                                    
thousand but if  the distribution was below  $60 million the                                                                    
base  was  reduced pro  rata  to  a  floor of  $220,000.  He                                                                    
recounted that the  bill changed the base  to $300 thousand,                                                                    
the exact  middle amount, and did  not prorate as long  as a                                                                    
sufficient amount of funding was  available to pay the basic                                                                    
amount.                                                                                                                         
                                                                                                                                
Representative Wilson did  not have a problem  with the bill                                                                    
due to  the fact that she  did not think excess  funds would                                                                    
be  available  except   in  years  experiencing  exceptional                                                                    
returns. She  asked that based  on the numbers on  the chart                                                                    
provided, what was the assumption  regarding the amount that                                                                    
was distributed into the program "first."                                                                                       
                                                                                                                                
9:50:29 AM                                                                                                                    
                                                                                                                                
Senator  Mackinnon  replied  that   in  FY  2016  the  state                                                                    
distributed $57.3  million. In SB 210,  the distribution was                                                                    
proposed  at  $38.2 million.  She  explained  that the  $300                                                                    
thousand figure  was a new  multiplier. She pointed  to page                                                                    
5, line 1  of the bill that designated deletion  of the $384                                                                    
thousand  number.  She  reiterated that  two  formulas  were                                                                    
employed.  The  "larger  communities   may  feel  like"  the                                                                    
distribution  was "unfair."  The state  did not  have enough                                                                    
revenue to  share and based  on a comparison  exclusively of                                                                    
the  changes of  the percentages  it would  be difficult  to                                                                    
find a rational reason  for the distribution. She delineated                                                                    
that  two  formulas  applied between  the  borough  and  the                                                                    
population  and a  different  spreadsheet  was necessary  to                                                                    
show how it  worked. "Larger communities were  impacted to a                                                                    
greater   degree."   The   Senate  believed   that   "larger                                                                    
communities' had a  way to react" to  reduction in revenues.                                                                    
The  Senate  wanted  to  ensure  smaller  communities  could                                                                    
retain  firefighters  or   police  officers  and  therefore,                                                                    
offered additional  assistance while transitioning  into the                                                                    
reality of state budget shortfalls.                                                                                             
                                                                                                                                
Mr. Painter elaborated that most  of the distribution larger                                                                    
communities received  were through  the per  capita payment.                                                                    
Altering the  formula reduced the  amount of the  per capita                                                                    
payment  and proportionately  increased the  payment through                                                                    
the  base amount.  A larger  community that  mostly received                                                                    
its  distribution  from the  per  capita  payout received  a                                                                    
larger  reduction  than  a  smaller  community  that  mostly                                                                    
received payments from the base amount.                                                                                         
                                                                                                                                
Representative Wilson  noted that North Pole  only had 2,100                                                                    
people.  She  pointed to  the  North  Slope Borough  with  a                                                                    
population of  2870 and "a lot  of infrastructure, business,                                                                    
oil, and gas" and compared it  to the North Pole that lost a                                                                    
big industry  but received a  higher reduction. She  did not                                                                    
believe  the   numbers  "seemed  fair."   Senator  MacKinnon                                                                    
replied that  the numbers for the  unorganized boroughs were                                                                    
"very  different."  She  relayed  that  the  Senate  Finance                                                                    
Committee discussed  that boroughs received more  money. She                                                                    
warned that the population numbers  were not actual and were                                                                    
not included  in the borough  population. She stated  that a                                                                    
percentage  of borough  money was  also  distributed to  the                                                                    
North  Pole  based  on the  formula  for  boroughs.  Another                                                                    
formula used  for boroughs shared  revenues with  its cities                                                                    
in another portion of the revenue sharing program.                                                                              
                                                                                                                                
Mr.  Painter delineated  that the  population  count in  the                                                                    
formula  did  not  double  count  citizens.  The  population                                                                    
within  the  North  Pole  city limits  was  counted  in  its                                                                    
population but not  in the borough. The  North Slope Borough                                                                    
received  its distribution  from the  full base  figure. The                                                                    
city of North  Pole received one quarter of the  base set in                                                                    
statute but also received funding from the borough formula.                                                                     
                                                                                                                                
