Legislature(2017 - 2018)HOUSE FINANCE 519

03/06/2017 01:30 PM House FINANCE

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                  HOUSE FINANCE COMMITTEE                                                                                       
                       March 6, 2017                                                                                            
                         1:33 p.m.                                                                                              
1:33:10 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:33 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Representative   Zach  Fansler,   Sponsor;  Nikole   Nelson,                                                                    
Executive Director,  Alaska Legal Services;  Mary Schlosser,                                                                    
Staff,  Representative  Zach   Fansler;  Representative  Dan                                                                    
Ortiz, Sponsor;  Britteny Cioni-Haywood,  Director, Division                                                                    
of Economic  Development, Department of  Commerce, Community                                                                    
and Economic Development; Jerry  McCunf, United Fishermen of                                                                    
Alaska,  Juneau;   Representative  Jonathan  Kreiss-Tomkins,                                                                    
Sponsor;  Berett  Wilber,   Staff,  Representative  Jonathan                                                                    
Kreiss-Tomkins;  Representative Sam  Kito, Sponsor;  Crystal                                                                    
Koeneman,  Staff,  Representative  Sam  Kito;  Kris  Curtis,                                                                    
Legislative Auditor,  Alaska Division of  Legislative Audit;                                                                    
Janey   Hovenden,   Director,  Division   of   Corporations,                                                                    
Business   and   Professional   Licensing,   Department   of                                                                    
Commerce,  Community   and  Economic   Development;  Johanna                                                                    
Crosset, Certified Direct-Entry Midwife, Juneau.                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Stacey Schubert,  Director, Governmental Affairs  and Public                                                                    
Relations,  Alaska Housing  Finance Corporation,  Anchorage;                                                                    
Michael  Strand, CFO,  Alaska  Housing Finance  Corporation,                                                                    
Anchorage;    Susan    Terwilliger,   President,    Midwives                                                                    
Association, Anchorage;  Deborah Schneider, Chair,  Board of                                                                    
Certified Direct Entry Midwives, Anchorage.                                                                                     
HB 49     EXTEND BOARD OF DIRECT-ENTRY MIDWIVES                                                                                 
          HB 49 was HEARD and HELD in committee for further                                                                     
HB 56     COMMERCIAL FISHING LOANS                                                                                              
          HB 56 was HEARD and HELD in committee for further                                                                     
HB 81     AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                               
          HB 81 was HEARD and HELD in committee for further                                                                     
HB 106    CIVIL LEGAL SERVICES FUND                                                                                             
          HB 106 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
Co-Chair Foster discussed housekeeping.                                                                                         
HOUSE BILL NO. 106                                                                                                            
     "An Act allowing appropriations to the civil legal                                                                         
     services fund from court filing fees."                                                                                     
1:34:20 PM                                                                                                                    
REPRESENTATIVE  ZACH  FANSLER, SPONSOR,  introduced  himself                                                                    
and  provided a  description of  the bill  from the  sponsor                                                                    
statement (copy on file).:                                                                                                      
     This bill will safeguard Alaskans' access to the civil                                                                     
     justice system by creating a stable and sustainable                                                                        
     mechanism  for   funding  the  Alaska   Legal  Services                                                                    
     Corporation,  protecting  those  who cannot  afford  to                                                                    
     hire  an   attorney  of  their   own.  It   allows  the                                                                    
     Legislature to  appropriate up to 25  percent of filing                                                                    
     fees  paid  to  the  Alaska  Court  System  during  the                                                                    
     previous fiscal  year into  the already  existing Civil                                                                    
     Legal Services Fund.                                                                                                       
     The  Alaska Legal  Services Corporation-established  in                                                                    
     1967-is   a  nonprofit   charitable  501(c)(3),   whose                                                                    
     funding  comes from  a variety  of state,  federal, and                                                                    
     private sources.                                                                                                           
     Alaska Legal Services Corporation  endeavors to serve a                                                                    
     growing number of eligible  applicants. Since 1984, the                                                                    
     number  of Alaskans  who qualified  for legal  services                                                                    
    has more than doubled, from 41,000 to over 100,000.                                                                         
     Yet currently,  the state's contribution to  The Alaska                                                                    
     Legal Services  Corporation is only a  fraction of what                                                                    
     it was 30  years ago. House Bill 106  aims to stabilize                                                                    
     The Alaska Legal Services  Corporation funding and help                                                                    
     ensure  that  civil  legal  aid  is  available  to  all                                                                    
     Alaskans, not just the few who can afford it.                                                                              
     The Need                                                                                                                   
     In the past  30 years, the number  of Alaskans eligible                                                                    
     for legal  services-including Alaska  Veterans-has more                                                                    
     than  doubled,  from  41,000   to  more  than  100,000.                                                                    
     However, state  funding for Legal  Services is  a small                                                                    
     fraction of what it was decades ago.                                                                                       
     Legal  Services  does  significant work  on  behalf  of                                                                    
     Alaska  Veterans,   protects  Alaskans   from  domestic                                                                    
     violence,  and also  contributes  to  efforts to  lower                                                                    
     recidivism   rates   through   helping   people   bring                                                                    
     stability to their lives.                                                                                                  
     Access to civil  justice should not be  just for people                                                                    
     who can afford an attorney.                                                                                                
1:37:11 PM                                                                                                                    
Co-Chair Foster noted that Representative Wilson and                                                                            
Representative Guttenberg had joined the meeting. He listed                                                                     
individuals who were on hand to answer questions.                                                                               
Co-Chair Seaton  referred to military members  served by the                                                                    
agency.  He asked  whether the  military  members had  civil                                                                    
Representative  Fansler   could  not  speak  to   the  legal                                                                    
services provided by the military,  but understood that many                                                                    
of  the  cases  handled  by civil  legal  services  involved                                                                    
Co-Chair  Seaton  requested differentiation  between  active                                                                    
military and veterans, when discussing the program.                                                                             
1:39:35 PM                                                                                                                    
NIKOLE  NELSON, EXECUTIVE  DIRECTOR, ALASKA  LEGAL SERVICES,                                                                    
shared that  the agency represented veterans,  as opposed to                                                                    
active  military   members.  She   said  that   civil  legal                                                                    
assistance  were provided  military families.  She expounded                                                                    
that a military  family could have a civil  legal issue that                                                                    
did  not qualify  for representation  through the  military,                                                                    
but that the agency was not duplicating services.                                                                               
Representative Wilson  asked for a breakdown  of federal and                                                                    
private donations for services in the past year.                                                                                
Representative Fansler deferred the question to the agency.                                                                     
Ms.  Nelson relayed  that the  agency  had a  wide range  of                                                                    
funding sources. She elaborated  that the overall budget was                                                                    
approximately  $5  million, of  which  $450,000  was from  a                                                                    
state  appropriation.  She  stated  that  $1.2  million  was                                                                    
received from  the Federal  Legal Services  Corporation, and                                                                    
the funding balance  after that was received  from a variety                                                                    
of   sources:   private    foundation   grants,   individual                                                                    
donations, and competitive grants and contracts.                                                                                
Representative  Wilson   asked  whether  there   were  legal                                                                    
service benefits available for veterans.                                                                                        
Ms. Nelson  answered in the affirmative.  She furthered that                                                                    
although the  VA did provide services,  legal representation                                                                    
was not among them. She asserted  that if a veteran had been                                                                    
denied   benefits,   it   was    helpful   to   have   legal                                                                    
1:42:27 PM                                                                                                                    
Representative  Grenn asked  whether current  funding levels                                                                    
had resulted in applicants being denied services.                                                                               
Ms.  Nelson answered  in the  affirmative;  they had  turned                                                                    
away over 850 cases in the  past year because the agency did                                                                    
not have  the resources to  serve them. She  elaborated that                                                                    
the  cases  that  were  turned   away  involved  victims  of                                                                    
domestic violence,  and exploited elderly and  veterans, and                                                                    
that all the cases were merited.                                                                                                
Representative Grenn  asked about a normal  course of action                                                                    
