Legislature(2017 - 2018)HOUSE FINANCE 519

04/06/2017 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to a Call of the Chair --
+ HB 47 MUNICIPAL PERS CONTRIBUTIONS/INTEREST TELECONFERENCED
Heard & Held
+ HB 131 RELOCATION ASSISTANCE FOR FED. PROJ/PROG TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HB 141 AK WORKFORCE INVESTMENT BOARD;FUNDS TELECONFERENCED
Moved HB 141 Out of Committee
+= HB 127 CRIM. CONV. OVERTURNED: RECEIVE PAST PFD TELECONFERENCED
Heard & Held
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 6, 2017                                                                                            
                         1:35 p.m.                                                                                              
                                                                                                                                
1:35:47 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:35 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                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Paul  Labolle,  Staff,  Representative  Neal  Foster;  Kevin                                                                    
Worley,   CFO   -Division   of  Retirement   and   Benefits,                                                                    
Department  of Administration;  Kathie Wasserman,  Executive                                                                    
Director,   Alaska   Municipal  League,   Anchorage;   Laura                                                                    
Stidolph,  Staff, Representative  Adam  Wool; Heather  Fair,                                                                    
Chief   of  Right-of-Way,   Department  of   Transportation;                                                                    
Representative  Scott  Kawasaki,  Sponsor;  Kaci  Schroeder,                                                                    
Assistant  Attorney General,  Criminal Division,  Department                                                                    
of  Law;   Representative  Zach  Fansler,   Sponsor;  Paloma                                                                    
Harbour,  Admin  Services  Director,  Department  of  Labor;                                                                    
Jerry  Burnett,  Deputy   Commissioner,  Treasury  Division,                                                                    
Department of Revenue.                                                                                                          
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
Jon Korta, Mayor, City of Galena, Galena; Shanda                                                                                
Huntington, City Manager/Clerk - City of Galena, Galena;                                                                        
Hilary Martin, Legislative Legal, Juneau.                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
HB 47     MUNICIPAL PERS CONTRIBUTIONS/INTEREST                                                                                 
                                                                                                                                
          HB 47 was HEARD and  HELD in committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
HB 127    CRIM. CONV. OVERTURNED: RECEIVE PAST PFD                                                                              
          HB  127  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 131    RELOCATION ASSISTANCE FOR FED. PROJ/PROG                                                                              
                                                                                                                                
          HB  131  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
                                                                                                                                
HB 141    AK WORKFORCE INVESTMENT BOARD; FUNDS                                                                                  
                                                                                                                                
          HB 141  was REPORTED OUT  of Committee with  a "do                                                                    
          Pass"  recommendation and  with  three new  fiscal                                                                    
          impact   notes  from   Department  of   Labor  and                                                                    
          Workforce  Development  and  with  two  previously                                                                    
          public fiscal notes: FN1 (EED) and FN4 (UA).                                                                          
                                                                                                                                
Co-Chair Foster reviewed the agenda for the day.                                                                                
                                                                                                                                
HOUSE BILL NO. 47                                                                                                             
                                                                                                                                
     "An  Act   requiring  certain  municipalities   with  a                                                                    
     population  that  decreased  by more  than  25  percent                                                                    
     between 2000  and 2010 that participate  in the defined                                                                    
     benefit  retirement  plan   of  the  Public  Employees'                                                                    
     Retirement  System  of  Alaska  to  contribute  to  the                                                                    
     system an  amount calculated by  applying a rate  of 22                                                                    
     percent of the  total of all base salaries  paid by the                                                                    
     municipality to  employees of the municipality  who are                                                                    
     active members  of the system during  a payroll period;                                                                    
     authorizing  the administrator  of the  defined benefit                                                                    
     retirement  plan of  the  Public Employees'  Retirement                                                                    
     System  of  Alaska  to  reduce  the  rate  of  interest                                                                    
     payable by  certain municipalities that  are delinquent                                                                    
     in transmitting employee  and employer contributions to                                                                    
     the  retirement plan;  and providing  for an  effective                                                                    
     date."                                                                                                                     
                                                                                                                                
Co-Chair Seaton invited Co-Chair Foster to join his staff                                                                       
at the table to present his bill.                                                                                               
                                                                                                                                
1:38:02 PM                                                                                                                    
                                                                                                                                
PAUL LABOLLE, STAFF, REPRESENTATIVE NEAL FOSTER, read the                                                                       
sponsor statement:                                                                                                              
                                                                                                                                
     HB  47 seeks  to correct  an unintended  consequence of                                                                    
     the PERS  "salary floor" established  in SB 125  of the                                                                    
     25th Legislature.                                                                                                          
                                                                                                                                
     SB  125  changed  the  PERS   system  from  a  multiple                                                                    
     employer plan to a cost  share plan. It transferred the                                                                    
     individual  liability of  the  160  PERS employers  and                                                                    
     consolidated  it so  that all  the  employers share  in                                                                    
     that liability.                                                                                                            
                                                                                                                                
     SB 125  also created  what is  commonly referred  to as                                                                    
     the  2008   salary  floor.  This   requires  employer's                                                                    
     contribute  22%  of  annual salaries  or  22%  of  FY08                                                                    
     salaries,   whichever  is   greater.   The  floor   was                                                                    
     instituted  to  ensure that  the  system  could not  be                                                                    
     "gamed" by discouraging employers from replacing PERS                                                                      
     employees  with contract  hires  to  reduce their  base                                                                    
     contribution to the system.                                                                                                
                                                                                                                                
     Some  municipalities have  found  themselves under  the                                                                    
     2008  floor through  no  fault of  their  own. A  large                                                                    
     change  in population  results in  a reduced  tax base,                                                                    
     which affects the services a  city can provide. As that                                                                    
     financial reality  drives a  city to  downsize, current                                                                    
     law  exacerbates this  problem  by  keeping their  PERS                                                                    
     contribution at  the 2008 level. This  bill targets the                                                                    
     communities whose  population has dropped by  more than                                                                    
     25% since the previous census.                                                                                             
                                                                                                                                
     HB 47 will address this issue in two ways:                                                                                 
                                                                                                                                
     1. Establish  a new  floor of  FY 2012  for communities                                                                    
     whose  population decreased  by more  than 25%  between                                                                    
     2000 and 2010.                                                                                                             
     2. Allows  the PERS administrator to  negotiate penalty                                                                    
     interest rates on delinquent payments.                                                                                     
     HB  47  does not  intend  to  repeat the  "2008  floor"                                                                    
     debate   but  to   correct   one   of  the   unintended                                                                    
     consequences caused  by the arbitrary line  that debate                                                                    
     created.                                                                                                                   
                                                                                                                                
     I urge your support of this legislation.                                                                                   
                                                                                                                                