9:56:03 AM                                                                                                                    
                                                                                                                                
Representative Wilson announced that  most of the cities had                                                                    
charters that  limited the amount  of property tax  it could                                                                    
raise and  some already  charged a  sales tax.  She wondered                                                                    
why the reduction discrepancy between  the City of Fairbanks                                                                    
and the North  Star Borough of 2 percent existed  in the new                                                                    
formula.                                                                                                                        
                                                                                                                                
Co-Chair Thompson noted that the  bill would be heard before                                                                    
the committee again.                                                                                                            
                                                                                                                                
Mr. Painter answered that a  borough received a distribution                                                                    
from the  full base  of 300 thousand  and the  city received                                                                    
one quarter of the base.  The different treatment was due to                                                                    
the  split  between  the  per capita  amount  and  the  base                                                                    
amount.                                                                                                                         
                                                                                                                                
Senator  MacKinnon  elaborated that  the  program  was at  a                                                                    
"stair step down stage." She  recounted that the legislature                                                                    
did  not  recharge the  fund  with  the yearly  $60  million                                                                    
appropriation  and  the  fund dropped  to  a  $57.3  million                                                                    
program. She  expounded that currently,  the program  was in                                                                    
the second  stair step down  headed towards  elimination and                                                                    
eventually the  cities will not receive  anything. The stair                                                                    
step had  dropped from  $57.3 million  to $38.2  million for                                                                    
the  current  fiscal  year's   budget.  The  largest  factor                                                                    
affecting   the  proration   was   the   reduction  in   the                                                                    
distribution  in  FY  16  of $57.3  million  down  to  $38.2                                                                    
million  currently. The  proration was  not the  significant                                                                    
portion of  the change  to municipalities  it was  the stair                                                                    
stepping reduction to the program.                                                                                              
                                                                                                                                
Co-Chair  Thompson  interjected   that  "otherwise"  revenue                                                                    
sharing was being eliminated.                                                                                                   
                                                                                                                                
Senator MacKinnon  agreed and  restated that  SB 196  was an                                                                    
effort  to  support  the program  outside  of  general  fund                                                                    
appropriations.                                                                                                                 
                                                                                                                                
Co-Chair  Neuman asked  how  equitably  the current  version                                                                    
distributed revenue sharing  dollars to communities. Senator                                                                    
MacKinnon answered  that the new program  gained more equity                                                                    
through  lowering  the base  amount  to  $300 thousand.  She                                                                    
indicated that  the formula would  still work  if additional                                                                    
appropriations  were   made  to  the   community  assistance                                                                    
program.  She  restated  that  the  bills  were  "a  way  to                                                                    
stabilize  a  program  in recognition"  that  there  was  no                                                                    
revenue to share.                                                                                                               
                                                                                                                                
Co-Chair Neuman  asked why the  provisions did  not allocate                                                                    
100 percent of excess PCE  funds into revenue sharing, since                                                                    
PCE  was  funded  via  general  fund  dollars,  and  further                                                                    
preserve the  draw on  GF. He  voiced that  his goal  was to                                                                    
reduce GF draws.                                                                                                                
                                                                                                                                
10:01:18 AM                                                                                                                   
                                                                                                                                
Senator  MacKinnon responded  she shared  the same  goal but                                                                    
employed a different method to  attain it. She detailed that                                                                    
LFD determined  that $17  million was  the amount  of excess                                                                    
earnings  of the  PCE fund  from  FY 2018  through FY  2022.                                                                    
Through  discussions with  Senator  Hoffman  and the  entire                                                                    
Senate in  an effort  to stimulate support  for some  of the                                                                    
programs  rural  Alaska  received,  50  percent  up  to  the                                                                    
maximum of  $30 million would support  community assistance.                                                                    
She emphasized  that $30 million  would fund  the assistance                                                                    
program  at  100 percent  and  larger  communities would  be                                                                    
receiving a profit  from the PCE receipts.  She believed the                                                                    
provisions  were "a  good  compromise."  She explained  that                                                                    
historically the PCE fund was  founded because a significant                                                                    
amount of  money was invested  in large hydro  projects that                                                                    
exclusively  benefitted urban  areas  and rural  communities                                                                    
did not  see relief  from energy  costs. She  mentioned that                                                                    
her  goal  was to  reduce  general  fund spending  with  the                                                                    
bills. She  noted that the  state was spending GF  on Alaska                                                                    
Energy Authority (AEA) programs.  She remarked that the bill                                                                    
was a  compromise and that  the initial bill did  assign all                                                                    
of  the excess  to  the  GF but  rural  Alaska's needs  were                                                                    
different than urban Alaska's needs  and the current version                                                                    
attempted to strike a balance.                                                                                                  
                                                                                                                                