for an individual who was denied service.                                                                                       
Ms.  Nelson  replied  that  other  services  available  were                                                                    
referred,  but for  most  people the  service  was the  last                                                                    
resort,  and without  assistance  the client  would have  to                                                                    
Co-Chair Foster  noted Representative Pruitt had  joined the                                                                    
1:44:06 PM                                                                                                                    
Representative  Kawasaki asked  how  the agency  prioritized                                                                    
the applicants.                                                                                                                 
Ms. Nelson  responded that the cases  were prioritized based                                                                    
on  the vulnerability  of clients,  the need  (legally), and                                                                    
staff  availability. She  said  that cases  were triaged  in                                                                    
order for the  assessment to be made of  the most vulnerable                                                                    
would receive services first.                                                                                                   
Representative Kawasaki asked what  the poverty level was as                                                                    
associated with the term "indigent" as defined in the bill.                                                                     
Ms. Nelson replied that the  services were generally limited                                                                    
to those at  125 percent of the  federal poverty guidelines,                                                                    
as adjusted  for Alaska. She  added that there  were several                                                                    
specific  funding  sources  that allowed  for  services  for                                                                    
those who did not meet the criteria.                                                                                            
1:45:41 PM                                                                                                                    
Representative  Guttenberg assumed  that the  clientele that                                                                    
the Alaska Legal Services Corporation  (ALSC) catered to had                                                                    
a higher  percentage of being  denied services  from private                                                                    
sector and government agencies.                                                                                                 
Ms.  Nelson agreed.  She  said  that the  agency  had an  86                                                                    
percent  success  rate in  the  cases  it  took on,  and  80                                                                    
percent of  its cases  settled out of  court. She  said that                                                                    
simply  letting the  other side  know that  the validity  of                                                                    
their legal  action was being  contested was a huge  help to                                                                    
the more  vulnerable clientele that  had not  had successful                                                                    
service elsewhere.                                                                                                              
Representative  Guttenberg asked  whether  ALSC  took a  cut                                                                    
from the money awarded to the client by the court.                                                                              
Ms. Nelson  clarified the  agency did  not take  cases where                                                                    
there  was a  large fee  award or  settlement -  those cases                                                                    
would be taken on by a private attorney.                                                                                        
1:48:34 PM                                                                                                                    
Representative Pruitt  noted that filing fees  went straight                                                                    
to the General Fund.                                                                                                            
Representative Fansler answered in the affirmative.                                                                             
Representative  Pruitt asked  whether  the  court should  be                                                                    
decremented  the difference  if  the original  appropriation                                                                    
and the  $634,000, because they  were bringing in  fees with                                                                    
the  intent  of  applying  them  toward  the  services  they                                                                    
MARY   SCHLOSSER,   STAFF,  REPRESENTATIVE   ZACH   FANSLER,                                                                    
answered that  the fund had  originally been  established in                                                                    
2007 using  fees from  punitive damages,  which were  not as                                                                    
stable as  court fees. She detailed  the legislation changed                                                                    
it  to  more stable  funding.  She  added  that zero  to  25                                                                    
percent  of the  court  fees could  be  appropriated to  the                                                                    
court, at  the legislature's  discretion. She said  that the                                                                    
bill  would  offer  secondary  funding  when  the  financial                                                                    
climate was more stable.                                                                                                        
Representative Pruitt  understood that the  punitive damages                                                                    
funds would be  replaced by the filing fees,  he asked where                                                                    
the punitive damages funds would go.                                                                                            
Ms.  Schlosser  replied  that  due  to  the  instability  of                                                                    
punitive awards in the past  ten years, the court fees would                                                                    
be  used  in addition  punitive  awards.  She detailed  that                                                                    
$90,000 had brought  forward in the past  ten years, $20,000                                                                    
in the past 4 years.                                                                                                            
1:52:25 PM                                                                                                                    
Representative Wilson understood that  the $450,000 that was                                                                    
appropriated  to the  program,  had not  been  based on  the                                                                    
punitive  awards or  court filing  fees.  She wondered  what                                                                    
percentage of the program's funding  had to be authorized by                                                                    
the legislature.                                                                                                                
Representative  Fansler replied  that punitive  damages were                                                                    
currently in  place, and the  majority of the  $450,000 came                                                                    
from a  direct legislative appropriation. He  clarified that                                                                    
the legislation  would provide a mechanism  that would allow                                                                    
for a  more stable funding  source once the  state's economy                                                                    
Representative Wilson assumed  if the bill were  to pass the                                                                    
court would consider their fees  when planning their overall                                                                    
yearly budget.                                                                                                                  
Representative Fansler agreed. He  said that it would yearly                                                                    
be up  to the  legislature to  determine what  percentage of                                                                    
the  fees would  be used.  He believed  that the  bill would                                                                    
allow  for  a  multi-faceted  approach  that  gave  numerous                                                                    
options for a secure and steady funding stream.                                                                                 
1:55:09 PM                                                                                                                    
Co-Chair  Foster  OPENED  and CLOSED  public  testimony.  He                                                                    
informed committee members that  amendments to the bill were                                                                    
due by 5pm on Wednesday, March 8, 2017.                                                                                         
Co-Chair Seaton pointed  out to the committee  that the fees                                                                    
that were collected  by ALSC went into the  general fund and                                                                    
were subject to appropriation by the legislature.                                                                               
HB  106  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 56                                                                                                             
     "An Act relating to limitations on certain commercial                                                                      
     fishing loans made by the Department of Commerce,                                                                          
     Community, and Economic Development."                                                                                      
1:57:21 PM                                                                                                                    
REPRESENTATIVE  DAN ORTIZ,  SPONSOR, introduced  himself and                                                                    
the bill. He  spoke of comments made by  Alaska U.S. Senator                                                                    
Dan  Sullivan  during  a  joint   floor  session  about  the                                                                    
importance and value  of the fishing industry  to the state.                                                                    
He said that  the $6 billion per year  industry was critical                                                                    
to  the Alaska  economy, and  the fishing  industry was  the                                                                    
largest  private employer  of  the state's  labor force.  He                                                                    
noted that the "greying of  the fleet" was becoming an issue                                                                    
for  the  industry;  the  age of  the  fleet  was  gradually                                                                    
getting older. He  believed that the legislation  was a step                                                                    
in helping with  the issue by raising the  loan limit amount                                                                    
for  fishermen to  purchase gear,  permits, and  boats, form                                                                    
$300,000 to  $400,000. He stated  that the funds  would come                                                                    
from  the Department  of Commerce,  Community, and  Economic                                                                    
Development  (DCCED) through  a revolving  loan program.  He                                                                    
offered additional sponsor statement language:                                                                                  
     This  bill increases  the aggregate  amount a  borrower                                                                    
     may,  in  aggregate,  hold   unpaid  from  $300,000  to                                                                    
     $400,000. The  amount of 300,000 was  assigned in 1982.                                                                    
     Due  to  inflation  and  technological  advances,  this                                                                    
     $300,000 amount  has become outdated. According  to the                                                                    
     calculation  method   of  the  Consumer   Price  Index,                                                                    
     $300,000  in   1982  is  equivalent   to  approximately                                                                    
     $746,136 today. This is why  a $100,000 increase to the                                                                    
     aggregate limit of $300,000  to $400,000, is reasonable                                                                    
     and pertinent today. An aggregate  limit of $400,000 is                                                                    
     a  reasonable  aggregate   unpaid  limit  for  Alaska's                                                                    
     commercial fishing businesses.                                                                                             
Representative Ortiz  noted that member's  packets contained                                                                    
several letter of support for the legislation.                                                                                  
