Legislature(2019 - 2020)ADAMS 519

03/23/2020 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 --
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 115 MOTOR FUEL TAX; EV REG. FEE TELECONFERENCED
Moved HCS CSSB 115(FIN) Out of Committee
+= SB 55 APPOINTMENTS TO COURT OF APPEALS TELECONFERENCED
Moved CSSB 55(2D JUD) Out of Committee
+= SB 172 EXTENDING THE STATE MEDICAL BOARD; AUDIT TELECONFERENCED
Moved CSSB 172(L&C) Out of Committee
                  HOUSE FINANCE COMMITTEE                                                                                       
                      March 23, 2020                                                                                            
                         1:38 p.m.                                                                                              
                                                                                                                                
1:38:50 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Johnston   called  the  House   Finance  Committee                                                                    
meeting to order at 1:35 p.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Neal Foster, Co-Chair                                                                                            
Representative Jennifer Johnston, Co-Chair                                                                                      
Representative Dan Ortiz, Vice-Chair                                                                                            
Representative Ben Carpenter                                                                                                    
Representative Andy Josephson                                                                                                   
Representative Gary Knopp                                                                                                       
Representative Bart LeBon                                                                                                       
Representative Kelly Merrick                                                                                                    
Representative Colleen Sullivan-Leonard                                                                                         
Representative Cathy Tilton                                                                                                     
Representative Adam Wool                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Kris  Curtis,   Legislative  Auditor,  Alaska   Division  of                                                                    
Legislative   Audit;  Erin   Shine,  Staff,   Representative                                                                    
Jennifer  Johnston; Dan  Stickel, Chief  Economist, Economic                                                                    
Research Group, Tax Division, Department of Revenue.                                                                            
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Sara Chambers, Director,  Division of Corporations, Business                                                                    
and   Professional   Licensing,  Department   of   Commerce,                                                                    
Community  and Economic  Development;  Richard Wein,  Chair,                                                                    
Alaska Medical Board, Sitka.                                                                                                    
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSSB 55(2nd JUD)                                                                                                                
          APPOINTMENTS TO COURT OF APPEALS                                                                                      
                                                                                                                                
          CSSB  55(2d JUD)  was  REPORTED  out of  committee                                                                    
          with  a  "do  pass" recommendation  and  with  one                                                                    
          previously  published  fiscal   impact  note:  FN2                                                                    
          (AJS).                                                                                                                
                                                                                                                                
CSSB 115(FIN)(efd fld)                                                                                                          
          MOTOR FUEL TAX; EV REG. FEE                                                                                           
                                                                                                                                
          CSSB 115(FIN)  was REPORTED out of  committee with                                                                    
          seven  "do  pass"  recommendations,  two  "do  not                                                                    
          pass"     recommendations,     and     two     "no                                                                    
          recommendation" recommendations  and with  one new                                                                    
          indeterminate   note   from  the   Department   of                                                                    
          Revenue, one new zero note  from the Department of                                                                    
          Transportation  and  Public   Facilities  and  one                                                                    
          previously  published  fiscal   impact  note:  FN2                                                                    
          (ADM).                                                                                                                
                                                                                                                                
CSSB 172(L&C)                                                                                                                   
          EXTENDING THE STATE MEDICAL BOARD; AUDIT                                                                              
                                                                                                                                
          CSSB 172(L&C)  was REPORTED out of  committee with                                                                    
          a   "do   pass"   recommendation  and   with   one                                                                    
          previously  published  fiscal   impact  note:  FN2                                                                    
          (CED).                                                                                                                
                                                                                                                                
Co-Chair Johnston reviewed the agenda for the meeting.                                                                          
                                                                                                                                
CS FOR SENATE BILL NO. 55(2d JUD)                                                                                             
                                                                                                                                
     "An Act relating to judges of the court of appeals;                                                                        
     and providing for an effective date."                                                                                      
                                                                                                                                
1:39:35 PM                                                                                                                    
                                                                                                                                
Co-Chair Johnston asked if there was any committee                                                                              
discussion.                                                                                                                     
                                                                                                                                
Co-Chair Foster MOVED to REPORT CSSB 55(2d JUD) out of                                                                          
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSSB 55(2d JUD) was REPORTED out of committee with a "do                                                                        
pass" recommendation and with one previously published                                                                          
fiscal impact note: FN2 (AJS).                                                                                                  
                                                                                                                                
CS FOR SENATE BILL NO. 172(L&C)                                                                                               
                                                                                                                                
     "An  Act extending  the termination  date of  the State                                                                    
     Medical Board; requiring a report  on the State Medical                                                                    
     Board's   audit  compliance;   and  providing   for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
1:40:22 PM                                                                                                                    
                                                                                                                                