Co-Chair Neuman  understood the rationale.  He spoke  to the                                                                    
population   in   the   Mat-Su   region   growing   at   "an                                                                    
extraordinary rate." He cited a  figure of 100 thousand from                                                                    
"state  economists."   He  noted  that  the   Mat-Su  school                                                                    
district  experienced an  increase of  708 students  but its                                                                    
revenue sharing was  going down "disproportionately compared                                                                    
to how other communities were  affected." He had issues with                                                                    
the bill.  His goal was to  get the excess funds  to go back                                                                    
into communities  with lowered GF.  He stated that  the bill                                                                    
did not  contain a mechanism  that adjusted  for communities                                                                    
with a high  growth rate. He felt that the  amount of people                                                                    
affected  by  the reduction  in  revenue  sharing was  "very                                                                    
disproportionate  compared  to  the   needs"  in  a  rapidly                                                                    
growing community.                                                                                                              
                                                                                                                                
10:05:15 AM                                                                                                                   
                                                                                                                                
Representative Pruitt  favored the program's name  change to                                                                    
community  assistance. He  wanted to  better understand  the                                                                    
impact  to his  community.  He asked  about  how the  change                                                                    
affected  the   individual  tax  payer.   Senator  MacKinnon                                                                    
replied that she  was uncertain. She offered  that the other                                                                    
choice eliminated  the program completely. The  result would                                                                    
be a  cost to everyone's  community and her  community would                                                                    
lose $7.8  million directly.  She said  there was  simply no                                                                    
revenue  and the  legislation's intention  was not  to shift                                                                    
costs.  In FY  18, only  $8 million  was left  to share  and                                                                    
urban  areas would  take 40  percent  to 50  percent of  the                                                                    
funds.  The sponsors  were not  attempting  to impact  local                                                                    
communities   but  wanted   to   sustain   the  program   in                                                                    
"perpetuity."  She commented  that $8.5  million out  of the                                                                    
projected $17  million of excess  PCE funds  would "standup"                                                                    
the community assistance program.  She acknowledged that the                                                                    
issue was  contentious. She reiterated that  she and Senator                                                                    
Hoffmann  had been  searching for  a  way that  some of  the                                                                    
receipts  from the  $1 billion  PCE fund  would be  utilized                                                                    
fairly while protecting the $1  billion balance in the fund.                                                                    
She stated  that once  the PCE  fund was  spent it  would be                                                                    
impossible to replenish the fund.                                                                                               
                                                                                                                                
10:09:10 AM                                                                                                                   
                                                                                                                                
Representative  Kawasaki asked  about additional  changes to                                                                    
the revenue  sharing program listed  on page 5 of  the bill.                                                                    
He noted  that the provision  that changed the base  to $300                                                                    
thousand  rounded  the  amount  off to  the  nearest  dollar                                                                    
instead  of  nearest  thousand.   He  wondered  whether  the                                                                    
provision  was the  only change  besides  the total  amount.                                                                    
Senator  MacKinnon  replied  that  was the  only  change  in                                                                    
addition to the name change of the program.                                                                                     
                                                                                                                                
LAURA CRAMER,  STAFF, SENATOR ANNA MACKINNON,  affirmed that                                                                    
they were the only changes.  She confirmed that the rounding                                                                    
was changed  to the nearest $1.00  so the fund would  not go                                                                    
negative.   Representative   Kawasaki    agreed   that   the                                                                    
distribution  formula between  rural  and urban  communities                                                                    
was  disproportionate.  He  spoke  to  the  revenue  sharing                                                                    
change to  community assistance. He  did not favor  the name                                                                    
change and thought it sounded like public assistance.                                                                           
                                                                                                                                