2:01:47 PM                                                                                                                    
Representative Kawasaki queried the  solvency of the current                                                                    
Co-Chair Foster  noted individuals from the  department were                                                                    
also available for questions.                                                                                                   
Representative  Ortiz encouraged  the department  to address                                                                    
the specific question. He added  that there was initial seed                                                                    
money  established to  start the  fund; the  fund had  never                                                                    
needed  additional appropriation  from  the legislature.  He                                                                    
noted that the fund had an outstanding record of repayment.                                                                     
Representative Kawasaki  pointed to a sheet  provided by the                                                                    
department  (copy  on  file)   that  addressed  a  statutory                                                                    
interest rate  provided by  the fund.  He asked  whether the                                                                    
statutory  interest  rate  being higher  than  the  industry                                                                    
interest rate was a problem for the fund.                                                                                       
2:03:55 PM                                                                                                                    
BRITTENY  CIONI-HAYWOOD,  DIRECTOR,   DIVISION  OF  ECONOMIC                                                                    
DEVELOPMENT, DEPARTMENT OF  COMMERCE, COMMUNITY AND ECONOMIC                                                                    
DEVELOPMENT,  explained that  the  department currently  had                                                                    
approximately $19  million in  available lending  funds. She                                                                    
asserted that the  fund was robust, and  reiterated that the                                                                    
fund  had not  used  general fund  dollars  since 1985,  but                                                                    
lived off of interest and fees charges through the program.                                                                     
Representative Kawasaki  referred to industry  and statutory                                                                    
interest rates. He  noted that in some cases  it looked like                                                                    
the industry rate  was higher. He wondered  why people would                                                                    
lend at such high rates.                                                                                                        
Ms. Cioni-Haywood  answered that  often the program  lent to                                                                    
people  who  could  not   secure  financing  elsewhere.  She                                                                    
relayed that the current interest  rate was 5.5 percent. She                                                                    
added that most recent  borrowers were younger borrowers and                                                                    
borrowers  that did  not  have a  credit  history, who  were                                                                    
willing to take the higher interest rate.                                                                                       
Representative Wilson asked for the current default rate.                                                                       
Ms. Cioni-Haywood  responded that  the current rate  was 2.2                                                                    
percent,  which  was  below   the  industry  standard  of  5                                                                    
Representative Wilson  queried how  much the  fund currently                                                                    
had on-loan.                                                                                                                    
Ms. Cioni-Haywood  replied that there was  approximately $90                                                                    
million in outstanding loans.                                                                                                   
Representative  Wilson wondered  whether  the interest  rate                                                                    
could be lowered without a  statute change. She thought that                                                                    
the program  could be taking  advantage of those  that could                                                                    
not afford to take out a lower interest loan.                                                                                   
2:07:18 PM                                                                                                                    
Ms. Cioni-Haywood  shared that the interest  rate was deemed                                                                    
in statute and  that the program had  a pay-on-time program,                                                                    
in  which  people who  paid  on-time  received a  discounted                                                                    
interest rate.                                                                                                                  
Representative  Tilton referred  to  legislation from  2012,                                                                    
regarding  the loan  fund. She  noted the  state's financial                                                                    
crisis and  wondered whether the  timing of  the legislation                                                                    
was appropriate.                                                                                                                
Representative Ortiz  replied that  he could not  comment on                                                                    
what  was occurring  in  the legislature  in  2012 when  the                                                                    
legislature had  been considering  the issue. He  shared the                                                                    
reason he  had brought the  legislation forward was  that he                                                                    
wanted  to help  young people  have a  better chance  to get                                                                    
involved  in  the industry.  He  said  that the  legislation                                                                    
would be  a no-cost item to  the state that would  allow the                                                                    
state to assist young fishermen to enter into the industry.                                                                     
Representative  Tilton asserted  that  there  was already  a                                                                    
disparity  in loan  amounts for  the commercial  and charter                                                                    
loan funds.                                                                                                                     
Representative  Ortiz replied  that  he was  not looking  to                                                                    
increase the  difference between the commercial  and charter                                                                    
industry loans. He suggested that  someone could bring forth                                                                    
a piece  of legislation  that would address  that particular                                                                    
2:10:57 PM                                                                                                                    
Representative Tilton understood that  there was $19 million                                                                    
currently available in the fund.                                                                                                
Ms. Cioni-Haywood answered in the affirmative.                                                                                  
Representative Tilton referred to  a 2015 figure that showed                                                                    
a $2 million balance.                                                                                                           
Ms. Cioni-Haywood was  surprised at the figure,  she did not                                                                    
think that the fund had  been that low for approximately two                                                                    
Representative Tilton hoped  to talk more in  depth with Ms.                                                                    
Cioni-Haywood about the issue.                                                                                                  
2:12:10 PM                                                                                                                    
Representative  Grenn  spoke  to  the last  paragraph  of  a                                                                    
letter of support from the United Fishermen of Alaska:                                                                          
     The revolving  loan program  is one  of very  few tools                                                                    
     that  the state  has  to give  an  advantage to  Alaska                                                                    
     residents  with a  desire to  become fishing  skippers.                                                                    
     And,  because  a  traditional bank  lender  must  first                                                                    
     reject  a borrower  in order  to qualify  for the  Loan                                                                    
     Program, we  do not  anticipate major  negative effects                                                                    
     on private sector lenders.                                                                                                 
Representative  Grenn wondered  what  a person  had to  shoe                                                                    
regarding  being previously  rejected  by a  bank. He  asked                                                                    
whether there had been opposition or support for the issue.                                                                     
Representative Ortiz answered he  had received some critical                                                                    
feedback   from  the   commercial   lending  community.   He                                                                    
elaborated that one  of the reasons for  the higher interest                                                                    
rates  could be  a sensitivity  to  not wanting  to see  the                                                                    
state   directly   compete   with   the   commercial/private                                                                    
industry.  He  furthered  that  there  were  people  in  the                                                                    
private  sector who  viewed the  program as  competition, he                                                                    
believed that  the qualification of first  being rejected by                                                                    
a traditional bank showed good faith by the department.                                                                         
2:14:37 PM                                                                                                                    
Co-Chair Seaton  referred to  a letter  in the  packet about                                                                    
commercial  hardship [handout  titled "Division  of Economic                                                                    
Development Department  of Commerce, Community  and Economic                                                                    
Development  2016  Annual  Report of  Fisheries  Enhancement                                                                    
Term  Extensions  per  AS 16.10.510(11)"  (copy  on  file)],                                                                    
which  discussed term  extensions that  could be  granted in                                                                    
times  of  financial  hardship.   He  wondered  whether  the                                                                    
document  was informational  as he  had not  seen it  in the                                                                    
Representative Ortiz replied  that it was not a  part of the                                                                    
bill. He deferred further discussion to the department.                                                                         
Ms.  Cioni-Haywood  answered   that  the  program  currently                                                                    
provided extensions  for economic  hardships; it  required a                                                                    
separate application process.                                                                                                   
2:16:03 PM                                                                                                                    
Representative Pruitt felt that  the information provided on                                                                    
the bill was  lacking for him to determine  the stability of                                                                    
the fund.  He thought that  the program was a  good program.                                                                    
He agreed  with the higher  rate. He expressed  concern that                                                                    
doubling the loan  amount would take away  funding for other                                                                    
applicants in other loan programs.                                                                                              
Representative Ortiz clarified that  the maximum loan amount                                                                    
would increase  from $300,000 to  $400,000, which was  not a                                                                    
doubling  of the  loan amount.  He asserted  that there  had                                                                    