Co-Chair   Johnston  asked   the  Department   of  Commerce,                                                                    
Community  and Economic  Development (DCCED)  to review  the                                                                    
fiscal note.                                                                                                                    
                                                                                                                                
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY  AND  ECONOMIC DEVELOPMENT  (via  teleconference),                                                                    
reviewed  the fiscal  note  for the  bill.  The fiscal  note                                                                    
recognized that the  State Medical Board was  set to sunset.                                                                    
The  amount  included  covered board  operations  only.  She                                                                    
explained that if the board  sunset, the amount would not be                                                                    
continued  in  the budget.  She  explained  that the  amount                                                                    
would need to be reauthorized,  which the bill would do. She                                                                    
elaborated that  the licensing  for medical  professions was                                                                    
not  included because  if the  board sunset,  the department                                                                    
would  take over  the  responsibility  for licensing,  which                                                                    
would be a different fiscal note.                                                                                               
                                                                                                                                
1:41:58 PM                                                                                                                    
                                                                                                                                
Representative Sullivan-Leonard  requested to hear  from the                                                                    
legislative auditor. First, she  addressed a question to the                                                                    
department.  She had  concern about  the board  extension in                                                                    
light  of  its  noncompliance   with  a  statute  from  2017                                                                    
regarding  the  prescription  database. She  asked  why  the                                                                    
challenge with noncompliance was taking place.                                                                                  
                                                                                                                                
Ms.  Chambers replied  that DCCED  also  had some  concerns,                                                                    
which was part of the  reason why the governor had appointed                                                                    
new  board  members  and  why  there  was  a  new  executive                                                                    
administrator  for  the  program. She  understood  that  the                                                                    
board    had    expressed   some    misunderstandings    and                                                                    
misconceptions over  certain aspects in the  audit findings.                                                                    
The  department was  committed to  moving the  board forward                                                                    
quickly to  get into compliance with  the PDMP [Prescription                                                                    
Drug  Monitoring Program].  There  were  related issues  the                                                                    
department   had  been   working   on  with   Representative                                                                    
Josephson's office that  could come up at  another time that                                                                    
could  strengthen the  PDMP.  She  elaborated that  concerns                                                                    
included  a  lack of  funding  for  the PDMP;  however,  the                                                                    
issues  were  outside  of the  medical  board's  purview  to                                                                    
ensure providers  required to register were  registered. The                                                                    
department had  addressed the issues  and the  new iteration                                                                    
of the  board and DCCED  staff were committed to  staying on                                                                    
top  of  the  issue.  She   believed  the  new  board  chair                                                                    
Dr. Wein  was available  online and  could also  address the                                                                    
topic.                                                                                                                          
                                                                                                                                
1:44:16 PM                                                                                                                    
                                                                                                                                
Representative Sullivan-Leonard  directed a question  to the                                                                    
legislative  auditor.   She  noted   that  Ms.   Curtis  had                                                                    
[previously]  provided a  good  overview of  the audit.  She                                                                    
asked if  it would be prudent  to extend the board  one year                                                                    
instead  of five.  She was  interested in  seeing the  board                                                                    
show its compliance with statute.  She wondered if there had                                                                    
been any discussion on the idea.                                                                                                
                                                                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT,  answered  that the  concerns  had  been                                                                    
raised  in  the Senate  Labor  and  Commerce Committee.  She                                                                    
reported  that   the  bill  had  been   amended  to  include                                                                    
uncodified  law to  have the  Division of  Legislative Audit                                                                    
provide an  updated status of  the prior audit  findings the                                                                    
following year  in order  to check  on compliance.  The bill                                                                    
allowed   for  a   full  sunset   review  in   three  years.                                                                    
Additionally,  the  division  would   review  the  Board  of                                                                    
Pharmacy that had a sunset  audit within the next two years.                                                                    
The division  would be reviewing  compliance for  the [PDMP]                                                                    
database over all occupations.                                                                                                  
                                                                                                                                
Representative  Sullivan-Leonard thought  if  there was  not                                                                    
enough pressure  for the board  to be compliant that  it may                                                                    
just  continue what  it is  doing. She  asked if  Ms. Curtis                                                                    
felt  confident there  was enough  fortitude within  the new                                                                    
board to get into full compliance.                                                                                              
                                                                                                                                
Ms. Curtis responded  that she could not comment  on the new                                                                    
board as  it had not been  part of the audit.  She could not                                                                    
comment  on whether  there was  fortitude amongst  the board                                                                    
members to  take action. She  believed the board  was paying                                                                    
attention to the audit findings  based on testimony in other                                                                    
committee hearings. The board had  stated on the record that                                                                    
it planned to take action.                                                                                                      
                                                                                                                                
Co-Chair Johnston added  that Dr. Wein, a new  member on the                                                                    
board, was available online.                                                                                                    
                                                                                                                                