1:40:22 PM                                                                                                                    
                                                                                                                                
Representative  Wilson asked  whether  the  bill opened  the                                                                    
Public  Employees'  Retirement  System (PERS)  and  Teachers                                                                    
Retirement  System (TRS)  to  liability  issue. Mr.  Labolle                                                                    
responded that the bill would  "slightly add to the unfunded                                                                    
liability,"  but eliminated  "future  exposure" because  the                                                                    
qualification   period    was   during   a    past   census.                                                                    
Representative  Wilson  deduced   that  the  municipalities'                                                                    
contribution would  be reduced due to  decreased population,                                                                    
but  the  state  remained  liable for  the  retirees,  which                                                                    
represented the  initial increase in liability.  Mr. Labolle                                                                    
responded in the affirmative.                                                                                                   
                                                                                                                                
1:41:25 PM                                                                                                                    
                                                                                                                                
Representative  Ortiz  asked  Mr.   Labolle  to  provide  an                                                                    
example of how the legislation  worked. Mr. Labolle used the                                                                    
example of a fish processing  plant that closed in a village                                                                    
causing some  residents to  move away.  He assumed  that the                                                                    
villages  22 percent  contribution rate  was $150  thousand,                                                                    
and  the  2008 floor  was  $100  thousand. After  the  plant                                                                    
closure, the  villages 22 percent of  gross salaries dropped                                                                    
to  $80  thousand, but  the  village  was still  statutorily                                                                    
required to pay  the $100 thousand floor.  He continued that                                                                    
if the village continued to  pay the gross salaries, but was                                                                    
unable  to  pay  the  floor amount,  the  remainder  of  the                                                                    
difference was considered a delinquent  payment subject to a                                                                    
statutory 12  percent interest rate that  accrued each year.                                                                    
He  related that  the state  and municipality  did not  have                                                                    
options to mitigate  the debt due to statute.  The state was                                                                    
bound  by  law  to  charge the  12  percent  assessment  and                                                                    
indebted  municipalities  could  not declare  bankruptcy  or                                                                    
dissolve.  Representative  Ortiz   surmised  that  the  bill                                                                    
"moved the floor to a  later date, which would presumably be                                                                    
a less  burdensome floor" when  the population  decrease was                                                                    
factored in. Mr. Labolle responded in the affirmative.                                                                          
                                                                                                                                
Co-Chair Foster  pointed out that the  situation Mr. Labolle                                                                    
provided was hypothetical. He  indicated the committee would                                                                    
hear testimony  from a  real situation  in Galena  where the                                                                    
military base closed.                                                                                                           
                                                                                                                                
1:44:47 PM                                                                                                                    
                                                                                                                                
Representative Grenn referred to  an email from the Division                                                                    
of Retirements and Benefits  {Jim Puckett, Division Director                                                                    
(copy on  file)] listing the  communities that  between 2000                                                                    
and  2010  lost  25  percent of  their  population  as;  St.                                                                    
George, Galena, and Pelican. He  asked for confirmation. Mr.                                                                    
Labolle  responded that  5 communities  qualified, but  only                                                                    
the three  Representative Grenn mentioned were  affected. He                                                                    
noted  that Atka  was  already paying  above  the floor.  In                                                                    
addition,  the community  of Anderson  had zero  active PERS                                                                    
eligible employees [St. George was also listed.]                                                                                
                                                                                                                                
Representative Wilson wanted to  understand the fiscal note.                                                                    
She  reported  that  the  state was  required  to  pay  $129                                                                    
thousand  in the  FY 2017  Supplemental Budget  bill and  an                                                                    
additional $121 thousand in 2018.                                                                                               
                                                                                                                                
Co-Chair Seaton asked Mr. Worley to come to the table.                                                                          
                                                                                                                                
1:47:17 PM                                                                                                                    
                                                                                                                                
KEVIN   WORLEY,  CHIEF   FINANCIAL   OFFICER,  DIVISION   OF                                                                    
RETIREMENT  AND  BENEFITS,   DEPARTMENT  OF  ADMINISTRATION,                                                                    
explained that  the figures were estimates  from the actuary                                                                    
based  on  the  reduced  floor that  shifted  the  remaining                                                                    
liability to the state.  Representative Wilson asked whether                                                                    
the state was required to  deposit the stated amounts in the                                                                    
PERS and  TRS funds. Mr.  Worley responded that  the figures                                                                    
would be an additional state contribution for PERS only.                                                                        
                                                                                                                                
Co-Chair Seaton asked whether the  fiscal note satisfied the                                                                    
statutory  requirement   that  an  actuarial   analysis  was                                                                    
required. Mr. Worley responded in the affirmative.                                                                              
                                                                                                                                
1:49:19 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton OPENED Public Testimony.                                                                                        
                                                                                                                                
1:49:35 PM                                                                                                                    
                                                                                                                                
JON   KORTA,   MAYOR,   CITY    OF   GALENA,   GALENA   (via                                                                    
teleconference), spoke  in favor of HB  47.  He read  from a                                                                    
prepared statement:                                                                                                             
     My  name  is Jon  Korta.  I  am  the mayor  of  Galena,                                                                    
     Alaska. I would like to  thank the committee for taking                                                                    
     time  today so  that I  may explain  the importance  of                                                                    
     HB47  for  communities  like   Galena  that  have  seen                                                                    
     significant population decreases in the last decade.                                                                       
                                                                                                                                
     As you may know,  the Galena Forward Operating Location                                                                    
     was closed by  the United States Air Force.  As part of                                                                    
     the BRAC process, the Galena  FOL closure was effective                                                                    
     October  1, 2010,  but  had been  in  process for  four                                                                    
     years.  The  Air Force  base  was  the main  source  of                                                                    
     employment for Galena  residents. Not surprisingly, the                                                                    
     base   closure  resulted   in   a   reduction  of   the                                                                    
     population.  In  2000,  Galena had  675  residents.  In                                                                    
     2010,  470  residents,   representing  a  30%  decline.                                                                    
     Galena was again  struck by hardship in  spring of 2013                                                                    
     when  ice  dammed the  Yukon  River  and inundated  the                                                                    
     City, leading to a disaster declaration.                                                                                   
                                                                                                                                
     The 2008 "Floor" established by  the current law exists                                                                    
     to prevent  a municipality from gaming  the PERS system                                                                    
     by  contracting   out  work  previously   performed  by                                                                    
     municipal employees  in order  to avoid  making ongoing                                                                    
     contributions  to   PERS.  The  current   minimum  PERS                                                                    
     contribution  is based  on the  level of  salaries that                                                                    
     existed  in 2008.  This purpose  does  not account  for                                                                    
     Galena's situation.  It was not  intended, nor  does it                                                                    
     contemplate,  municipalities   with  sharply  declining                                                                    
     populations.  HB 47  does not  change the  PERS policy,                                                                    
     but rather recognizes nuance.                                                                                              
                                                                                                                                