Representative  Edgmon stated  that  he  supported the  bill                                                                    
even  though  it   was  not  a  "perfect."   He  viewed  the                                                                    
legislation as  a measure that incorporated  urban and rural                                                                    
members of  the Senate working  together to find  a solution                                                                    
in times of  downsizing the budget. He pointed to  page 6 of                                                                    
the spreadsheet handout  and noted that after  the first six                                                                    
listed  communities the  rest of  the 59  communities had  a                                                                    
population under  10 thousand. He thought  the program saved                                                                    
the  state   money.  He  maintained  that   without  revenue                                                                    
sharing, costs would shift form  the operating budget to the                                                                    
capital budget. He  voiced that in all of  the other revenue                                                                    
measures there were disparate numbers as well.                                                                                  
                                                                                                                                
Representative Munoz  stated that Fairbanks,  Ketchikan, and                                                                    
Kodiak   were   listed   twice  on   the   spreadsheet,   as                                                                    
municipalities  and   as  parts  of  boroughs.   Juneau  and                                                                    
Wrangell  were   also  municipalities  that  were   part  of                                                                    
boroughs and were only listed  once. She wondered why Juneau                                                                    
and  Wrangell  were  only  listed  once.  Co-Chair  Thompson                                                                    
clarified  that boroughs  contain cities  inside it  such as                                                                    
the  Mat-Su borough  that contained  Palmer and  Wasilla. He                                                                    
added  that  cities  did not  exist  inside  municipalities.                                                                    
Representative   Munoz    ascertained   that    Juneau   was                                                                    
incorporated as  one municipality  with one  city government                                                                    
and  therefore,  was  only listed  once.  Co-Chair  Thompson                                                                    
replied in the affirmative.                                                                                                     
                                                                                                                                
Senator   MacKinnon  referenced   Representative  Kawasaki's                                                                    
concern  that some  of  the rural  payments  were very  high                                                                    
relative  to the  low population  numbers. She  reminded the                                                                    
committee  that some  of the  rural communities  were listed                                                                    
separately and  were also  part of a  borough where  some of                                                                    
its  population existed  within  a  borough. She  reiterated                                                                    
that  the  formula  did  not  double  count  population  and                                                                    
cautioned  against  using   population  numbers  to  compare                                                                    
proportionality. She offered to send  an analyst from LFD to                                                                    
member's offices  to explain the breakdown  in each member's                                                                    
district.                                                                                                                       
                                                                                                                                
Co-Chair  Thompson  noted  that  the  Fairbanks  North  Star                                                                    
Borough listed population along  with the listed populations                                                                    
of Fairbanks and  North Pole on the  spreadsheet equaled the                                                                    
actual population of the Fairbanks North Star Borough.                                                                          
                                                                                                                                
10:16:37 AM                                                                                                                   
                                                                                                                                
Representative Gara stated that  the revenue sharing program                                                                    
had  changed many  times over  the years.  He asked  why the                                                                    
current formula  was eventually stepped  down to zero  by FY                                                                    
2019.  Senator  MacKinnon  answered  that  most  likely  the                                                                    
reason  was  due  to  the   legislature's  decision  to  not                                                                    
recharge  the   fund.  She  recounted  that   the  fund  was                                                                    
originally set  up at the  full allocation of  $180 million;                                                                    
$60 million  was drawn  and paid according  to the  pro rata                                                                    
formula.                                                                                                                        
                                                                                                                                
Mr.  Painter  expounded  that   annually  one-third  of  the                                                                    
balance was  distributed which amounted to  $60 million. The                                                                    
previous year the legislature  appropriated $52 million into                                                                    
the fund;  not the  full $60  million and  distributed $57.3                                                                    
million.  Without another  appropriation, one  third of  the                                                                    
funds balance of approximately $115  million was $38 million                                                                    
and  eventually decreased  to $25  million. Current  statute                                                                    
prohibited any distribution if the  fund's balance was below                                                                    
$20   million.  Representative   Gara   asked  for   further                                                                    
clarification. Mr. Painter replied  that the legislature did                                                                    
recharge the fund during the  last fiscal year in the amount                                                                    
of   $52  million.   He  added   that   the  formula   using                                                                    
progressivity was  no longer in effect.  Representative Gara                                                                    
asked  what amount  was necessary  to  recharge the  current                                                                    
fund. Mr.  Painter answered that  the balance  was currently                                                                    
$115  million  and  an  appropriation  of  $75  million  was                                                                    
necessary.                                                                                                                      
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
SHIRLEY  MARQUARDT,  MAYOR,   UNALASKA,  believed  the  name                                                                    
change was  very significant and  agreed that the  state did                                                                    
not have the  revenue to share anymore. She  opined that the                                                                    
revenue  sharing  program  had  always  been  assistance  to                                                                    
communities  to "keep  the lights  on."  She referenced  the                                                                    
community  of  Atka  that literally  had  a  difficult  time                                                                    
keeping the lights on and  the money they received under the                                                                    
continuation  of  the  program   assisted  them  with  power                                                                    
generation. She  noted the difficulty in  providing services                                                                    
in rural communities. She supported the bill.                                                                                   
                                                                                                                                