1:46:28 PM                                                                                                                    
                                                                                                                                
Representative Sullivan-Leonard had  concern about the board                                                                    
moving forward  to a five-year extension,  especially due to                                                                    
the restructuring  of the board and  past noncompliance with                                                                    
the PDMP database passed in  statute in 2017. She understood                                                                    
there  were  some  changes  going  forward.  She  asked  for                                                                    
assurance that the  board and physicians in  Alaska would be                                                                    
in full compliance.                                                                                                             
                                                                                                                                
RICHARD  WEIN,  CHAIR,  ALASKA  MEDICAL  BOARD,  SITKA  (via                                                                    
teleconference), assured  the committee that the  members on                                                                    
the Alaska Medical  Board were critically aware  of the many                                                                    
issues  it   was  facing.  The   board  looked   forward  to                                                                    
addressing  and solving  the issues  and moving  forward. He                                                                    
believed the board  had the fortitude to  continue the work.                                                                    
He assured the committee that,  as the current chair, he was                                                                    
not interested  in any misunderstandings  and misconceptions                                                                    
held by  the previous  board. The  board would  move forward                                                                    
with the  current team  that had  been very  helpful getting                                                                    
the  completely  new  board  up to  speed.  He  assured  the                                                                    
committee  the board  would be  on top  of things,  would be                                                                    
fully  compliant,   and  would   be  happy  to   update  the                                                                    
legislature or  provide whatever  it may  need to  allay any                                                                    
concerns.                                                                                                                       
                                                                                                                                
1:48:32 PM                                                                                                                    
                                                                                                                                
Representative Carpenter  understood there was  a changeover                                                                    
in the board.  He asked if the department  was providing the                                                                    
board with  everything it needed  in order for the  board to                                                                    
"right the ship" and get it headed in the right direction.                                                                      
                                                                                                                                
Mr. Wein  answered in the  affirmative. He detailed  that he                                                                    
had   received  incredible   support   from  the   executive                                                                    
administrator, the division director,  and legal in his work                                                                    
to  understand all  of the  issues. He  had been  in contact                                                                    
with  the executive  administrator on  a daily  basis and  a                                                                    
working  group  had  been formed  with  other  board  chairs                                                                    
including  the Board  of Pharmacy  and Board  of Nursing  in                                                                    
order  to   collaborate,  find   common  ground,   and  work                                                                    
together. He believed it was a  new day, coupled with all of                                                                    
the aspects  surrounding the  burden of  COVID-19, including                                                                    
the  fast tracking  of licensure,  eliminating any  backlog,                                                                    
and ensuring the state had  the capacity to meet any medical                                                                    
crisis.  He reported  that the  board had  just concluded  a                                                                    
meeting 30 minutes earlier. He  was gratified at the support                                                                    
the board was receiving  from the department, especially due                                                                    
to  the board's  steep  learning curve.  He highlighted  his                                                                    
vast  experience  in  credentialing  and  reviewing  medical                                                                    
issues  and  he felt  confident  the  board could  meet  the                                                                    
challenge.                                                                                                                      
                                                                                                                                
Representative Carpenter  asked if  the board had  been able                                                                    
to establish some objectives that  it felt were necessary to                                                                    
meet in  a given  timeline. He  recognized that  the current                                                                    
[COVID-19] crisis likely had the board's attention.                                                                             
                                                                                                                                
1:51:41 PM                                                                                                                    
                                                                                                                                
Mr.  Wein answered  in the  affirmative. He  highlighted the                                                                    
board's ability to  multitask. The full board  had a meeting                                                                    
scheduled  for the  coming Thursday  and it  would meet,  as                                                                    
necessary. The  formal meeting had  been scheduled  for May,                                                                    
but  due to  everything going  on, it  was necessary  to get                                                                    
down to business and get it  done. The board had a number of                                                                    
objectives   it  would   have  to   triage  into   order  of                                                                    
importance. He assured the committee  that compliance was at                                                                    
the top of the list.                                                                                                            
                                                                                                                                
Co-Chair  Foster  MOVED  to  REPORT  CSSB  172(L&C)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
Representative Sullivan-Leonard OBJECTED.                                                                                       
                                                                                                                                
Representative Sullivan-Leonard  MOVED to AMEND the  bill to                                                                    
extend the  board to 2021  instead of  2023 in order  to see                                                                    
proof of the board's compliance,  especially at a time where                                                                    
things were  happening rapidly  with COVID-19.  She stressed                                                                    
the importance  of knowing the  board could be relied  on to                                                                    
do what was  best for the state. She did  not currently have                                                                    
full faith that was the case.                                                                                                   
                                                                                                                                