been  prior testimony  concerning the  solvency of  the fund                                                                    
and the excellent repayment rate.                                                                                               
2:18:50 PM                                                                                                                    
Representative  Pruitt said  that  he was  referring to  the                                                                    
$100,000 to $200,000  by vessel. He stressed  that he wanted                                                                    
to  see the  information  in  writing. He  did  not want  to                                                                    
jeopardize the fund.                                                                                                            
Ms.  Cioni-Haywood   replied  that  she  would   submit  the                                                                    
information  in writing.  She  shared  that projections  had                                                                    
been  done using  the assumption  of 21  new loans,  with an                                                                    
increased average loan  amount over the next  ten years, and                                                                    
using a  conservative repayment schedule, and  had estimated                                                                    
that the fund  would still maintain over $12  million in the                                                                    
fund balance.                                                                                                                   
Representative Thompson expressed  appreciation for the loan                                                                    
program. He  queried whether any  of the loans  were awarded                                                                    
out of state.                                                                                                                   
Ms.  Cioni-Haywood confirmed  that  it  was a  resident-only                                                                    
program; a person  had to be a resident for  two years to be                                                                    
eligible for the loan.                                                                                                          
2:21:18 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
JERRY MCCUNF, UNITED FISHERMEN  OF ALASKA, JUNEAU, testified                                                                    
in support  of the legislation.  He spoke of  the complexity                                                                    
of loan programs.  He spoke of the doubling  of vessel loans                                                                    
from $100,000 to $200,000, and  he noted that the number had                                                                    
not  increased since  1982.  He felt  that  a $200,000  boat                                                                    
would be  safer than a  $100,000, and that a  proper fishing                                                                    
vessel  could  cost  several of  hundreds  of  thousands  of                                                                    
dollars. He felt that the program was beneficial to younger                                                                     
fishermen just starting out in the industry.                                                                                    
Co-Chair Foster CLOSED public testimony.                                                                                        
HB 56 was HEARD and HELD in committee for further                                                                               
HOUSE BILL NO. 81                                                                                                             
     "An Act  making an entity  that is exempt  from federal                                                                    
     taxation under 26 U.S.C. 501(c)(3),  (4), (6), (12), or                                                                    
     (19)   (Internal   Revenue   Code)  and   a   federally                                                                    
     recognized tribe  eligible for  a loan from  the Alaska                                                                    
     energy  efficiency  revolving  loan fund;  relating  to                                                                    
     loans from the Alaska  energy efficiency revolving loan                                                                    
     fund; and  relating to the  annual report  published by                                                                    
     the Alaska Housing Finance Corporation."                                                                                   
2:24:21 PM                                                                                                                    
REPRESENTATIVE JONATHAN  KREISS-TOMKINS, SPONSOR, introduced                                                                    
himself and  provided information about the  legislation. He                                                                    
believed  that  most  members  of  the  committee  had  seen                                                                    
previous iterations  of the legislation  over the  years. He                                                                    
offered a history of the topic of the bill:                                                                                     
     This bill gives  nonprofit organizations and federally-                                                                    
     recognized  tribes the  power to  apply for  loans from                                                                    
     the  Alaska  Energy  Efficiency  Revolving  Loan  Fund.                                                                    
     Because AEERLF  is such  a god  awful acronym,  we call                                                                    
     this  bill  the  More Energy  Efficient  Buildings  Act                                                                    
     The  AEERLF  was  created  by  the  Alaska  Sustainable                                                                    
     Energy Act  in 2010.  It authorized the  Alaska Housing                                                                    
     Finance  Corporation  to  make   $250  million  in  low                                                                    
     interest  loans for  energy efficiency  improvements to                                                                    
     public  entities,  namely   municipalities  and  school                                                                    
     districts.  One   loan  has   been  closed   since  the                                                                    
     program's creation in 2010.                                                                                                
     Especially  given  our  new  and  more  austere  fiscal                                                                    
     climate  in which  legislative grants  are going  to be                                                                    
     rare to nonexistent, many  nonprofits are interested in                                                                    
     becoming more self-sufficient  and accessing loans from                                                                    
     the   revolving  loan   fund   to   invest  in   energy                                                                    
     efficiency.   Right  now,   nonprofits  such   as  soup                                                                    
     kitchens,  arts organizations,  American Legion  posts,                                                                    
     and  churches   are  not  eligible  to   apply  to  the                                                                    
     revolving loan fund.                                                                                                       
     The  More  Energy  Efficient Buildings  Act  authorizes                                                                    
     Alaska Housing to  accept applications from non-profits                                                                    
     and federally  recognized tribes for  energy efficiency                                                                    
     improvements  to  their   buildings.  The  More  Energy                                                                    
     Efficient Buildings  Act improves energy  efficiency in                                                                    
     Alaska.  It  helps  Alaska  nonprofits,  churches,  and                                                                    
     veteran's  organizations  become more  self-sufficient.                                                                    
     And  it  helps create  a  public  benefit for  a  State                                                                    
     program that's presently under-used.                                                                                       
Representative  Kreiss-Tompkins lamented  that his  previous                                                                    
attempts  to  pass similar  legislation  had  been met  with                                                                    
apathy and  disinterest. He  felt that  the apathy  had been                                                                    
nurtured  by  the  legislature,  which  had  offered  school                                                                    
districts and municipalities'  legislative grants to finance                                                                    
their energy expenses.                                                                                                          
2:29:26 PM                                                                                                                    
Representative  Kreiss-Tompkins  continued  to  address  the                                                                    
reasoning for  the development of  the legislation.  He felt                                                                    
that  the   bonding  authority   had  been   underused,  and                                                                    
suggested that  expanding the  eligibility to  the revolving                                                                    
loan  fund  to  non-profits and  organizations  that  needed                                                                    
access to capital in order to deliver services to Alaskans.                                                                     
Co-Chair  Foster relayed  there  were individuals  available                                                                    
for questions.                                                                                                                  
2:31:13 PM                                                                                                                    
Representative  Grenn   queried  they  type   of  non-profit                                                                    
entities that would be eligible under the bill.                                                                                 
Representative Kreiss-Tompkins replied  that the eligibility                                                                    
would be expanded  to the suite of  Internal Revenue Service                                                                    
(IRS) designated  non-profit organizations. He  thought that                                                                    
the  bottom line  was  that energy  efficiency  was good  no                                                                    
matter who was benefiting from  it; the more people who were                                                                    
able to make energy efficiency improvements, the better.                                                                        
2:33:42 PM                                                                                                                    
Representative  Kawasaki  requested further  description  of                                                                    
the IRS designated non-profit entities.                                                                                         
Representative Kreiss-Tompkins answered  that 501c 4 related                                                                    
to  civic   leagues,  social   welfare  or   local  employee                                                                    
associations,  and  501c  6  related  to  business  leagues,                                                                    
chambers of  commerce, and industry  umbrella organizations.                                                                    
He furthered that 501c 12  related to mutual and cooperative                                                                    
associations, and  501c 19 related to  post-organizations of                                                                    
past and  present members of  the armed forces.  He deferred                                                                    
to staff for any further clarification.                                                                                         
Representative   Kawasaki   asked    whether   a   political                                                                    
organization  such as  the Alaska  Democratic or  Republican                                                                    
Party Headquarters would qualify.                                                                                               
Representative Kreiss-Tompkins replied that  he did not know                                                                    
and relayed that he would follow up with an answer.                                                                             
Representative  Kawasaki expressed  concern for  fairness in                                                                    
the decision  making process  of who  would qualify  for the                                                                    
loans.  He   asked  about   the  constitutionality   of  the                                                                    
inclusion of churches and religious organizations.                                                                              
BERETT  WILBER,   STAFF,  REPRESENTATIVE   JONATHAN  KREISS-                                                                    
TOMKINS, directed  committee attention to the  memo from the                                                                    