KATHIE WASSERMAN, ALASKA MUNICIPAL  LEAGUE, relayed that the                                                                    
league  examined the  formula regularly  and the  inequities                                                                    
shifted between  all areas.  The previous  version contained                                                                    
larger  decreases  to  the  Fairbanks  North  Star  Borough.                                                                    
Manipulating the  formula was very difficult  and she opined                                                                    
that  at  some  point  it  had  to  become  acceptable  with                                                                    
existing inequities. Her only concern  was the absence of an                                                                    
effective date and  the league "was not certain  that the SB
210 formula  can operate" under the  $38.2 million provision                                                                    
that was effective  in July 2016. She  recommended using the                                                                    
old formula to distribute the $38.2 million in FY 18.                                                                           
10:24:22 AM                                                                                                                   
                                                                                                                                
RICK   KOCH,    CITY   MANAGER,    CITY   OF    KENAI   (via                                                                    
teleconference), voiced  that currently a variable  base was                                                                    
built into the  formula and the legislation  did not contain                                                                    
a  variable base.  He believed  eliminating the  variability                                                                    
created the  problem with the  calculation. He  deduced that                                                                    
at $30  million the base  of $300 thousand worked  but noted                                                                    
that  as   the  distribution   dropped  the   formula  "went                                                                    
completely out of whack." He  cited that at an allocation of                                                                    
$30 million with the base  of $300 thousand the distribution                                                                    
for  Fairbanks  was  roughly  $877 thousand  but  at  a  $20                                                                    
million  distribution it  would drop  to $78  thousand which                                                                    
was  a  91  percent  drop. He  added  that  Anchorage  would                                                                    
experience a  95 percent  drop from  a distribution  of $7.8                                                                    
million  to  $406 thousand  under  the  same allocations.  A                                                                    
small community  of 322  would receive  $83 thousand  or $75                                                                    
thousand  and  only  experience  slightly  less  than  a  10                                                                    
percent reduction  under the  same distribution  factors. He                                                                    
believed  the   disparity  was  too  wide   and  a  variable                                                                    
distribution provision  would resolve the issue.  He offered                                                                    
to provide a proposed plan to the committee members.                                                                            
                                                                                                                                
10:27:11 AM                                                                                                                   
                                                                                                                                
DR. JON ERICKSON, MANAGER, CITY  AND BOROUGH OF YAKUTAT (via                                                                    
teleconference), spoke in support of  SB 210. He stated that                                                                    
revenue sharing made up 16  percent of the borough's budget.                                                                    
He  reported   that  Yakutat  collected  $350   thousand  in                                                                    
property  tax and  in order  to  make up  the difference  he                                                                    
needed to increase  property tax two and one  half times. In                                                                    
addition,  Yakutat  was  funding  the  school  at  the  full                                                                    
contribution rate  at $503 thousand. Yakutat  had been using                                                                    
revenue sharing  to make up  the differences in  its various                                                                    
budgets.   He  indicated   that  if   revenue  sharing   was                                                                    
eliminated he  would be forced to  reduce the administrative                                                                    
staff from  6 to 3  employees. He understood  that "everyone                                                                    
had to pitch in and make it work somehow."                                                                                      
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
CSSB  210(FIN)  am  was  HEARD and  HELD  in  committee  for                                                                    
further consideration.                                                                                                          
                                                                                                                                