Co-Chair Johnston OBJECTED for discussion.                                                                                      
                                                                                                                                
1:53:36 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:53:58 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative  Sullivan-Leonard WITHDREW  her first  motion                                                                    
and restated  the motion. She moved  Conceptual Amendment 1,                                                                    
which would  change the date  from 2023  to 2021 on  page 1,                                                                    
line 5.                                                                                                                         
                                                                                                                                
Co-Chair  Johnston OBJECTED  for discussion.  She asked  Ms.                                                                    
Curtis to comment on the proposed amendment.                                                                                    
                                                                                                                                
Ms. Curtis replied  that the concern had been  raised in the                                                                    
Senate. She  explained that in  order to have a  2021 sunset                                                                    
date,   the  division   would  have   to   start  an   audit                                                                    
immediately.  She reported  that the  division did  not have                                                                    
the  staff to  do that;  therefore, the  division would  not                                                                    
have  the  ability  to  provide  the  legislature  an  audit                                                                    
required  by  statute to  be  considered  during the  sunset                                                                    
process.   The  date   was  not   doable   from  the   audit                                                                    
perspective.  She explained  that  in order  to address  the                                                                    
concern, there  would be a  legislative audit  review within                                                                    
one year  to focus on the  specific areas the board  had not                                                                    
been  compliant.  She  elaborated   that  the  division  had                                                                    
recommended  a  five-year  extension   and  the  Senate  had                                                                    
reduced  it to  three years.  After one  year, the  division                                                                    
would report its review findings  to the legislature and the                                                                    
legislature could take action at that time if desired.                                                                          
                                                                                                                                
1:55:40 PM                                                                                                                    
                                                                                                                                
Representative Knopp  opposed the amendment.  He highlighted                                                                    
that the board was brand new.  He elaborated that all of the                                                                    
deficiencies had  existed with the prior  board. He believed                                                                    
the replacement  of the entire  board by  the administration                                                                    
was the desired action. He noted  that Dr. Wein was aware of                                                                    
the issues and  concerns and sounded sincere in  his plan to                                                                    
address them.  He elaborated that Dr.  Wein had acknowledged                                                                    
what the issues  were and had relayed it was  the number one                                                                    
priority.   He  believed   the   review   the  Division   of                                                                    
Legislative   Audit   would   conduct  in   one   year   was                                                                    
appropriate.                                                                                                                    
                                                                                                                                
Representative Josephson  asked if the division  could do an                                                                    
audit by 2022.                                                                                                                  
                                                                                                                                
Ms. Curtis replied  it was doable if it was  the will of the                                                                    
legislature. She  had pointed  out the  cost of  audits when                                                                    
discussing the issue  with the Senate. She  noted there were                                                                    
limited resources. She elaborated  that when the Legislative                                                                    
Budget  and  Audit  Committee  had  asked  the  division  to                                                                    
conduct  performance  audits,  the   division  did  so  when                                                                    
resources were  available. She  detailed that  sunset audits                                                                    
had a statutory due  date; therefore, the division conducted                                                                    
those first. The financial audit  and federal compliance had                                                                    
timelines and  requirements. She  explained that  with other                                                                    
available  resources  and on  its  down  time, the  division                                                                    
would do other  audits requested by the  legislature to look                                                                    
at specific  things. She clarified  that the  division would                                                                    
prioritize  the  sunset review  of  the  medical board  over                                                                    
other audits if there was a statutory due date.                                                                                 
                                                                                                                                
Representative Carpenter  asked when the  division's planned                                                                    
review [of the State Medical Board] would be published.                                                                         
                                                                                                                                
Ms.  Curtis answered  that  assuming  financial and  federal                                                                    
compliance  audits   were  complete   on  time,   staff  was                                                                    
typically  freed  up in  January.  She  elaborated that  the                                                                    
division  could do  a sample  and inquiry  to figure  out to                                                                    
what degree the board was  complying. She explained that the                                                                    
review could be done more  quickly than an audit required to                                                                    
be  conducted in  accordance  with  auditing standards.  She                                                                    
relayed  that  the  medical board  sunset  audit  had  taken                                                                    
approximately 500 hours at an  hourly rate of about $80. She                                                                    
reiterated  there  was  a cost  associated  with  increasing                                                                    
audit activity.                                                                                                                 
                                                                                                                                
Representative Carpenter asked if  the review would start in                                                                    
January 2021.                                                                                                                   
                                                                                                                                
Ms.  Curtis could  not say  exactly. She  explained that  it                                                                    
depended  on  COVID-19.  She elaborated  that  the  division                                                                    
could  suddenly take  much  longer to  do  an audit  working                                                                    
remotely.  Typically,   audit  staff  became   available  in                                                                    
January. She  estimated that she  could provide  a memo-type                                                                    
report  to the  Legislative  Budget and  Audit Committee  by                                                                    
March for consideration and release to the public.                                                                              
                                                                                                                                