Division Legislative Legal provided  in member's packets and                                                                    
dated  January 23,  2017(copy on  file). She  explained that                                                                    
legislative legal  had determined that allowing  churches to                                                                    
apply for  loan funding under the  energy efficiency program                                                                    
was constitutional.                                                                                                             
Representative  Kawasaki asked  if it  was because  everyone                                                                    
that applied had an equal chance of receiving the loan.                                                                         
2:37:37 PM                                                                                                                    
Ms. Wilber  replied she would  need to reread the  memo, but                                                                    
she believed he was correct.                                                                                                    
Representative  Wilson  asked   about  prioritizing  schools                                                                    
first as recipients.                                                                                                            
Ms. Wilber cited Section 7 of the legislation:                                                                                  
     * Sec. 7. AS 18.56.855 is amended by adding new                                                                          
     subsections to read:                                                                                                       
          (k) In  considering applications and  making loans                                                                    
          from the  Alaska energy efficiency  revolving loan                                                                    
          fund,  the  corporation  shall  give  priority  to                                                                    
          energy efficiency improvements  to buildings owned                                                                    
          by  a regional  educational  attendance area,  the                                                                    
          University  of  Alaska,  a  municipality,  or  the                                                                    
         state over other applications and loans.                                                                               
          (l)   Notwithstanding   any  provision   of   this                                                                    
          section,  the recipient  of a  loan under  28 this                                                                    
          section   may  not   be   a  for-profit   business                                                                    
Representative  Wilson thought  some  loans required  audits                                                                    
Ms. Wilber  answered that the loan  required a federal-grade                                                                    
audit that  would specify  the areas  a building  would save                                                                    
money with energy efficiency improvements.                                                                                      
Representative Wilson  asked whether a  non-profits monetary                                                                    
holding  would  be  taken   into  account  when  determining                                                                    
interest and eligibility of the loans.                                                                                          
2:40:08 PM                                                                                                                    
Ms. Wilber  answered that there  would be no limit  to which                                                                    
non-profits could  apply for the  loans. She said  that AHFC                                                                    
would   set  the   interest  rate.   She  deferred   further                                                                    
explanation to AHFC.                                                                                                            
STACEY SCHUBERT,  DIRECTOR, GOVERNMENTAL AFFAIRS  AND PUBLIC                                                                    
RELATIONS,  ALASKA  HOUSING FINANCE  CORPORATION,  ANCHORAGE                                                                    
(via  teleconference), explained  that the  current interest                                                                    
rate for a 15 year loan was 4.25 percent.                                                                                       
Representative Wilson asked whether  the interest rate would                                                                    
be the same for a bank loan to the same applicant.                                                                              
Ms.  Schubert replied  that  she did  not  know the  current                                                                    
interest rate for other institutions.                                                                                           
Representative  Wilson asserted  that  she did  not want  to                                                                    
compete  with banks  or to  loan money  at a  lower interest                                                                    
rate  than financial  institutions. She  asked who  paid the                                                                    
bill if an organization defaulted on the loan.                                                                                  
Ms. Schubert deferred the question to a colleague.                                                                              
MICHAEL  STRAND, CFO,  ALASKA  HOUSING FINANCE  CORPORATION,                                                                    
ANCHORAGE (via teleconference),  informed the committee that                                                                    
the money  would come from  the AHFC internal  resources. He                                                                    
said  that  if  the  total loan  amounts  reached  over  $50                                                                    
million then  AHFC would have  to go  to bond, the  costs of                                                                    
which  would be  absorbed by  the program  cost. He  relayed                                                                    
that  AHFC  would be  responsible  for  any defaults;  there                                                                    
would be no risk  to the state in the event  of a default on                                                                    
the loan.                                                                                                                       
2:44:07 PM                                                                                                                    
Representative   Guttenberg  referred   to  the   previously                                                                    
mentioned legal  memo. He believed that  the memo succinctly                                                                    
explained the entities  that were eligible for  the loan. He                                                                    
believed  that   the  memo   addressed  the   issues  raised                                                                    
Representative  Wilson. He  believed that  non-profits would                                                                    
take advantage of bank loans  if they could qualify for one,                                                                    
regardless of interest rates.                                                                                                   
Representative  Kreiss-Tompkins responded  to Representative                                                                    
Wilson's questions.  He understood  that because of  the way                                                                    
the program  was structured, savings had  to be demonstrated                                                                    
through an  audit before an  entity could qualify.  He added                                                                    
that  the  energy  savings essentially  financed  the  debt,                                                                    
which was a  unique approach that was not used  by banks and                                                                    
traditional lending institutions.                                                                                               
2:47:15 PM                                                                                                                    
Co-Chair Foster OPENED and CLOSED public testimony.                                                                             
HB  81  was   HEARD  and  HELD  in   committee  for  further                                                                    
HOUSE BILL NO. 49                                                                                                             
     "An Act extending the termination date of the Board of                                                                     
     Certified Direct-Entry Midwives; and providing for an                                                                      
     effective date."                                                                                                           
2:48:05 PM                                                                                                                    
REPRESENTATIVE  SAM KITO,  SPONSOR,  introduced himself  and                                                                    
the bill.                                                                                                                       
CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SAM KITO, shared                                                                        
the sponsor's statement (copy on file):                                                                                         
     House  Bill 49  extends  the termination  date for  the                                                                    
     Board  of Certified  Direct-Entry  Midwives until  June                                                                    
     30, 2021.                                                                                                                  
     Legislative Audit conducted their  review of this board                                                                    
     and determined that "The board  is serving the public's                                                                    
     interest  by   effectively  licensing   and  regulating                                                                    
     certified   direct-entry    midwives   and   apprentice                                                                    
     midwives.  The board  monitors licensees  and works  to                                                                    
     ensure    only    qualified    individuals    practice.                                                                    
     Furthermore,  the board  adopts regulations  to improve                                                                    
     the  practice  of  midwifery.  In  accordance  with  AS                                                                    
     08.03.010(c)(8),  the board  is scheduled  to terminate                                                                    
     on  June 30,  2017. We  recommend that  the legislature                                                                    
     extend the board's termination date to June 30, 2021."                                                                     
     The board  currently oversees  52 active  licensees and                                                                    
     is  composed of  five  members:  two certified  direct-                                                                    
     entry  midwives, one  physician licensed  by the  State                                                                    
     Medical Board, one certified  nurse midwife licensed by                                                                    
     the Board of Nursing, and one public member.                                                                               
     The continuation of the Board of Certified Direct-                                                                         
     Entry Midwives  is important to  the health  and safety                                                                    
     of  Alaska's  women  and  children,  as  it  serves  an                                                                    
     important   role  in   protecting  the   well-being  of                                                                    
     Alaskans by identifying individuals  who are willing to                                                                    
     pursue technical training  and meet specified technical                                                                    
     qualifications  necessary  for   license  as  midwives.                                                                    
     Thank you for your support of House Bill 49.                                                                               
2:50:18 PM                                                                                                                    
Co-Chair Foster noted there were individuals available for                                                                      
Representative Wilson queried the cost of the audit,                                                                            
relative to the size of the group the board oversaw. She                                                                        
wondered whether the board paid for the audit.                                                                                  
Representative Kito deferred the question to the division.                                                                      
He answered that the four-year extension had been                                                                               
recommended by the division.                                                                                                    
Co-Chair Foster  recognized that Vice-Chair Gara  had joined                                                                    
the meeting.                                                                                                                    