HOUSE BILL NO. 81                                                                                                             
                                                                                                                                
     "An Act  relating to an  exemption from  the regulation                                                                    
     of construction contractors."                                                                                              
                                                                                                                                
10:30:21 AM                                                                                                                   
                                                                                                                                
Co-Chair Neuman MOVED to ADOPT the proposed committee                                                                           
substitute for HB 81, Work Draft 29-LS0346\P (Bruce,                                                                            
4/12/16). There being NO OBJECTION, it was so ordered.                                                                          
                                                                                                                                
JANE PIERSON, STAFF, REPRESENTATIVE STEVE THOMPSON,                                                                             
explained the changes in the Committee Substitute and read                                                                      
from a prepared statement:                                                                                                      
                                                                                                                                
   HB 81 Version P differs from CSHB 81 (L&C), HB 81 Version                                                                    
   H, in three ways:                                                                                                            
                                                                                                                                
   1. Deletes  "in  order"   from  the   legislative  intent                                                                    
     language  from page  1,  line  6, of  HB  81 Version  H                                                                    
     because the  words are not needed,  as many grammarians                                                                    
     often say.                                                                                                                 
                                                                                                                                
   2. Adds a new section 2 (page 1, lines 8 through 14) that                                                                    
     adds a  new subsection to  AS 08.18.116 to  require the                                                                    
     Alaska Department of  Commerce, Community, and Economic                                                                    
     Development  or  the  Alaska Department  of  Labor  and                                                                    
     Workforce   Development   to   investigate   and   take                                                                    
     appropriate action if an owner-builder  tries to sell a                                                                    
     structure  while not  licensed as  a contractor  during                                                                    
     the  time of  constructing  the building  or two  years                                                                    
    after construction begins. See "begins" on line 11.                                                                         
                                                                                                                                
   3. Replaces language  in  section  3  (page  3,  lines  2                                                                    
     through 6)  to require  an owner-builder to  notify the                                                                    
     Alaska Department of  Commerce, Community, and Economic                                                                    
     Development  on  a form  provided  by  the agency  when                                                                    
     advertising  or  selling  a home  built  if  an  owner-                                                                    
     builder  tries  to sell  it  while  not licensed  as  a                                                                    
     contractor   during  the   time  of   constructing  the                                                                    
     building or  two years  after construction  begins. See                                                                    
     "begins" on line 4.                                                                                                        
                                                                                                                                
   The previous versions of the bill would have required the                                                                    
   owner-builder to  get permission  from the  department to                                                                    
   sell a building. HB 81 Version N  changes this to require                                                                    
   disclosure.                                                                                                                  
                                                                                                                                
Representative Wilson asked  for clarification regarding the                                                                    
two year provision.  Ms. Pierson answered that  the two year                                                                    
provision  was consistent  with current  law. Representative                                                                    
Wilson asked  when the  two year  period began.  Ms. Pierson                                                                    
deferred the question to the sponsor.                                                                                           
                                                                                                                                
REPRESENTATIVE  CATHY  TILTON,  SPONSOR,  replied  that  the                                                                    
question had been asked the  prior session and was something                                                                    
the   sponsors  struggled   with   over   the  interim   and                                                                    
extensively  researched. The  two year  period began  at the                                                                    
start of construction  because the start was  the point that                                                                    
defined   the   permitting   process.  She   discussed   the                                                                    
legislation.  She  relayed  that  HB  81  provided  stronger                                                                    
protection  to   homebuyers  that  required   an  unlicensed                                                                    
builder  to   disclose  the  fact  that   the  building  was                                                                    
constructed  by an  unlicensed builder.  The  intent was  to                                                                    
allow individuals to continue  to construct their own homes.                                                                    
Unfortunately, there  were people who built  with the intent                                                                    
to sell  and avoided attaining the  required licensures. She                                                                    
stated that contractor  law had been on the  books in Alaska                                                                    
since 1968. She detailed  that the current homeowner/builder                                                                    
exemption  was enacted  in 1982  and modified  in 2006.  The                                                                    
current  law  provided an  exemption  allowing  a person  to                                                                    
build their own home or  commercial building every two years                                                                    
without  a license.  A growing  number  of individuals  were                                                                    
exploiting the  provision to build and  operate construction                                                                    
businesses without attaining  required licensure. Homeowners                                                                    
who  purchase a  home  from the  unlicensed  builder had  no                                                                    
recourse  in the  law if  the home  had issues  and was  not                                                                    
built  properly. She  declared  that the  bill provided  for                                                                    
transparency and disclosure.                                                                                                    
                                                                                                                                