     The amendment affects only  communities that suffered a                                                                    
     minimum  25% decline  in  population  between 2000  and                                                                    
     2010, like Galena. To put  that in perspective, the 25%                                                                    
     threshold  would represent  the loss  of 75,000  people                                                                    
     from Anchorage or 8,000 people  from Juneau. What would                                                                    
     happen  to   Fairbanks  if  the   Borough's  population                                                                    
     declined by 30,000,  while at the same  time seeing the                                                                    
     closure of Eielson and Fort  Wainwright? The demand for                                                                    
     municipal  administrative  and  public  services  would                                                                    
     decline  sharply; so  would the  municipality's ability                                                                    
     to  provide these  services  having  lost the  region's                                                                    
     economic driver.                                                                                                           
     HB 47,  which moves  the floor year  from 2008  to 2012                                                                    
     for  the   communities  that  experienced   these  huge                                                                    
     losses, does  not provide a "loophole"  allowing Galena                                                                    
     or any  other community with a  similar population loss                                                                    
     between 2000  and 2010 to  "game" the system now  or in                                                                    
     the  future. The  2008 floor  for these  communities is                                                                    
     replaced with  a 2012 floor. Galena's  budgeted payroll                                                                    
     for FY 2015 is above the 2012 amount for 17 employees.                                                                     
                                                                                                                                
     Galena's circumstances  are not a result  of any choice                                                                    
     the city  made. The  base closure and  concomitant loss                                                                    
     of close to  1/3 of the city's  population was entirely                                                                    
     involuntary.  The  relationship   between  a  declining                                                                    
     population  and  declining   payroll  is  clear:  fewer                                                                    
     residents  =  fewer  public  employee  =  lower  public                                                                    
     payroll. Based  on the 2008  floor, Galena  is required                                                                    
     to pay  an amount owed  by a city  substantially larger                                                                    
     than  Galena.   Galena's  required   PERS  contribution                                                                    
     approaches half of the City's entire payroll.                                                                              
                                                                                                                                
     Galena's FY 2008 salary total  was $1,513,365.19 for 36                                                                    
     employees.  Therefore,  Galena's  annual  minimum  PERS                                                                    
     contribution is  $332,940. In FY 2012  Galena's payroll                                                                    
     was $765,776  for 17 employees.  That is the  year this                                                                    
     amendment would move  the floor to for  cities that saw                                                                    
     a  25% decrease  in population  between 2000  and 2010.                                                                    
     Under  the 2008  floor,  Galena's  annual minimum  PERS                                                                    
     contribution  is  nearly  half  of  the  City's  entire                                                                    
     payroll costs.                                                                                                             
                                                                                                                                
     For  Galena,  the   difference  in  PERS  contributions                                                                    
     between the 2008 "floor" and  FY 2012 actual payroll is                                                                    
     $164,000. This  difference will continue  going forward                                                                    
     creating  an  ever-increasing obligation.  By  statute,                                                                    
     any amount  unpaid accrues interest at  12%. This ever-                                                                    
     increasing  obligation  adds  to  an  already  stressed                                                                    
     situation.  The  City's   financial  situation  was  so                                                                    
     severe in FY 2011 that  it required a low interest loan                                                                    
     through the Alaska  Municipal Bond Bank to  deal with a                                                                    
     severe cash  flow crisis that was  preventing them from                                                                    
     being  able to  secure fuel  for heat  and electricity.                                                                    
     Simply put, if Galena cannot  pay its bills, the lights                                                                    
     go out in Galena.                                                                                                          
                                                                                                                                
     The  2008   Floor  is,  overall,   a  sound   piece  of                                                                    
     legislation, furthering  sound policy, but it  does not                                                                    
     account  for all  situations. It  does not  account for                                                                    
     cities   that   have    suffered   massive   population                                                                    
     contractions.  This amendment  furthers the  underlying                                                                    
     policy  goals of  the  regulatory  structure: It  helps                                                                    
     ensure  that   municipalities  are  able   to  continue                                                                    
     contributing  to PERS,  while recognizing  that a  city                                                                    
     cannot, and  should not, have to  make the contribution                                                                    
     of a  city that has a  significantly larger population.                                                                    
     Recognizing that  Galena is  not the  same city  it was                                                                    
     before the base closed and  30% of its population moved                                                                    
     away is  simply good  policy, policy that  helps ensure                                                                    
     that Galena  continues to contribute  to PERS  and that                                                                    
     the lights stay on.                                                                                                        
                                                                                                                                
     Recognizing   the   reality    of   sharply   declining                                                                    
     populations  is a  worthy amendment  and is  just plain                                                                    
     fair.                                                                                                                      
                                                                                                                                
     Thank you for your time  this morning. I would be happy                                                                    
     to answer any questions you may have.                                                                                      
                                                                                                                                
1:56:13 PM                                                                                                                    
                                                                                                                                
SHANDA HUNTINGTON, CITY MANAGER/CLERK - CITY OF GALENA,                                                                         
GALENA (via teleconference), read a prepared statement:                                                                         
                                                                                                                                
     My name  Shanda Huntington  and I  am the  city manager                                                                    
     for  Galena,   Alaska.  Before  serving  as   the  city                                                                    
     manager, I served as the city  clerk for 6 years. I was                                                                    
     also  born in  Galena,  grew up  there,  and raised  my                                                                    
     children in Galena. I would  like to follow up on Mayor                                                                    
     Korta's   testimony   with  information   relating   to                                                                    
     Galena's population decline, the  base closure, and the                                                                    
     effects on city payroll and finances.                                                                                      
                                                                                                                                
     As  Mayor Korta  said,  the air  force base  officially                                                                    
     closed  in 2010,  following a  multi-year drawdown.  In                                                                    
     1990, before base  realignment, Galena's population was                                                                    
     847. Galena has  always been a small city  and the base                                                                    
     was the  driver of economic activity.  According to the                                                                    
     2000 census,  the number of  residents, which  does not                                                                    
     include all of  the Air Force personnel,  was 675. That                                                                    
     number had  dropped to  470 with  the 2010  census. 205                                                                    
     people may  not sound like  a lot, but it  represents a                                                                    
     30% decrease in the  city's resident population between                                                                    
     the two censuses. 30% of  residents moved away, but the                                                                    
     decline  in  the  city's  economic  activity  was  much                                                                    
     greater. Without  the base, the  decline in  demand for                                                                    
     city  services was  disproportionate to  the population                                                                    
     decrease.                                                                                                                  
                                                                                                                                