Co-Chair Seaton  noted the fee  increase of 169  percent and                                                                    
the one-time surcharge of $2000.                                                                                                
Representative  Kito explained  that  the audit  recommended                                                                    
that licensing  fees should be  increased to cover  the cost                                                                    
of board operations.                                                                                                            
2:52:42 PM                                                                                                                    
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, testified that  the previous sunset audit                                                                    
conducted on the  board had been in 2014, and  at that point                                                                    
the  division  found  that  the  Division  of  Corporations,                                                                    
Businesses and Professional  Licensing (DCBPL) investigative                                                                    
staff had  not been actively processing  investigations that                                                                    
posed a public safety risk. She  said that at that point the                                                                    
board was extended only 2  years; the division had conducted                                                                    
a  2016 follow-up  sunset review.  The  latest review  found                                                                    
that  the  board is  serving  in  the public's  interest  by                                                                    
effectively licensing and  regulating certified direct-entry                                                                    
midwives (CDM) and apprentice midwives.  She stated that the                                                                    
division  recommended   that  the  legislature   extend  the                                                                    
board's  termination date  to June  30,  2021, provided  the                                                                    
board  execute  the   following  recommendations  [from  the                                                                    
Performance Audit  of the Department of  Commerce, Community                                                                    
and Economic  Development, State Board of  Certified Direct-                                                                    
Entry Midwives (board) April 30, 2016(copy on file)]:                                                                           
     Recommendation  1:  DCBPL management,  in  consultation                                                                  
     with  the  board,  should increase  licensing  fees  to                                                                  
     eliminate the board's operating deficit.                                                                                 
     High  regulatory costs  relative to  the low  number of                                                                    
     licensees  has  led to  high  license  fees. The  board                                                                    
     primarily  receives   its  revenue  from   license  and                                                                    
     renewal  fees. Renewals  are  conducted  on a  biennial                                                                    
     basis,  creating a  two-year cycle  in board  revenues.                                                                    
     Fee levels were  increased in FY 15, but  fees were not                                                                    
     high  enough  to cover  operating  costs.  As shown  in                                                                    
     Exhibit 3, the  board's deficit grew to  $183,081 as of                                                                    
     February  29, 2016,  the second  year  of its  biennial                                                                    
     licensing period (see Recommendation 1.)                                                                                   
     Recommendation 2: The DCBPL  director should take steps                                                                  
    to ensure license records are accurately recorded.                                                                        
     Audit test  work identified  two instances  where DCBPL                                                                    
     staff provided  insufficient support  to the  board. In                                                                    
     one instance,  division staff  noted the  wrong license                                                                    
     as on  probation in the  online licensing  database. In                                                                    
     another instance,  a consent agreement approved  by the                                                                    
     board had  the wrong year.  Both instances were  due to                                                                    
     administrative error by DCBPL staff.                                                                                       
     Recommendation  3:  The   legislature  should  consider                                                                  
     alternate   forms    of   regulating    the   midwifery                                                                  
     In order  to address the deficit,  licensing fees would                                                                    
     need to  be significantly increased. Fees  are expected                                                                    
     to  be  upwards  of  $4,000 for  CDMs  and  $2,000  for                                                                    
     apprentice  permits   by  the   year  2020.   The  high                                                                    
     licensing fees could limit entry into the profession.                                                                      
Ms. Curtis  noted the  department's response  on Page  21 of                                                                    
the  audit. She  shared that  the department  concurred with                                                                    
recommendation's   1  and   2,  but   did  not   respond  to                                                                    
recommendation 3, as it was  not directed to the department.                                                                    
However, the department acknowledged  that merging the board                                                                    
could  result  in  economies  of scale.  She  spoke  to  the                                                                    
board's  response  on  Page  23  of  the  audit.  The  board                                                                    
concurred  with  recommendations  1   and  2,  but  strongly                                                                    
disagreed with recommendation 3:                                                                                                
     Midwifery is  a unique profession that  any other board                                                                    
     would  have difficulty  regulation.  The suggestion  of                                                                    
     the Board  of Nursing  and the Physician's  Board would                                                                    
     be problematic  on several different levels.  These two                                                                    
     boards have  historically been  competitive to  the CDM                                                                    
     profession and  often oppose  legislation that  we have                                                                    
     introduced to  improve the standard of  care and safety                                                                    
     of  our  clients.  I  am concerned  that  we  would  be                                                                    
     regulated  out  of  practice  or   to  a  very  minimal                                                                    
     practice,  which is  what the  majority of  the Alaskan                                                                    
     population clearly does not want.  Also, I believe that                                                                    
     the  doctor's and  nurse's board  would  not want  CDMs                                                                    
     sitting on  their Board (which  we would need to  do if                                                                    
     we  were to  have proper  representation) and  having a                                                                    
     voice  in  decisions  regarding their  regulations  and                                                                    
2:57:27 PM                                                                                                                    
Representative   Wilson  asked   who  decided   which  cases                                                                    
warranted investigation.                                                                                                        
Ms. Curtis responded that the  division had an investigative                                                                    
section  that had  the statutory  responsibility to  conduct                                                                    
investigations. The  board was removed from,  but eventually                                                                    
weighed in on, the decision.                                                                                                    
Representative  Wilson  asked  whether  unlicensed  midwives                                                                    
were charged with reimbursing the board for any fines.                                                                          
Ms. Curtis  deferred to DCCED.  She offered that  there were                                                                    
no dedication of  fines to any particular  board; any levied                                                                    
fines went to the General Fund.                                                                                                 
Representative  Wilson  thought  that   there  should  be  a                                                                    
mechanism  that could  protect  midwives  from having  their                                                                    
licensing  fees  increased  because of  acts  of  unlicensed                                                                    
Ms. Curtis  asked whether  Representative Wilson  was asking                                                                    
if the board's deficit was the result of investigations.                                                                        
Representative Wilson replied in the affirmative.                                                                               
Ms. Curtis stated  that the schedule on Page 6  of the audit                                                                    
highlighted   the  board's   expenditures.  She   said  that                                                                    
historically  the  problem  with deficit  had  stemmed  from                                                                    
investigations;  however,   not  only   unlicensed  activity                                                                    
generated investigations.                                                                                                       
3:00:20 PM                                                                                                                    
Representative Wilson surmised that  the board would have to                                                                    
pay the fee  even though the fee was already  in the general                                                                    
Ms. Curtis explained  that the cost of  regulating was borne                                                                    
by licensees,  and any  fees that  were collected  went into                                                                    
the general fund.                                                                                                               
Representative  Wilson asserted  that  any money  collected,                                                                    
based  on an  investigation, had  to be  paid by  the board,                                                                    
even if it went into the general fund.                                                                                          
Ms. Curtis  answered that  the revenues  from the  fines did                                                                    
not offset the costs of investigations.                                                                                         
Representative Wilson  felt that the fees  should offset the                                                                    
costs of investigations.                                                                                                        
3:02:04 PM                                                                                                                    
Representative  Kawasaki   asked  why  there  had   been  an                                                                    
extension of 2  years had been recommended, rather  than a 4                                                                    
year, 6 year, or 8 year.                                                                                                        
Ms. Curtis replied she had  never seen a one-year extension.                                                                    
They  had  received  recommendations  for  termination.  She                                                                    
spoke to boards  with significant deficit such  as the Board                                                                    
of  Game with  a $1  million  deficit, which  resulted in  a                                                                    
short  recommendation  for  extension.  She  explained  that                                                                    
problems  that posed  a public  safety risk  could prompt  a                                                                    
short recommendation. She  said that it was  very unusual to                                                                    