1:58:49 PM                                                                                                                    
                                                                                                                                
Representative Carpenter referenced  the two previous audits                                                                    
mentioned  in the  most recent  audit that  noticed problems                                                                    
[with  the board].  He asked  how  long the  board had  been                                                                    
extended in each of the two previous audits.                                                                                    
                                                                                                                                
Ms. Curtis  answered that  in the  previous audit  the board                                                                    
had been  given an  eight-year extension.  She did  not know                                                                    
about the one prior to that.                                                                                                    
                                                                                                                                
Representative Carpenter stressed  the importance of nipping                                                                    
the situation  in the  bud if  there had  been noncompliance                                                                    
for eight  years or more.  He thought sounded like  a report                                                                    
would come  to the legislature  in the first quarter  of the                                                                    
next  calendar year  to show  whether compliance  was taking                                                                    
place. He asked for the accuracy of his statements.                                                                             
                                                                                                                                
Ms.  Curtis   confirmed  that  the   division  would   do  a                                                                    
compliance  review in  2021. She  detailed that  the current                                                                    
bill  would sunset  the board  in 2023,  which meant  a full                                                                    
sunset  audit would  be conducted  in  2022. Currently,  the                                                                    
division was scheduled  for a detailed review  over the next                                                                    
two years.                                                                                                                      
                                                                                                                                
2:00:06 PM                                                                                                                    
                                                                                                                                
Representative  Sullivan-Leonard   WITHDREW  her  conceptual                                                                    
amendment.  She  was trying  to  highlight  the urgency  and                                                                    
demand for the  state medical board to be  in compliance and                                                                    
working  on the  incredible  medical  situations facing  the                                                                    
state. She  looked forward  to the  report in  the following                                                                    
year.                                                                                                                           
                                                                                                                                
Co-Chair Johnston  asked Ms. Curtis  to outline  the options                                                                    
that the  Legislative Budget and  Audit Committee had  if it                                                                    
found the review lacking.                                                                                                       
                                                                                                                                
Ms. Curtis believed the committee  had the ability to submit                                                                    
a bill at the committee level.                                                                                                  
                                                                                                                                
2:01:26 PM                                                                                                                    
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSSB  172(L&C) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN2 (CED).                                                                                                  
                                                                                                                                
2:01:38 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:22:01 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR SENATE BILL NO. 115(FIN)(efd fld)                                                                                      
                                                                                                                                
     "An Act relating to vehicle registration fees; and                                                                         
     relating to the motor fuel tax."                                                                                           
                                                                                                                                
2:22:07 PM                                                                                                                    
                                                                                                                                
Co-Chair  Foster  MOVED  to  ADOPT  the  proposed  committee                                                                    
substitute (CS)  for CSSB  115(FIN), Work  Draft 31-LS0895\G                                                                    
(Nauman, 3/23/20).                                                                                                              
                                                                                                                                
Co-Chair Johnston OBJECTED for discussion.                                                                                      
                                                                                                                                
ERIN   SHINE,  STAFF,   REPRESENTATIVE  JENNIFER   JOHNSTON,                                                                    
reviewed  the  changes  in  the   CS  (version  G).  The  CS                                                                    
incorporated four  amendments adopted  by the  committee the                                                                    
previous  day. Amendment  2 added  new language  on page  1,                                                                    
lines  4  through  14  and  page  2,  lines  1  through  11.                                                                    
Amendment 4 added  new language on page 2,  lines 15 through                                                                    
17 as follows:                                                                                                                  
                                                                                                                                
     ...the owner of a vehicle powered by alternative fuel                                                                      
     shall pay a special biennial registration fee of                                                                           
     $100...                                                                                                                    
                                                                                                                                
Ms. Shine  pointed to page  2, line 20 where  the definition                                                                    
of alternative fuel  had been added by Amendment  4. Page 3,                                                                    
Section  5, lines  19 through  21 incorporated  Amendment 1.                                                                    
The last change  was on page 5, lines 9  and 10 included the                                                                    
effective date  and conforming  changes. The  bill specified                                                                    
"Except as provided  in sec. 10 of this Act,  this Act takes                                                                    
effect  January 1,  2021." Section  10  on line  9 gave  the                                                                    
transition regulations an immediate effective date.                                                                             
                                                                                                                                
2:24:09 PM                                                                                                                    
                                                                                                                                
Co-Chair Johnston  asked the Department of  Revenue (DOR) to                                                                    
review the fiscal note.                                                                                                         
                                                                                                                                