Co-Chair Thompson OPENED public testimony.                                                                                      
                                                                                                                                
RICHARD    CARR,     OWNER,    BEMA     CONSTRUCTION    (via                                                                    
teleconference), spoke  in support  of the bill.  He relayed                                                                    
that he  specialized in restoration  and remodeling.  He had                                                                    
received  many  "frantic  calls from  insurance  agents  and                                                                    
homeowners"  with  serious  issue  due to  faulty  work.  He                                                                    
shared  personal  experience  with   customers  who  had  no                                                                    
financial  recourse  because  the  builder did  not  have  a                                                                    
"performance bond." The bill would  protect the consumers of                                                                    
Alaska from  "unscrupulous builders"  that "hide  behind the                                                                    
two year allowance."                                                                                                            
ANDRE SPINELLI, PRESIDENT,  ALASKA HOME BUILDERS ASSOCIATION                                                                    
(via  teleconference),  stated  his strong  support  of  the                                                                    
bill. He  shared that  the association  worked on  the issue                                                                    
for many years.                                                                                                                 
                                                                                                                                
PATRICK    DALTON,   CONTRACTOR,    DELTA   JUNCTION    (via                                                                    
teleconference),  testified   against  Section  11   of  the                                                                    
current version of the bill.  He felt that the provision was                                                                    
extreme   and  "interfered   with  the   right  of   private                                                                    
property."  He agreed  with  the  regulations for  organized                                                                    
boroughs.   He  proposed   an   exemption  for   unorganized                                                                    
boroughs.   He   believed    the   provision   protected   a                                                                    
professional group at the expense of rural homebuilders.                                                                        
                                                                                                                                
10:42:27 AM                                                                                                                   
                                                                                                                                
JAMES  SQUYRES, SELF,  RURAL  DELTANA (via  teleconference),                                                                    
testified  against  the  bill.  He  believed  the  bill  had                                                                    
unintended  consequences for  rural  residents. He  stressed                                                                    
that   "the  contractor   lobby   was   tenacious  and   was                                                                    
terrorizing"  regular  Alaskans.  He opposed  the  provision                                                                    
that  required the  owner/builder  to fill  out  a form  and                                                                    
provide  proof  to the  Department  of  Labor and  Workforce                                                                    
Development (DOL) and Department  of Commerce, Community and                                                                    
Economic Development  (DCCED) in order to  sell their owner-                                                                    
built  home.  He opined  that  the  provision increased  the                                                                    
agencies bureaucratic  functions and impinged  on individual                                                                    
freedoms.                                                                                                                       
                                                                                                                                
TERRY   DUSYNSKI,   MEMBER,   ALASKA   STATE   HOMEBUILDER'S                                                                    
ASSOCIATION  (via teleconference),  testified in  support of                                                                    
the bill. He shared that he  was a home inspector since 1978                                                                    
and  had seen  many owner-built  homes. He  voiced that  the                                                                    
exemption  in the  bill allowed  people to  build their  own                                                                    
homes. He explained  that the bill merely  required a person                                                                    
building a house  and selling it before the  two year period                                                                    
to notify the department and  explain why the individual was                                                                    
selling  the house.  He  emphasized that  the  bill did  not                                                                    
prohibit constructing an owner built home.                                                                                      
                                                                                                                                
Co-Chair Thompson CLOSED public testimony.                                                                                      
                                                                                                                                
Representative Wilson  asked who  would enforce the  issue -                                                                    
DOL or DCCED.                                                                                                                   
                                                                                                                                
CHRISTOPHER  CLARK,  STAFF,   REPRESENTATIVE  CATHY  TILTON,                                                                    
replied  that the  provision in  Section 2  of the  bill was                                                                    
enforced by both DCCED and  DOL. He added that the provision                                                                    
in Section  3 was  enforced by DCCED.  Representative Wilson                                                                    
wanted to know how the bill would be enforced.                                                                                  
                                                                                                                                