have  2 year  recommendation for  extension. She  added that                                                                    
the number and nature of  the findings would be weighed when                                                                    
considering  the length  of  extension; housekeeping  issues                                                                    
would not impact the  extension recommendation, but deficits                                                                    
would reduce the number of years recommended.                                                                                   
Representative Kawasaki wondered  whether the extension were                                                                    
always even numbered years.                                                                                                     
Ms. Curtis  answered that  extensions seemed  to be  made in                                                                    
even  numbers.  She  said  that workload  was  a  factor  in                                                                    
determining sunset timelines.                                                                                                   
3:04:11 PM                                                                                                                    
Representative  Kawasaki preferred  longer sunset  timelines                                                                    
because it meant less work  for auditors. He asked about the                                                                    
long  sheet (copy  on file)  in the  packet, created  by the                                                                    
division  and  the  board,  related to  ways  in  which  the                                                                    
deficit could be erased.                                                                                                        
Ms. Curtis replied that she had not seen the document.                                                                          
Representative Pruitt thought that  the deficit was the crux                                                                    
of the  problem. He spoke of  the differing views of  all of                                                                    
the  involved parties.  He wondered  whether  the board  had                                                                    
offered a  proposal of how  to eliminate the debt.  He asked                                                                    
when the  legislature should  expect action  to be  taken on                                                                    
the third recommendation.                                                                                                       
Ms.  Curtis clarified  that the  intent of  recommendation 3                                                                    
had been  to acknowledge  that direct  entry midwives  had a                                                                    
board  that was  serving the  public's interest,  and should                                                                    
exist. She  said that  the division's  concern was  that the                                                                    
number  of  midwives would  decline  because  of barrier  to                                                                    
entry  due to  increased licensing  fees. She  stressed that                                                                    
the  recommendation  had  not   been  made  to  address  the                                                                    
deficit, but to ensure that  the public's interest was being                                                                    
served  by the  board. She  felt  that it  was a  management                                                                    
decision as to  how the deficit would be  addressed, but the                                                                    
increase in licensing fees had seemed extreme.                                                                                  
3:09:50 PM                                                                                                                    
Representative   Pruitt   requested   to   hear   from   the                                                                    
Vice-Chair Gara asked whether Ms.  Curtis could speak to the                                                                    
investigation   costs  for   violations   that  had   proved                                                                    
Ms. Curtis answered in the negative.                                                                                            
Vice-Chair  Gara  worried  about  people being  put  out  of                                                                    
business  for   minor  violations.   He  noted   that  often                                                                    
traditional  medical  professionals and  midwives  disagreed                                                                    
about each  other's practices, and  wondered if  having them                                                                    
share a board would be practical.                                                                                               
3:11:46 PM                                                                                                                    
Representative  Wilson  asked about  the  cost  of the  most                                                                    
recent audit and how it was paid for.                                                                                           
Ms.  Curtis thought  the  audit had  taken  about 450  hours                                                                    
which was approximately  $38,000. She said that  a follow up                                                                    
review  had been  conducted by  the  request of  Legislative                                                                    
Budget and Audit to look into  the public safety risk of not                                                                    
following up on the investigations.                                                                                             
Representative Wilson asked who paid for the audit.                                                                             
Ms. Curtis  answered the audit  was part of the  Division of                                                                    
Audit's  operating budget  that was  approved annually,  and                                                                    
was not paid for by the boards that were audited.                                                                               
Representative  Wilson thought  the  boards had  to pay  the                                                                    
Ms. Curtis answered that the  statute that dictated that the                                                                    
boards would  pay the operational costs  was the operational                                                                    
cost  of  regulation  the  board  and  not  the  legislative                                                                    
oversight process of sunsets.                                                                                                   
3:14:00 PM                                                                                                                    
Representative  Thompson spoke  to the  investigation costs.                                                                    
He lamented  that investigators  assigned to  certain boards                                                                    
may not  understand certain aspects  to the work  the boards                                                                    
oversee, adding to the investigating costs.                                                                                     
Ms.  Curtis said  that she  did  not know.  She stated  that                                                                    
there  were some  boards that  had dedicated  investigators,                                                                    
such as the medical board.                                                                                                      
3:15:30 PM                                                                                                                    
JANEY   HOVENDEN,   DIRECTOR,  DIVISION   OF   CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE,  COMMUNITY  AND ECONOMIC  DEVELOPMENT,  introduced                                                                    
Representative Pruitt  asked about  the denial of  the board                                                                    
to carry a surplus budget forward.                                                                                              
Ms. Hovenden  answered that there  had been concerns  by the                                                                    
Department of  Law about incorporating the  $2000 surcharge,                                                                    
instead the  $2000 had been incorporated  into the licensing                                                                    
fee, raising  the fee  to the current  level of  $3,800. She                                                                    
said that  she would not  be able  to speak to  changes that                                                                    
were made to the fees before she took her position.                                                                             
Representative  Pruitt  asked how  long  it  would take  the                                                                    
board  to get  to a  place where  the fees  would cover  the                                                                    
Ms.   Hovenden  referred   to  a   handout  with   an  Excel                                                                    
spreadsheet  chart titled  "Board of  Direct-Entry Midwives"                                                                    
dated September 7, 2016 (copy  on file), which offered a fee                                                                    
analysis. She noted  where the board had  recommended a one-                                                                    
time  surcharge  of $2000,  over  to  biennium. Due  to  the                                                                    
concerns of  the Department  of Law, the  fee of  $3,800 was                                                                    
recommended.  She  said  that  the  fee  increase  would  be                                                                    
stretched out to 2021.                                                                                                          
Representative  Pruitt   spoke  to  the  challenge   of  the                                                                    
continued cost  of investigating unlicensed  individuals. He                                                                    
asked about the department's suggestion  to make sure it did                                                                    
not penalize individuals working  within the proper confines                                                                    
of  the law.  He  felt that  individuals  who were  properly                                                                    
licensed should not be penalized.                                                                                               
3:20:57 PM                                                                                                                    
Ms. Hovenden  answered that the department  did not breakout                                                                    
the  information  in  investigations  between  licensed  and                                                                    
unlicensed individuals.                                                                                                         
Representative Pruitt asked if a breakdown could be done.                                                                       
Ms. Hovenden answered  that it would not  be that difficult,                                                                    
but   the  department   did  not   currently  look   at  the                                                                    
information down to that level.                                                                                                 
Representative  Pruitt  recalled  that the  issue  had  been                                                                    
brought up a couple of  years earlier. He believed the issue                                                                    
had been brought up by midwives a couple of years earlier.                                                                      
3:22:58 PM                                                                                                                    
Ms.  Koeneman  relayed  that civil  penalties  for  licensed                                                                    
midwives were  set under Alaska Statute  08.08.075. She said                                                                    
that there  was another statute for  unlicensed activity, AS                                                                    
08.01.082, and  did not delineate  any civil penalty  or any                                                                    
monetary amount. She said that it  would be a policy call by                                                                    
the committee  to open the  unlicensed activity  statutes to                                                                    
modify the  language. She  noted there  was another  bill in                                                                    
the  finance  committee  that  would  address  investigative                                                                    
Representative  Pruitt understood  that currently  there was                                                                    
no penalty for being unlicensed.                                                                                                
Ms.  Koeneman answered  that  under Title  8  there were  no                                                                    
fines other  than the $5,000  civil penalty. She  added that                                                                    
criminal charges could be applied under Title 11.                                                                               
Representative Pruitt  asked how  to discourage  people from                                                                    
practicing without a license.                                                                                                   