DAN STICKEL,  CHIEF ECONOMIST, ECONOMIC RESEARCH  GROUP, TAX                                                                    
DIVISION, DEPARTMENT  OF REVENUE, relayed that  DOR's fiscal                                                                    
note reflected  the changes  made in  the CS,  primarily the                                                                    
January  1, 2021  effective  date and  the  increase to  the                                                                    
refined fuel  surcharge from $0.95  per gallon to  $1.50 per                                                                    
gallon, which had not been  included in previous versions of                                                                    
the bill.  The note  showed an indeterminate  revenue impact                                                                    
for two  reasons. First,  the department  did not  have data                                                                    
available to estimate the impact  of the allowed refunds for                                                                    
marine  fuel  used by  vessels  for  commercial fishing.  He                                                                    
explained  that  under  the  bill,  any  commercial  fishing                                                                    
marine fuel would  be allowed a refund of  $0.05 per gallon,                                                                    
meaning the  tax would not  be increased on that  portion of                                                                    
marine fuel. Second, it was  unknown how COVID-19 may impact                                                                    
fuel  demand. Based  on the  fall revenue  forecast and  not                                                                    
including  the commercial  fishing impacts,  the bill  would                                                                    
increase revenue  by $16.9 million  in FY 21,  $33.3 million                                                                    
in FY 22,  decreasing to $31 million in FY  26. He clarified                                                                    
the amounts  pertained only to  the motor fuel  tax increase                                                                    
portion.  There  would be  an  additional  increase for  the                                                                    
refined fuel surcharge  component of $1.8 million  in FY 21,                                                                    
$3.5 million in FY 22, decreasing to $3.3 million in FY 26.                                                                     
                                                                                                                                
Co-Chair Johnston WITHDREW her  OBJECTION to the adoption of                                                                    
the  CS.  There  being  NO  further  OBJECTION,  it  was  so                                                                    
ordered.                                                                                                                        
                                                                                                                                
Co-Chair  Foster  MOVED  to  REPORT  CSSB  115(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
                                                                                                                                
Representative  Sullivan-Leonard OBJECTED.  She opposed  the                                                                    
tax. She stated  there was an incredible  disparity with the                                                                    
tax, especially in  her region of the  state. She referenced                                                                    
a comment  that people  chose where  they lived.  She agreed                                                                    
and  noted that  people chose  to  live in  rural and  urban                                                                    
areas; however,  at a time  when unemployment  insurance had                                                                    
risen by  500 percent,  residents who  drive would  be taxed                                                                    
more  due to  the  bill. She  did not  believe  it made  any                                                                    
sense.  She  realized the  date  had  changed in  the  bill;                                                                    
however, the  concept of an  increased gasoline tax  did not                                                                    
go unnoticed in her district.                                                                                                   
                                                                                                                                
2:28:02 PM                                                                                                                    
                                                                                                                                
Representative Wool  spoke to his  support for the  bill. He                                                                    
shared that he  had voted on the increase to  the motor fuel                                                                    
tax  several years  earlier that  had added  just under  one                                                                    
penny. He  thought it was  likely the only revenue  bill the                                                                    
legislature  had passed  during his  tenure. He  stated that                                                                    
legislators received  numerous emails  asking why  they were                                                                    
not  looking into  [new] revenues.  He  stressed that  state                                                                    
coffers  were decreasing  by the  minute  and expenses  were                                                                    
increasing. He believed the legislature  needed to look into                                                                    
revenue. He  highlighted it had been  previously stated that                                                                    
the motor fuel  tax had not been raised since  the 1970s. He                                                                    
pointed out that  the pennies increase in  the 1970s equated                                                                    
to about $0.50  currently. He emphasized that  the state had                                                                    
not kept  up with  inflation and had  the lowest  motor fuel                                                                    
tax in the country. He  believed the state would rank number                                                                    
four or  five if the tax  was doubled. He reasoned  that the                                                                    
price of motor  fuel should decrease due to the  drop in oil                                                                    
price, which would  likely result in a net  reduction at the                                                                    
pump.                                                                                                                           
                                                                                                                                
Representative   Wool  noted   that   the  Municipality   of                                                                    
Anchorage  had recently  instituted a  municipal motor  fuel                                                                    
tax; therefore,  half the people  in the state  were already                                                                    
paying an  additional motor  fuel tax.  He knew  that Mat-Su                                                                    
residents  drove to  Anchorage frequently  and he  knew that                                                                    
many of  his constituents lived  in remote areas  like Chena                                                                    
Hot  Springs  and other  areas  that  required driving  many                                                                    
miles to  town and burning  substantial gas. He  thought the                                                                    
tax  increase  was  the  least  the  legislature  could  do,                                                                    
especially  when many  citizens were  asking it  to act.  He                                                                    
thought  the legislature  should  try to  help citizens  and                                                                    
provide solutions.  He supported adding the  small amount of                                                                    
revenue of  $15 million in FY  21 and $30 million  in FY 22.                                                                    
He  noted  that  people  would likely  not  be  driving  and                                                                    
purchasing gas the way they had  in the past. He stated that                                                                    
the change  was a small gesture  towards increasing revenue,                                                                    
though  he  did not  believe  it  was enough.  He  supported                                                                    
looking into  new revenue and  believed the  state's savings                                                                    
would  be rapidly  diminishing. He  thought the  bill was  a                                                                    
step in the right direction.                                                                                                    
                                                                                                                                