     For FY  2008, the  current floor year,  Galena's salary                                                                    
     total  was $1,513,365.19  for 36  employees. Therefore,                                                                    
     Galena's annual minimum  PERS contribution is $332,940.                                                                    
     In FY  2012, the  amended floor year,  Galena's payroll                                                                    
     was $765,776 for  17 employees. Between FY  2008 and FY                                                                    
     2012, Galena's payroll was cut  in half, reflecting the                                                                    
     decrease  in  population   and  in  economic  activity.                                                                    
     Galena's  current annual  minimum PERS  contribution of                                                                    
     $332,940 is  nearly half  of the  City's FY  2012 total                                                                    
     payroll  costs.  Allowing  a floor  year  of  2012  for                                                                    
     cities   that  experienced   a   drastic  decrease   in                                                                    
     population    changes     Galena's    annual    minimum                                                                    
     contribution to $168,940.                                                                                                  
                                                                                                                                
     For  Galena,  the   difference  in  PERS  contributions                                                                    
     between the  2008 floor and  FY 2012 actual  payroll is                                                                    
     $164,000. This  difference will continue  going forward                                                                    
     creating  an  ever-increasing obligation.  By  statute,                                                                    
     any amount  unpaid accrues compounded interest  at 12%.                                                                    
     This  ever-increasing  obligation  adds to  an  already                                                                    
     stressed situation. The  City's financial situation was                                                                    
     so severe  in FY 2011  that it required a  low interest                                                                    
     loan  through the  Alaska Municipal  Bond Bank  to deal                                                                    
     with a severe  cash flow crisis that  was preventing us                                                                    
     from   being  able   to  secure   fuel  for   heat  and                                                                    
     electricity.  Simply  put,  if  Galena  can't  pay  its                                                                    
     bills, the lights go out in Galena.                                                                                        
                                                                                                                                
     Reasonably  adjusting  the   floor  year  for  severely                                                                    
     impacted cities does not mean  that the cities will pay                                                                    
     the  minimum  amount  only. Modifying  the  floor  year                                                                    
     changes  Galena's  minimum   annual  contribution  from                                                                    
     $332,940 to  $168,940; the  actual contribution  may be                                                                    
     higher.  For FY  2013, Galena  would in  fact pay  more                                                                    
     than that  amended minimum. For  FY 2013,  Galena added                                                                    
     one employee,  for a total payroll  of $895,784.53. For                                                                    
     FY 2013,  Galena's contribution  would have  been above                                                                    
     the 2012 floor by approximately $30,000.                                                                                   
     HB  47  simply  recognizes   that  reality  of  drastic                                                                    
     population   decreases  experienced   by  some   Alaska                                                                    
     cities, using a clearly  defined metric: a 25% decrease                                                                    
    in population according the 2000 and 2010 censuses.                                                                         
                                                                                                                                
     The base  closure has been  very difficult  for Galena.                                                                    
     As  previously noted,  Galena required  a low  interest                                                                    
     loan through  the Alaska Municipal Bond  Bank to secure                                                                    
     fuel for heat  and electricity in FY 2011.  In the last                                                                    
     several  years, Galena's  finances have  stabilized and                                                                    
     there  are  even  indicators   of  recovery  after  the                                                                    
     catastrophic decline.  We cannot  say what  will happen                                                                    
     to Galena's  population long-term, but we  believe that                                                                    
     we  have turned  a corner  in terms  of population  and                                                                    
     finances.                                                                                                                  
                                                                                                                                
     The  City  of Galena  is  adjusting  to a  new  reality                                                                    
     following  the base  closure  and loss  of  30% of  the                                                                    
     population.  This  legislation  is  one  part  of  that                                                                    
     adjustment. I  became city  manager during  a difficult                                                                    
     period  for  the  City. Our  finances  have  stabilized                                                                    
     somewhat  over the  last several  years. Requiring  the                                                                    
     City of Galena to pay to  PERS a contribution owed by a                                                                    
     much  larger city  weakens  Galena,  and threatens  its                                                                    
     ability  to provide  any contribution  to PERS.  We are                                                                    
     cautiously  optimistic   that  the  City   will  become                                                                    
     stronger and  even grow over  time. If and  when Galena                                                                    
     becomes  the city  it was  in  2008, the  city will  be                                                                    
     required to make a  PERS contribution commensurate with                                                                    
     that size and payroll, and  will do so gladly, but it's                                                                    
     not  that  city  right  now   and  the  oversized  PERS                                                                    
     contribution inhibits it from becoming so.                                                                                 
                                                                                                                                
     Recognizing  the   reality  of   drastically  declining                                                                    
     populations  is  a  matter   of  simple  fairness.  The                                                                    
     amendment recognizes  this and ultimately  promotes the                                                                    
     goals  of  PERS:  ensuring that  Alaska  municipalities                                                                    
     continue to contribute their fair share to the system.                                                                     
                                                                                                                                
     I would  like to  thank the  committee for  taking time                                                                    
     today  so that  I may  explain the  importance of  this                                                                    
     amendment for  communities like  Galena that  have seen                                                                    
     significant population decreases in the last decade.                                                                       
                                                                                                                                
2:02:58 PM                                                                                                                    
                                                                                                                                
KATHIE  WASSERMAN,  EXECUTIVE   DIRECTOR,  ALASKA  MUNICIPAL                                                                    
LEAGUE, ANCHORAGE, spoke  in support of HB  47. She reported                                                                    
that the  league had been  working on the issue  for several                                                                    
years. She  was the previous  mayor of Pelican,  Alaska. She                                                                    
relayed an example when the  local cold storage facility was                                                                    
purchased  by   Kake  Tribal,  subsequently   went  bankrupt                                                                    
resulting in  the city's 2008 floor  dramatically decreasing                                                                    
due to population  loss. She emphasized that  the 12 percent                                                                    
assessment  was incredibly  high.  She voiced  that in  some                                                                    
instances municipalities  fall into  a situation  where they                                                                    
could  never get  out of  the debt.  The league  offered its                                                                    
full support of HB 47.                                                                                                          
                                                                                                                                