Ms.  Koeneman thought  that  the answer  could  be found  by                                                                    
reading the statute.                                                                                                            
Representative  Kawasaki  referred   to  the  fee  proposals                                                                    
intended to erase  the deficit by 2021.  He wondered whether                                                                    
the timeline had been spurred by the audit.                                                                                     
3:25:38 PM                                                                                                                    
Ms. Hovenden  answered in the  affirmative. She  stated that                                                                    
the board  had been  active and  engaged in  increasing fees                                                                    
for that particular reason.                                                                                                     
Representative Kawasaki  spoke to the conflicting  nature of                                                                    
recommendations  one   and  three.  He  was   supportive  of                                                                    
extending the  board for  a longer time  period and  did not                                                                    
believe  that the  deficit had  to be  completely erased  by                                                                    
2021. He agreed with recommendation 3.                                                                                          
Ms.  Koeneman  answered  that  the  statutory  authority  to                                                                    
collect fees did  not give the legislature or  the board any                                                                    
additional  authority  to  collect  outside  of  the  annual                                                                    
review. She said  that stretching the payment out  over 3 or                                                                    
4 biennium would go against the statutory intent.                                                                               
Representative Kawasaki referred to  the Division of Audit's                                                                    
recommendation  to  extend  the  board four  years,  and  he                                                                    
wondered whether  the existing  deficit, plus the  high fees                                                                    
would be problematic.                                                                                                           
Ms. Koeneman understood  that it the board did  not have the                                                                    
fees paid  up within 4  years, legislative audit  would have                                                                    
no  choice but  to make  another recommendation  stating the                                                                    
board and the department needed  to modify the fees on order                                                                    
to eliminate the deficit.                                                                                                       
3:28:35 PM                                                                                                                    
Co-Chair Seaton thought  payment of the deficit  was tied to                                                                    
the four-year sunset.                                                                                                           
Ms. Curtis  responded there was  no term recommended  by the                                                                    
Division of Audit for fixing  the issue. She stated that the                                                                    
law specified the  cost of regulation must  be covered every                                                                    
time rates were  set. She said that the  four year extension                                                                    
was  made  in order  to  understand  whether the  number  of                                                                    
midwives  in the  state were  serving the  public's interest                                                                    
and had nothing to do with the fee setting process.                                                                             
Representative   Kawasaki    noted   that    the   step-down                                                                    
calculations  that  the  division proposed  would  have  the                                                                    
board outside  of the  deficit by  2021, but  a drop  in the                                                                    
deficit over  the next four  year could result in  a cleaner                                                                    
3:30:45 PM                                                                                                                    
Ms. Curtis replied that she  would revisit the issue in four                                                                    
years to provide an answer.                                                                                                     
Representative Wilson  requested the cost  of investigations                                                                    
in  the  past  several   years.  She  wondered  whether  the                                                                    
legislature could be equally at fault for the deficit.                                                                          
Ms.  Koeneman answered  that investigative  costs for  FY 16                                                                    
was $31,000;  FY 14 and FY  15, $41,522 total; FY  12 and FY                                                                    
13, $45,457;  FY 10  and FY  11, $8,034.  She said  that the                                                                    
figures  did   not  include  some  of   the  indirect  costs                                                                    
associated with  the department's cost allocation  plan. She                                                                    
agreed the department  was getting in the way  of the board.                                                                    
She said that in FY  09, licensing costs dropped from $2088,                                                                    
down  to   $500,  and  rose   as  the   investigative  costs                                                                    
Representative   Wilson  requested   why  the   increase  in                                                                    
investigative costs had jumped significantly.                                                                                   
3:33:59 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
JOHANNA  CROSSET,  CERTIFIED DIRECT-ENTRY  MIDWIFE,  JUNEAU,                                                                    
she expressed  gratitude for  the current  conversation. She                                                                    
hoped for a  solution to prevent deficit in  the future. She                                                                    
explained it  had been  a surprise to  hear of  the proposal                                                                    
for the  fee increase. She  asked the committee  to continue                                                                    
conversing. She directed a  comment to Representative Wilson                                                                    
about looking  into the investigative costs,  penalties, and                                                                    
fees going to the general fund as opposed to the board.                                                                         
SUSAN   TERWILLIGER,    PRESIDENT,   MIDWIVES   ASSOCIATION,                                                                    
ANCHORAGE  (via teleconference),  spoke  in  support of  the                                                                    
legislation. She shared that each  member of the association                                                                    
had  endured  the  large  hit related  to  the  increase  in                                                                    
licensing. The  board wanted  to pay  down the  deficit. She                                                                    
said  that HB  90  would deal  with  investigation costs  to                                                                    
correct  the  issue  over time.  She  shared  that  midwives                                                                    
provided high quality  care to low-risk women  for less cost                                                                    
and were  regulated by  a board that  was familiar  with the                                                                    
nature of their work. She  referred to a handout in members'                                                                    
packets that  detailed the cost  savings that  resulted from                                                                    
midwife  assisted   births.  Many  women  and   babies  were                                                                    
thankful for the extension of the board.                                                                                        
3:38:08 PM                                                                                                                    
DEBORAH SCHNEIDER,  CHAIR, BOARD  OF CERTIFIED  DIRECT ENTRY                                                                    
MIDWIVES, ANCHORAGE (via  teleconference), urged the passage                                                                    
of the bill.  She had been involved  crafting regulations to                                                                    
protect  mothers and  babies. She  was very  appreciative of                                                                    
the conversation supporting the  continuation of the board's                                                                    
cost-effectiveness.  She referred  to the  issue related  to                                                                    
investigations, and the high  cost of investigations covered                                                                    
in the audit,  and shared that there had  been several cases                                                                    
that  had  been  under  investigation  for  4  to  6  years,                                                                    
generating  enormous cost.  She stressed  that the  midwives                                                                    
were  committed  to  paying  down  the  debt.  She  believed                                                                    
midwifery could  be expanded  in Alaska  if the  issues were                                                                    
addressed. She  expressed appreciation for the  work done by                                                                    
the committee.                                                                                                                  
Co-Chair Foster CLOSED public testimony.                                                                                        
HB  49  was   HEARD  and  HELD  in   committee  for  further                                                                    
Co-Chair Foster discussed housekeeping.                                                                                         
3:42:10 PM                                                                                                                    
The meeting was adjourned at 3:42 p.m.                                                                                          

Document Name Date/Time Subjects
HB049 Sponsor Statement 1.30.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 49
HB049 Supporting Documents-Letters of Support 2.2.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 49
HB049 Supporting Documents-Full Sunset Audit 01.30.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 49
HB0056 Sponsor Statement 01.23.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB0056 Supporting Document-Constituent 01.24.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB0056 Sectional Analysis 01.23.17 .pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB056 Support SEAFA.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB056 Support USAG.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB056 Supporting Document - Decker 02.23.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB056 Supporting Document CED 2016 Annual State Loan Report.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB056 Supporting Document CED 2016 FE Term Ext Report.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
HB081 Additional Documents Guide AEERLFP 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Additional Documents Memo Legal 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Sectional Analysis 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Sponsor Statement 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Summary of Changes 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Support Document Letter AAHA 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Supporting Documents Letter CCS, Catholic Diocese of Juneau 1.27.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Supporting Documents Letter Denali Commission 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Supporting Documents Letter SFAC 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Supporting Documents Letter TCC 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB081 Supporting Documents Report Rural Retrofits 2.14.2017.pdf HFIN 3/6/2017 1:30:00 PM
HB 81
HB 106 Supporting Document - Letters ACOA-ACT 2.14.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-2017 Civil Legal Services Fund Overview 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-2017 Fact Sheet 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-ALSC statement on Case Restrictions 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-Civil Funds filing fee info 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-FY2016 ALSC Fact Sheet 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Additional Document-FY2016 ALSC Pro Bono Program 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Sponsor Statement 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB106 Sectional Analysis ver A 2.8.17.pdf HFIN 3/6/2017 1:30:00 PM
HB 106
HB 49 Medicaid Cost Savings_CDMs 2015_word (002).pdf HFIN 3/6/2017 1:30:00 PM
HB 49
HB 49 Supporting Doc 2016 MID Fee Analysis.pdf HFIN 3/6/2017 1:30:00 PM
HB 49
HB56 Support UFA to HFin SB71 to SLC 030317.pdf HFIN 3/6/2017 1:30:00 PM
HB 56
SB 71
HB 56 Supporting Documents-letters.pdf HFIN 3/6/2017 1:30:00 PM
HB 56