2:30:35 PM                                                                                                                    
                                                                                                                                
Representative  Carpenter acknowledged  the  sound logic  of                                                                    
comments  by  Representative  Wool; however,  he  noted  the                                                                    
argument  did not  account for  the cost  of government.  He                                                                    
detailed  that  compared  to other  states  with  a  similar                                                                    
population size  and GDP [gross domestic  product], Alaska's                                                                    
government expense was significantly  higher. He stated that                                                                    
Alaska's cost  of government  was higher  than it  should be                                                                    
based on  its population  and GDP.  He highlighted  that the                                                                    
increased tax  would take $16.9  million out of  the private                                                                    
sector to  help sustain  a government  that was  already too                                                                    
large. He  did not  believe it  made sense,  especially when                                                                    
considering the  fiscal crisis. He guessed  that the private                                                                    
sector would be hurting for  12 to 24 months. He underscored                                                                    
that taking  $17 million out  of the private  sector economy                                                                    
was  not without  consequences. He  thought the  state could                                                                    
wait  to   patch  potholes  another   year  as   opposed  to                                                                    
increasing  funding. He  believed it  was wrong  to increase                                                                    
taxes on the private sector at present.                                                                                         
                                                                                                                                
2:32:42 PM                                                                                                                    
                                                                                                                                
Co-Chair  Johnston believed  it was  very important  for the                                                                    
legislature to increase the tax.  She shared that it was not                                                                    
only her  constituents who had  asked for the  increase. She                                                                    
highlighted that the Alaska  Trucking Association was asking                                                                    
for  and  supported  the  increase.  She  explained  that  a                                                                    
maintenance station  had closed  down between  the districts                                                                    
represented  by   Representative  Carpenter,  Representative                                                                    
Knopp,   and  herself.   She  stressed   it  was   the  main                                                                    
thoroughfare for  getting food, safety, and  supplies to the                                                                    
Kenai  Peninsula.  She  did  not  know  how  many  committee                                                                    
members  had driven  the pass  on  a winter  night, but  the                                                                    
situation had been catastrophic to  the safety and the needs                                                                    
of the Kenai Peninsula.                                                                                                         
                                                                                                                                
Co-Chair  Johnston reported  that  the road  service in  her                                                                    
district had been cut dramatically  back. She explained that                                                                    
the first two  roads classified as a level  one priority out                                                                    
of Anchorage were  the Seward and Glenn  Highways. The level                                                                    
two priority included main  thoroughfares in Anchorage owned                                                                    
by  the  state. She  explained  that  the  roads up  to  her                                                                    
district  on  the  hillside   had  been  poorly  maintained,                                                                    
sanded, and plowed due to a  lack of resources and there had                                                                    
been multiple accidents including  buses. She had heard from                                                                    
people  on the  Glenn Highway  about issues  due to  lack of                                                                    
sanding and plowing.                                                                                                            
                                                                                                                                
Co-Chair Johnston explained that  because resources had been                                                                    
stretched,  the maintenance  and operation  [office] out  of                                                                    
Girdwood was  responsible for the  highway from  Girdwood to                                                                    
Anchorage  and  for  the Seward  Highway  south.  The  Kenai                                                                    
office  was responsible  for the  Seward Highway  north. She                                                                    
reported that the highway was  not being plowed or sanded as                                                                    
could be  needed for  safety. She stated  that the  bill was                                                                    
timely,  and  the  implementation date  had  been  postponed                                                                    
until 2021  with the  recognition that  it was  currently an                                                                    
interesting time  for all  businesses. She  supported moving                                                                    
the bill forward.                                                                                                               
                                                                                                                                
2:36:04 PM                                                                                                                    
                                                                                                                                
Representative  Carpenter stated  that the  remarks made  by                                                                    
Co-Chair Johnston were opinion and not fact.                                                                                    
                                                                                                                                
Co-Chair  Johnston   replied  that  the  remarks   were  her                                                                    
statement based on what she knew.                                                                                               
                                                                                                                                