10:48:12 AM                                                                                                                   
                                                                                                                                
AL  NAGEL, DEPARTMENT  OF  LABOR  AND WORKFORCE  DEVELOPMENT                                                                    
(via teleconference), answered that  the details had not yet                                                                    
been  worked out  between the  departments; the  regulations                                                                    
would be written  after the bill was  adopted. He delineated                                                                    
that both departments had  investigators that were dedicated                                                                    
to license enforcement.                                                                                                         
                                                                                                                                
Representative   Wilson  wondered   whether  the   bill  was                                                                    
necessary. She asked how the  bill changed what was supposed                                                                    
to  currently be  done. Mr.  Nagel replied  that he  was not                                                                    
sure what the  department was not doing now.  He stated that                                                                    
the  bill  offered  more structure  about  when  a  two-year                                                                    
exemption period started. He  emphasized that the department                                                                    
was    seriously    enforcing    the    existing    statute.                                                                    
Representative  Wilson  asked  what   paper  work  would  be                                                                    
required  to  prove  the  starting  date  of  the  two  year                                                                    
construction  period. Mr.  Nagel answered  that the  statute                                                                    
would  require  notice  that  the  homeowner  was  divesting                                                                    
herself  of  a property;  not  for  a business  reason.  The                                                                    
department  would  investigate  and  determine  whether  the                                                                    
activity   was  unlicensed.   Representative  Wilson   asked                                                                    
whether updated fiscal notes were forthcoming.                                                                                  
                                                                                                                                
Co-Chair Neuman  spoke to  the fiscal  notes. He  noted that                                                                    
the Division  of Corporations, Businesses,  and Professional                                                                    
Licensing  (DCBPL) submitted  a  zero note  (FN  1 CED).  He                                                                    
detailed that  the division noted  that the  licensing costs                                                                    
covered  the regulatory  costs. He  noted the  Department of                                                                    
Labor  and  Workforce Development  zero  fiscal  note (FN  2                                                                    
DOL).                                                                                                                           
                                                                                                                                
10:52:25 AM                                                                                                                   
                                                                                                                                
Representative  Wilson  spoke  to   the  fiscal  notes.  She                                                                    
believed the bill carried fiscal impacts to the agencies.                                                                       
                                                                                                                                
Co-Chair Neuman  stated that according  to the  fiscal notes                                                                    
the  department  determined that  its  fees  and staff  were                                                                    
sufficient to enforce the legislation.                                                                                          
Co-Chair    Thompson    reminded    the    committee    that                                                                    
investigations were presently happening on a regular basis.                                                                     
                                                                                                                                
Co-Chair  Neuman  MOVED  to  report   CSHB  81(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Representative Wilson  OBJECTED. She was concerned  over how                                                                    
the regulations would be written  and believed that the bill                                                                    
impacted   personal  property   rights.  She   WITHDREW  her                                                                    
OBJECTION.                                                                                                                      
                                                                                                                                
CSHB 81(FIN) was REPORTED out  of committee with a "do pass"                                                                    
recommendation and  with one new  zero fiscal note  from the                                                                    
House  Finance Committee  for  the  Department of  Commerce,                                                                    
Community and  Economic Development and one  new zero fiscal                                                                    
note   from   the   Department  of   Labor   and   Workforce                                                                    
Development.                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
10:54:55 AM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:58 p.m.                                                                                          

Document Name Date/Time Subjects
HB 194 CS WORKDRAFT FIN GH1060-S.pdf HFIN 4/14/2016 8:30:00 AM
HB 194
HB 81 CS WORKDRAFT vP.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
House Members - SB 196ce.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
SB 196 Fin updated sectional.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
sb 196 Leg finance spread sheets.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
CSSB 210(FIN) AM - Sectional Analysis.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM E.A.PDF HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB 210(FIN) AM Sponsor Statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
CSSB210(FIN) AM - Community Assistance Distribution.pdf HFIN 4/14/2016 8:30:00 AM
SB 210
HB 81 Summary of Changes Pversion 8 March 2016.pdf HFIN 4/14/2016 8:30:00 AM
HB 81
196 new sponsor statement.pdf HFIN 4/14/2016 8:30:00 AM
SB 196
4 14 16 SB 210 by Borough.pdf HFIN 4/14/2016 8:30:00 AM
SB 210