2:06:10 PM                                                                                                                    
                                                                                                                                
Representative  Guttenberg  wondered  about the  ability  to                                                                    
collect  what a  city owed  for  a liability.  He related  a                                                                    
prior  conversation with  Michael  Lamb, [Interim  Executive                                                                    
Director   and  Chief   Financial  Officer,   Alaska  Energy                                                                    
Authority,  Department of  Commerce, Community  and Economic                                                                    
Development] who  was "instrumental"  in a  prior settlement                                                                    
agreement.  He  relayed that  Mr.  Lamb  stated a  community                                                                    
would never be able to pay  off its indebtedness to PERS. He                                                                    
stated that  communities were paying through  a formula, but                                                                    
it was  unknown whether  the payments were  underpayments or                                                                    
overpayments. He  asked whether the statement  was accurate.                                                                    
Ms. Wasserman responded  in the affirmative. She  spoke of a                                                                    
historical  arbitrary  percentage   that  had  been  decided                                                                    
between  the league  and the  Senate Finance  Committee. She                                                                    
acknowledged that some communities  might be overpaying, and                                                                    
some  were  likely  underpaying.  Representative  Guttenberg                                                                    
commented that  the purpose of  the bill was to  ensure that                                                                    
payments could  continue and were made  more affordable. Ms.                                                                    
Wasserman  explained that  the bill  did not  provide relief                                                                    
from the liability, but simply  moved the floor and adjusted                                                                    
the interest.  The municipality still owed  the principal of                                                                    
their past debt.                                                                                                                
                                                                                                                                
2:09:04 PM                                                                                                                    
                                                                                                                                
Representative Pruitt  asked whether Ms.  Wasserman expected                                                                    
other   cities   coming   to  the   legislature   requesting                                                                    
adjustments  in the  future. Ms.  Wasserman  replied in  the                                                                    
negative. She  explained that  wages continued  to increase,                                                                    
and  the  floor issue  will  likely  resolve itself  in  the                                                                    
future.  She  deemed that  it  would  be very  difficult  to                                                                    
revert further  than 2008  due to  inflation. Representative                                                                    
Pruitt  commented that  the municipalities  were asking  the                                                                    
state to  take on  more of  its burden.  He wondered  if the                                                                    
rest of the league's membership  was supportive of the bill.                                                                    
Ms.  Wasserman thought  the  other  member communities  were                                                                    
supportive. However, every municipality  was waiting for the                                                                    
state  to  address the  "termination  studies  and the  PERS                                                                    
floor," which were  the larger issues. She  claimed that the                                                                    
legislation was  only a temporary  fix for  communities that                                                                    
were  in a  desperate situation.  She was  still working  on                                                                    
additional legislation to provide a more permanent fix for                                                                      
the larger issues.                                                                                                              
                                                                                                                                
2:12:51 PM                                                                                                                    
                                                                                                                                
Co-Chair Seaton CLOSED Public Testimony.                                                                                        
                                                                                                                                
Co-Chair Foster indicated amendments were due on the                                                                            
following Monday by 5:00 PM.                                                                                                    
                                                                                                                                
HB 47 was HEARD and HELD in committee for further                                                                               
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 131                                                                                                            
                                                                                                                                
     "An   Act  relating   to   relocation  assistance   for                                                                    
     federally assisted public  construction and improvement                                                                    
     projects and  programs; and providing for  an effective                                                                    
     date."                                                                                                                     
                                                                                                                                
2:13:17 PM                                                                                                                    
                                                                                                                                
LAURA STIDOLPH, STAFF, REPRESENTATIVE ADAM WOOL, read from                                                                      
a prepared statement:                                                                                                           
                                                                                                                                
     In front of  you is House Bill  131 "Federal Relocation                                                                    
     Assistance Programs/Projects"  which will  bring Alaska                                                                    
     into   compliance    with   Federal    law   concerning                                                                    
     reimbursement  for  relocation   expenses  incurred  by                                                                    
     individuals or businesses that were  displaced due to a                                                                    
     federally-funded   highway,   bridge,   or   facilities                                                                    
     project. Alaskans  deserve to be fairly  compensated in                                                                    
     these circumstances.  HB131 will also  protect Alaska's                                                                    
     500+  million  dollar   annual  allocation  of  Federal                                                                    
     Highway  Administration funding  by bringing  the state                                                                    
     into compliance.                                                                                                           
                                                                                                                                
     In 2012, Congress relaxed  the eligibility criteria and                                                                    
     increased the maximum  reimbursement limits for State's                                                                    
     relocation  assistance   payment  programs   when  they                                                                    
     passed their  transportation authorization  and funding                                                                    
     bill,  the  Moving  Ahead  for  Progress  in  the  21st                                                                    
     Century Act, aka MAP-21.  Prior  to MAP-21, the payment                                                                    
     rates had not been changed for 30 years.                                                                                   
                                                                                                                                
     These changes went into effect October 1, 2014.                                                                            
     Unfortunately, Alaska Statute  continues to reflect the                                                                    
     more  stringent eligibility  criteria  and the  smaller                                                                    
     maximum reimbursement limits.                                                                                              
                                                                                                                                
                                      th                                                                                        
     During the second  half of the 29   Alaska Legislature,                                                                    
     this inconsistency  between state  and federal  law was                                                                    
     nearly fixed.  Language similar  to HB 131 was proposed                                                                    
     and passed  the House  unanimously.  It  passed through                                                                    
     the Senate State Affairs and  Senate Finance.  However,                                                                    
     the bill was held in  Senate Rules and never calendared                                                                    
     for a Senate floor vote.                                                                                                   
                                                                                                                                
     HB 131  assures Alaskans  that their  Legislature wants                                                                    
     them to  be compensated the  same as a resident  of any                                                                    
     other state.                                                                                                               
                                                                                                                                
     Thank you for  the opportunity to present  this bill on                                                                    
     behalf of  the House Transportation  Committee. Heather                                                                    
     Fair,  the   Department  of  Transportation   &  Public                                                                    
     Facilities'  Statewide Right-of-Way  Chief, is  here to                                                                    
     answer any questions you may have.                                                                                         
                                                                                                                                
          · Property    acquisition   and    therefore   the                                                                    
             subsequent  displacement  of   individuals  and                                                                    
             relocation of  their  homes/businesses  is  the                                                                    
             exception, not  the norm.   Our engineers  work                                                                    
             hard to design projects  in a manner  such that                                                                    
             we do not encroach upon private property.                                                                          
          · Relocation      assistance      payments     are                                                                    
             reimbursements    for     actual,    documented                                                                    
             relocation expenditures.  If a  party does  not                                                                    
             have the means to relocate themselves up front,                                                                    
             there is a hardship program that will help with                                                                    
             the cost.                                                                                                          
          · The new payment amounts created in federal law                                                                      
             are maximums;                                                                                                      
          · The payments we do make are a mix of                                                                                
             approximately 91% federal funding  and 9% state                                                                    
             funding.                                                                                                           
                                                                                                                                
2:15:42 PM                                                                                                                    
                                                                                                                                
Representative Wilson  asked whether the  federal government                                                                    
also  compensated  for  the   lost  property.  Ms.  Stidolph                                                                    
indicated that  the bill only  dealt with  relocation costs.                                                                    
Representative Wilson  asked whether the  federal government                                                                    
addressed  property  loss  under another  component  of  the                                                                    
program.  Ms.   Stidolph  deferred  to  the   Department  of                                                                    
Transportation and Public Facilities (DOT) for the answer.                                                                      
                                                                                                                                