Representative Knopp  had never  seen the highway  so poorly                                                                    
maintained or shut down as many  times as it had been in the                                                                    
current year  in his  40 years living  on the  peninsula. He                                                                    
stated it was  a fact that the  Department of Transportation                                                                    
and  Public  Facilities  had lost  millions  of  dollars  in                                                                    
revenue over  the years. He  highlighted that  the documents                                                                    
showing road maintenance was down  did not lie. He stated it                                                                    
was  the  current reality.  He  reported  that the  critical                                                                    
maintenance  station had  been  closed,  positions had  been                                                                    
lost  in  Homer  and  Soldotna,  and  there  was  no  longer                                                                    
continuance  from night  shift to  day shift.  He referenced                                                                    
Representative Wool's  statement that  the tax had  not been                                                                    
increased  since  the  1970s,  which was  a  long  time.  He                                                                    
supported the use  of the funds for  highway maintenance and                                                                    
was hoping improvements would be made.                                                                                          
                                                                                                                                
Representative  Carpenter communicated  that  he had  driven                                                                    
the roads during  the day and night, and he  did not believe                                                                    
they were different than in the  past. He did not believe it                                                                    
was accurate  to say the  roads had not been  maintained. He                                                                    
stressed that  the roads  had been  maintained but  may have                                                                    
seen a  delay. He believed that  putting sand on a  road did                                                                    
not  make  it safer.  He  remarked  that there  were  always                                                                    
conditions  on  roads that  required  driving  at a  prudent                                                                    
speed.  He stated  that sanding  or plowing  a road  did not                                                                    
necessarily make it  safer. He did not believe  the level of                                                                    
maintenance was responsible for  causing accidents or making                                                                    
the road less  safe. He countered that the  speed of driving                                                                    
made the road  less safe in most cases.  He thought Co-Chair                                                                    
Johnston had used the word catastrophic.                                                                                        
                                                                                                                                
Co-Chair  Johnston could  not be  certain she  had used  the                                                                    
word catastrophic.                                                                                                              
                                                                                                                                
2:39:09 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:40:39 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Representative  LeBon shared  that  the past  summer he  and                                                                    
Representative  Wool   had  visited  the   trucking  company                                                                    
Sourdough  Express based  in his  district in  Fairbanks. He                                                                    
detailed  that  representatives  from  the  Alaska  Trucking                                                                    
Association  had  been  present   at  the  meeting  and  had                                                                    
communicated that it  was a crisis situation.  They had been                                                                    
told that  the Dalton  Highway from  Fairbanks to  the North                                                                    
Slope  was  in  desperate  need of  the  minimum  amount  of                                                                    
maintenance. He  elaborated that  they had visited  a repair                                                                    
shop  and  seen equipment  that  had  been beaten  from  the                                                                    
condition of the  road. He stated it was real  money and the                                                                    
roads  had   to  be  maintained.  He   emphasized  that  the                                                                    
lifeblood  to the  North Slope  was the  Dalton Highway.  He                                                                    
listened  when  the  Alaska  Trucking  Association  and  the                                                                    
primary  operator   -  Sourdough  Express  -   were  telling                                                                    
legislators   that  the   monies   designated  for   highway                                                                    
maintenance were critical to their operation.                                                                                   
                                                                                                                                
Representative Sullivan-Leonard MAINTAINED her OBJECTION.                                                                       
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Wool,  Josephson,  Knopp,  LeBon,  Ortiz,  Foster,                                                                    
Johnston                                                                                                                        
OPPOSED: Sullivan-Leonard, Tilton, Carpenter, Merrick                                                                           
                                                                                                                                
The MOTION PASSED (7/4).                                                                                                        
                                                                                                                                
There being NO further OBJECTION, it was so ordered.                                                                            
                                                                                                                                
CSSB 115(FIN) was  REPORTED out of committee  with seven "do                                                                    
pass"  recommendations, two  "do not  pass" recommendations,                                                                    
and  two "no  recommendation" recommendations  and with  one                                                                    
new indeterminate  note from the Department  of Revenue, one                                                                    
new  zero note  from  the Department  of Transportation  and                                                                    
Public  Facilities  and   one  previously  published  fiscal                                                                    
impact note: FN2 (ADM).                                                                                                         
                                                                                                                                
2:42:54 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
2:44:04 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Johnston recessed the meeting to a call of the                                                                         
chair [note: the meeting never reconvened].                                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:44:15 PM                                                                                                                    
                                                                                                                                
The meeting was adjourned at 2:44 p.m.                                                                                          
                                                                                                                                

Document Name Date/Time Subjects
SB 115 Public Testimony Rec'd by 032320.pdf HFIN 3/23/2020 1:30:00 PM
SB 115
SB 134 AMHTA Support 3.23.20.pdf HFIN 3/23/2020 1:30:00 PM
SB 134
SB 115 ver. G 3.23.2020.pdf HFIN 3/23/2020 1:30:00 PM
SB 115