2:17:02 PM                                                                                                                    
                                                                                                                                
HEATHER   FAIR,  CHIEF   OF   RIGHT-OF-WAY,  DEPARTMENT   OF                                                                    
TRANSPORTATION,  asked for  clarification  of the  question.                                                                    
Representative Wilson  asked whether the  federal government                                                                    
had  a program  that paid  fair market  value for  displaced                                                                    
property owners.  Ms. Fair answered in  the affirmative. She                                                                    
indicated that the federal  government placed the guidelines                                                                    
in  the "Uniform  Act." She  noted that  MAP-21 updated  the                                                                    
Uniform  Act  specific  to relocation.  The  department  met                                                                    
federal  requirements via  state statute  to compensate  for                                                                    
acquisition   of   property    separate   from   relocation.                                                                    
Representative Wilson asked whether  the state was currently                                                                    
in  compliance  with  federal acquisition  regulations.  Ms.                                                                    
Fair responded in the affirmative.                                                                                              
                                                                                                                                
2:18:21 PM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  commented that the  cost of  the relocation                                                                    
compensation  was  absorbed   when  the  legislature  funded                                                                    
capital projects.  He asked whether the  higher compensation                                                                    
rate  warranted  an  indeterminate  fiscal  note.  Ms.  Fair                                                                    
replied that the state contributed  roughly 9 percent to the                                                                    
federal  government's  91  percent contribution  on  federal                                                                    
projects. She  shared that the department  tried to minimize                                                                    
impacts  on Alaskan  families,  businesses,  and farms  when                                                                    
designing projects.  The department had run  some numbers on                                                                    
known  projects  and  determined   that  the  state's  share                                                                    
equaled about $12 thousand.                                                                                                     
                                                                                                                                
Representative  Pruitt  noticed  that the  fiscal  note  was                                                                    
retroactive to 2014. He wondered  about the fiscal aspect of                                                                    
the  retroactivity.  Ms.  Fair  answered  that  the  state's                                                                    
contribution  was  less than  a  "few  thousand dollars"  in                                                                    
retroactive payments.  She was  uncertain whether  the state                                                                    
had  paid the  recipients or  if  the money  was set  aside.                                                                    
Since the  state was currently  out of compliance  with MAP-                                                                    
21, the state  was not able to make the  payments and comply                                                                    
with state law at the same time.                                                                                                
Representative   Ortiz   wondered   to   what   extent   the                                                                    
legislation remedied  a potential problem in  the future. He                                                                    
asked whether  a significant  amount of  people in  the past                                                                    
had access  to relocation benefits. Ms.  Fair responded that                                                                    
the bill affected less than 12 people.                                                                                          
                                                                                                                                
Vice-Chair Gara asked whether the  bill increased the number                                                                    
of  people eligible  for  compensation.  Ms. Fair  responded                                                                    
that  the  legislation  increased  eligibility  because  the                                                                    
federal  government  "relaxed"  the  requirements.  However,                                                                    
currently the eligibility in Alaska did not increase.                                                                           
                                                                                                                                
2:22:09 PM                                                                                                                    
                                                                                                                                
Representative  Wilson surmised  that  the  state would  owe                                                                    
more money for the retroactive  payments, even if the amount                                                                    
was  small.  Ms.  Fair  responded   that  she  was  correct.                                                                    
However, she  reiterated that she was  uncertain whether the                                                                    
retroactive payments  were made because, so  few people were                                                                    
affected.                                                                                                                       
                                                                                                                                
Representative Kawasaki wanted to  challenge the zero fiscal                                                                    
note.  He referred  to  the document  in  the members  files                                                                    
titled  "DOT&PF's Proposed  Bill  for Relocation  Assistance                                                                    
Program Compliance" (copy on file).  He mentioned several of                                                                    
the increases listed in the document that included:                                                                             
                                                                                                                                
     Increases maximum reestablishment expense payment                                                                          
     from $10,000 to $25,000                                                                                                    
     Increases maximum amount of the fixed payment for                                                                          
     nonresidential moves from $20,000 to $40,000                                                                               
     Increases maximum purchase price differential for                                                                          
     homeowners from $22,500 to $31,000                                                                                         
                                                                                                                                
Representative Kawasaki  thought that the  increases "seemed                                                                    
like  a  lot." He  recognized  that  the state's  share  was                                                                    
roughly 9  percent but thought  the amount could add  up for                                                                    
future  projects. He  asked her  to speak  to the  potential                                                                    
cost  increases  of  projects  in  the  future.  He  thought                                                                    
recipients    would   request    the   highest    level   of                                                                    
reimbursement.  Ms. Fair  responded that  the reimbursements                                                                    
were based on actual expenses.  She agreed that if a project                                                                    
DOT  was  unable  to  redesign  had  high  impacts,  it  was                                                                    
possible that the  state's 9 percent share  could be costly.                                                                    
She  determined that  it was  impossible  to know  regarding                                                                    
projects that were 3 to  5 years away from construction. She                                                                    
stressed that  the department always endeavored  to minimize                                                                    
impacts.                                                                                                                        
                                                                                                                                
2:24:49 PM                                                                                                                    
Co-Chair Foster OPENED Public Testimony.                                                                                        
                                                                                                                                
Co-Chair Foster CLOSED Public Testimony.                                                                                        
                                                                                                                                
Co-Chair Foster  requested that  amendments be  submitted by                                                                    
Monday at 5:00 pm.                                                                                                              
                                                                                                                                
HB  131  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 127                                                                                                            
                                                                                                                                
     "An Act  relating to a  permanent fund dividend  for an                                                                    
     individual   whose   conviction   has   been   vacated,                                                                    
     reversed,   or   dismissed;   and   relating   to   the                                                                    
     calculation  of   the  value  of  the   permanent  fund                                                                    
     dividend by  including payment to  individuals eligible                                                                    
     for a  permanent fund dividend because  of a conviction                                                                    
     that has been vacated, reversed, or dismissed."                                                                            
                                                                                                                                
2:26:33 PM                                                                                                                    
                                                                                                                                
Representative Wilson referred  to page 1, line  10 and read                                                                    
the following:                                                                                                                  
                                                                                                                                
     …individual's conviction is vacated or reversed, and                                                                       
     (1)  the charges on  which the conviction was based are                                                                    
     later dismissed; or                                                                                                        
     (2)  the individual is retried and found not guilty.                                                                       
                                                                                                                                
Representative  Wilson wondered  whether the  language meant                                                                    
that if  a conviction had  been merely vacated a  person was                                                                    
not eligible under the bill.                                                                                                    
                                                                                                                                
REPRESENTATIVE  SCOTT KAWASAKI,  SPONSOR,  relayed that  the                                                                    
bill  was   not  necessarily   introduced  to   address  the                                                                    
Fairbanks  Four. He  voiced that  the bill  was intended  to                                                                    
address   anyone   who    was   wrongfully   convicted   and                                                                    
incarcerated  and  was  denied  the  ability  to  receive  a                                                                    
Permanent  Fund Dividend  (PFD). He  deferred any  questions                                                                    
regarding the  Fairbanks Four to  the Department of  Law. He                                                                    
noted that he  had a copy of the  agreement between Attorney                                                                    
General  Craig Richards  and the  individuals  known as  the                                                                    
Fairbanks Four.                                                                                                                 
                                                                                                                                
Representative  Wilson  believed  that  the  Fairbanks  Four                                                                    
would not  be eligible  under the  bill. She  cited previous                                                                    
testimony from the individual members  of the Fairbanks Four                                                                    
who testified in favor of the bill.                                                                                             
                                                                                                                                
2:29:25 PM                                                                                                                    
                                                                                                                                
HILARY    MARTIN,    LEGISLATIVE    LEGAL,    JUNEAU    (via                                                                    
teleconference), did not know the answer to the question.                                                                       
                                                                                                                                
Representative Wilson repeated the question.                                                                                    
                                                                                                                                
KACI   SCHROEDER,  ASSISTANT   ATTORNEY  GENERAL,   CRIMINAL                                                                    
DIVISION,  DEPARTMENT OF  LAW,  replied  that the  Fairbanks                                                                    
Four would fall under the  bill because the convictions were                                                                    
vacated,  and  the  charges were  dismissed.  Representative                                                                    
Wilson asked  for verification that all  the charges against                                                                    
the  Four  were  dismissed.  Ms. Schroeder  replied  in  the                                                                    
affirmative.                                                                                                                    
                                                                                                                                
Representative Thompson  asked about the  difference between                                                                    
overturned, dismissed,  and vacated. Ms.  Schroeder answered                                                                    
that  all the  judgements were  vacated in  the case  of the                                                                    
Fairbanks Four.  She added that  vacated and  reversed meant                                                                    
to annul. The words were used interchangeably.                                                                                  
                                                                                                                                
2:32:31 PM                                                                                                                    
                                                                                                                                
Representative Guttenberg  pointed to page 1,  line 10 after                                                                    
the word "reversed"  in the bill and asked if  the comma was                                                                    
considered an  Oxford comma that separated  the clauses. Ms.                                                                    
Schroeder replied in the affirmative.                                                                                           
                                                                                                                                
Representative Pruitt  asked how  many people  were eligible                                                                    
under  the provisions  in the  bill. Ms.  Schroeder did  not                                                                    
have the data.  She believed the bill sponsor  had the exact                                                                    
numbers.   Representative  Pruitt   spoke   of  a   previous                                                                    
situation  when  the  governor had  the  ability  to  pardon                                                                    
people. He  wondered whether previously pardoned  people had                                                                    
the  ability   to  claim   their  dividend.   Ms.  Schroeder                                                                    
responded  that  the  bill  did  not  include  pardons.  She                                                                    
deferred the question to the Department of Revenue.                                                                             
                                                                                                                                
Representative  Kawasaki relayed  the  difficulty to  obtain                                                                    
data  regarding the  issue and  that DOL  did not  track the                                                                    
information, however,  he discovered  that the  Court System                                                                    
produced  some  data   for  a  similar  bill   in  the  29th                                                                    
legislature. He reported  that the number showed  that 19 to                                                                    
23  individuals  between  the   years  2011  and  2015  were                                                                    
eligible.                                                                                                                       
                                                                                                                                
Representative   Pruitt   believed   that   the   bill   was                                                                    
retroactive to  1982 at the  start of the  PFD distribution.                                                                    
He  wondered   if  the  sponsor   had  any  idea   how  many                                                                    
individuals  would be  eligible  since 1982.  He also  asked                                                                    
whether   the   bill    provided   for   interest   accrual.                                                                    
Representative  Kawasaki  answered  that the  bill  did  not                                                                    
contain  a provision  applying interest  to the  retroactive                                                                    
payments. He  added that  DOR would  determine the  value of                                                                    
the PFD  for each  year the individual  applied for  and DOL                                                                    
would  decide   eligibility.  The   bill  provided   for  an                                                                    
application period  of 120  days after  the bill  was signed                                                                    
into   law.   Representative   Pruitt  asked   whether   the                                                                    
appropriations  would  come  out  of  the  Earnings  Reserve                                                                    
Account   (ERA)  of   the  Permanent   Fund.  Representative                                                                    
Kawasaki  answered  that the  money  would  be paid  from  a                                                                    
specific "Reserve  for Prior Year Dividend  Liabilities." He                                                                    
explained  that  DOR  established the  reserve  account  for                                                                    
circumstances  when prior  year dividends  were owed,  which                                                                    
was why the fiscal note was zero.                                                                                               
                                                                                                                                
2:38:30 PM                                                                                                                    
                                                                                                                                
Representative  Pruitt commented  that  prisoners PFDs  were                                                                    
applied to  health care costs  or victim's  compensation and                                                                    
the funds  were already spent.  He asked whether  any future                                                                    
"conflicts" might arise  from the issue that  the funds were                                                                    
already spent  and used money  from the reserve  account for                                                                    
compensation.  Representative  Kawasaki  thought  it  was  a                                                                    
policy call. He believed that a  person who went to jail and                                                                    
was  wrongfully convicted  was a  victim. He  contended that                                                                    
the   legislation   was   for  the   wrongfully   convicted.                                                                    
Representative  Pruitt wanted  to  understand any  ancillary                                                                    
fiscal effects of  the bill. He agreed that if  a person was                                                                    
wrongfully convicted their life  was disrupted. He wanted to                                                                    
ensure that  the reserve fund  would be the  absolute source                                                                    
of  the   reimbursement  funding.   Representative  Kawasaki                                                                    
reiterated that  the issue  was a  policy call.  He believed                                                                    
that  when  a  person  was placed  in  jail  and  wrongfully                                                                    
convicted the  state owed the victims  something. He pointed                                                                    
out that the  individual was denied the  benefit of applying                                                                    
for the PFD.                                                                                                                    
                                                                                                                                
Representative   Pruitt  requested   that  DOR   answer  the                                                                    
question.  He   merely  wanted  to  understand   the  fiscal                                                                    
ramifications from the bill.                                                                                                    
                                                                                                                                
2:41:45 PM                                                                                                                    
                                                                                                                                
JERRY  BURNETT,  DEPUTY   COMMISSIONER,  TREASURY  DIVISION,                                                                    
DEPARTMENT   OF  REVENUE,   responded  that   in  1982   the                                                                    
incarcerated  population in  Alaska  could apply  for a  PFD                                                                    
until sometime in the 1990s  so the retroactivity did not go                                                                    
back that  far. He  confirmed that the  money would  be paid                                                                    
for out of  the Reserve for Prior Year  Dividends, which was                                                                    
calculated each year on a  statistical basis. He thought the                                                                    
number  of  people the  legislation  would  affect was  "not                                                                    
significant relative  to the amount  of money  reserved each                                                                    
year." He  delineated that the  reserve funding was  used to                                                                    
pay for  situations such as  upheld appeals from  the Office                                                                    
of  Administrative Hearings,  Commissioner's  Office, or  by                                                                    
the  Courts. He  reiterated  that the  bill  would cover  an                                                                    
"insignificant"  number  of  people relative  to  the  total                                                                    
number of appeals.                                                                                                              
                                                                                                                                
Vice-Chair  Gara  did  not see  a  provision  for  notifying                                                                    
someone  who   was  released  from   wrongful  incarceration                                                                    
included  in the  bill.  He  thought 120  days  was a  short                                                                    
period of  time for  people who were  trying to  piece their                                                                    
lives  together  after release.  He  felt  that a  year  was                                                                    
fairer.  Representative Kawasaki  replied that  the previous                                                                    
committee  engaged in  discussion over  the time  period but                                                                    
did not  want to offer  an amendment to lengthen  the amount                                                                    
of time.  He announced that he  would honor the will  of the                                                                    
committee.  Vice-Chair Gara  commented  that  he wanted  the                                                                    
sponsor to decide whether to offer the amendment.                                                                               
                                                                                                                                
Co-Chair Foster asked members to  submit their amendments by                                                                    
5:00 pm, Monday, 10, 2017.                                                                                                      
                                                                                                                                
HB  127  was  HEARD  and   HELD  in  committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
HOUSE BILL NO. 141                                                                                                            
                                                                                                                                
     "An Act relating to allocations of funding for the                                                                         
     Alaska Workforce Investment Board; and providing for                                                                       
     an effective date."                                                                                                        
                                                                                                                                
2:46:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ZACH   FANSLER,   SPONSOR,   reminded   the                                                                    
committee  that  the  bill  was   a  funding  mechanism  for                                                                    
technical and  vocational education  programs set  to sunset                                                                    
on June 30, 2017. He furthered that HB 141 included a five-                                                                     
year renewal  extending it through  June 30, 2022.  He noted                                                                    
that during the prior  hearing several questions were asked.                                                                    
He  had  distributed a  memo  with  answers in  response  to                                                                    
committee member questions [Memo  "House Bill 141 Questions"                                                                    
(copy on file)].                                                                                                                
                                                                                                                                
Representative Wilson  asked about the  constitutionality of                                                                    
a private school receiving some of the funding.                                                                                 
                                                                                                                                
2:49:53 PM                                                                                                                    
                                                                                                                                
PALOMA  HARBOUR,  ADMIN  SERVICES  DIRECTOR,  DEPARTMENT  OF                                                                    
LABOR, was  not aware of any  constitutional restrictions or                                                                    
violations.  She referred  to the  memo and  noted that  the                                                                    
answers  listed the  federal requirements  regarding use  of                                                                    
the  fund   and  specified  that   there  were   no  federal                                                                    
requirements  regarding  use  of employee  contributions  to                                                                    
unemployment programs.  She reminded committee  members that                                                                    
the  state   requirements  were  statutes  enacted   by  the                                                                    
legislature.  Representative  Wilson asked  whether  private                                                                    
schools  were required  to meet  state standards  to qualify                                                                    
for  the  funding. Ms.  Harbour  was  unable to  answer  the                                                                    
question   but  remembered   that  the   list  of   eligible                                                                    
recipients  were  placed  in state  statute.  Representative                                                                    
Wilson  commented that  there were  certain restrictions  on                                                                    
uses of general  funds for education. She  deemed that since                                                                    
the   funding   was   generated   by   unemployment   funds,                                                                    
restrictions regarding  type of  institution did  not apply.                                                                    
Ms.  Harbour  responded  that the  funds  became  designated                                                                    
state general funds.                                                                                                            
                                                                                                                                
2:51:46 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara asked  whether  the bill  covered the  same                                                                    
training institutions at the same  amounts as in years prior                                                                    
to the sunset. Representative  Fansler replied that the same                                                                    
10  institutions would  receive the  same amount  of funding                                                                    
they  received in  prior  years.  Vice-Chair Gara  commented                                                                    
that the Constitution did stipulate  that private funds were                                                                    
prohibited  for  use  for  public   education.  He  was  not                                                                    
concerned about any constitutional issues over the funding.                                                                     
Co-Chair Foster  asked Vice-Chair Gara to  review the bill's                                                                    
fiscal notes.                                                                                                                   
                                                                                                                                
2:53:17 PM                                                                                                                    
                                                                                                                                
Vice-Chair Gara  reviewed the  fiscal notes  for HB  141. He                                                                    
noted the new Department  of Labor and Workforce Development                                                                    
(DLWD)  fiscal  impact   note  appropriated  for  Employment                                                                    
Training  Services  in  the  amount   of  $408  thousand  in                                                                    
designated general funds (DGF).  He cited the new Department                                                                    
of  Labor  and  Workforce  Development  fiscal  impact  note                                                                    
allocated  to Workforce  Development in  the amount  of $4.2                                                                    
million  DGF. He  reported that  another  new Department  of                                                                    
Labor   and   Workforce    Development   fiscal   note   was                                                                    
appropriated  to  the  Alaska  Vocational  Technical  Center                                                                    
(AVTEC) in  the amount of $2  million DGF. He turned  to the                                                                    
previously  published   fiscal  notes:  FN4  (UA)   for  the                                                                    
University of Alaska  in the amount of $5.3  million DGF and                                                                    
a  previously  published fiscal  notes:  FN1  (EED) for  the                                                                    
Department of Education and Early  Development in the amount                                                                    
of $478 thousand DGF.                                                                                                           
                                                                                                                                
2:56:02 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton MOVED  to report  HB 141  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
notes.                                                                                                                          
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
                                                                                                                                
HB  141 was  REPORTED  OUT  of Committee  with  a "do  Pass"                                                                    
recommendation and  with three new fiscal  impact notes from                                                                    
Department of  Labor and Workforce Development  and with two                                                                    
previously published fiscal notes: FN1 (EED) and FN4 (UA).                                                                      
                                                                                                                                
Co-Chair Foster reviewed the agenda for the following day.                                                                      
                                                                                                                                
Co-Chair Foster recessed the meeting  to a call of the chair                                                                    
[Note: the meeting never reconvened].                                                                                           
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:58:42 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:58 p.m.