Legislature(1993 - 1994)
04/16/1994 01:05 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 16, 1994
1:05 p.m.
TAPE HFC 94-127, Side 1, #000 - end.
TAPE HFC 94-127, Side 2, #000 - end.
TAPE HFC 94-128, Side 1, #000 - end.
TAPE HFC 94-128, Side 2, #000 - 511.
CALL TO ORDER
Co-Chair Larson called the House Finance Committee to order
at 1:05 p.m.
PRESENT
Co-Chair Larson
Co-Chair MacLean Representative Martin
Vice-Chair Hanley Representative Navarre
Representative Brown Representative Parnell
Representative Foster Representative Therriault
Representatives Grussendorf and Hoffman were not present for
the meeting.
ALSO PRESENT
Senator George Jacko; Crystal Smith, Director, Member
Services, Alaska Municipal League; Frank Homan,
Commissioner, Commercial Fisheries Entry Commission; Duane
Guiley, Finance Director, Department of Education; Juanita
Hensley, Chief Driver Services, Division of Motor Vehicles,
Department of Public Safety; Ray Gillespie, Lobbyist; Kent
Dawson, Lobbyist, Silver Lining Seafood; Greg Winegar,
Department of Commerce and Economic Development; Josh Fink,
Senator Kelly; Ron King, Department of Environmental
Conservation; Jeannie Larson, Staff, Representative Martin.
SUMMARY INFORMATION
HB 328 "An Act relating to motor vehicle registration and
registration fees; to fees for drivers' licenses
and permits; and providing for an effective date."
CSHB 328 (FIN) was reported out of Committee with
"no recommendation" and with a fiscal impact note
by the Department of Public Safety.
SB 45 "An Act relating to persons under 21 years of age;
providing for designation of `safe homes' for
runaway minors; and providing for an effective
date."
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HCS CSSB 45 (FIN) was reported out of Committee
with "no recommendation" and with three fiscal
impact notes two by the Department of Health &
Social Services and one by the Alaska Court
System; and with five zero fiscal notes three by
the Department of Health & Social Services, one by
the Department of Law, dated 2/17/94 and one by
the Department of Labor, dated 2/17/94.
SB 141 "An Act extending workers' compensation coverage
to certain high school students in uncompensated
work-study programs."
HCS CSSB 141 (FIN) was reported out of Committee
with "no recommendation" and with two fiscal
impact notes one by the Department of
Administration and one by the Department of
Education; and with a zero fiscal note by the
Department of Commerce and Economic Development.
SB 251 "An Act relating to the commercial fishing
revolving loan fund and the fisheries enhancement
revolving loan fund."
SB 251 was HELD in Committee for further
discussion.
HOUSE BILL NO. 328
"An Act relating to motor vehicle registration and
registration fees; to fees for drivers' licenses and
permits; and providing for an effective date."
Representative Martin provided members with a proposed
committee substitute, work draft 8-LS1316\D, 4/15/94 (copy
on file). He noted that the proposed committee substitute
incorporates the following changes:
* Sets biennial vehicle registration fees at twice
the current annual rate; and
* Allows the Department of Public Safety to suspend
or revoke the registration if the owner fails to
obtain an emission inspection certificate.
Co-Chair Larson noted that the ability to collect municipal
personal property tax on automobiles upon registration has
aided municipalities.
Representative Martin noted that the provision for state
collection will be optional. He stressed that the municipal
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tax could be collected in conjunction with the property tax.
Co-Chair Larson noted that the owner of an automobile
purchased on January 2 would not pay their municipal tax
until the following year.
JUANITA HENSLEY, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF PUBLIC SAFETY explained that section 17 of the
proposed committee substitute contains the municipal tax
schedule. Section 17 also provides for an agreement between
the Commissioner of the Department of Public Safety and
municipalities to collect the municipal tax upon
registration. She clarified that municipalities are
currently given the option of state collection. The
proposed committee substitute would add an option for the
state to collect the tax. She noted that the state collects
municipal tax for ten municipalities.
Ms. Hensley noted that the proposed committee substitute
removes authorizing language from title 28.10.431. Language
allowing the tax to be collected by the Department of Public
Safety would be placed under title 29. The Commissioner of
the Department of Public Safety would be given the
discretion to collect or not collect the municipal tax.
Representative Hanley expressed concern that the
Commissioner could chose not to collect the tax on behalf of
municipalities. He emphasized that the state receives 8
percent of the money collected for administrative costs.
Representative Martin noted that the state has the
administrative burden and expense of collection. The state
receives 8 percent of the money collected as compensation
for the administrative costs.
Ms. Hensley noted that the Division of Motor Vehicles
collected $29.0 million dollars in FY 94. She added that
$5.9 million was returned to municipalities. She observed
that 8 percent of the collected tax is returned to the
General Fund. Eight percent equals approximately $440.0
thousand dollars. She emphasized that the 8 percent
marginally covers all of the costs associated with the
collection.
Representative Hanley discussed funding for the Division of
Motor Vehicles. He reiterated his concern with the
provision to allow the Commissioner of the Department of
Public Safety to not collect the tax on behalf of
municipalities.
Members discussed amending the proposed committee substitute
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to delete the provision allowing discretion. Ms. Hensley
suggested that section 17 be deleted.
Representative Martin clarified that the tax collection is
based on annual registration. Ms. Hensley explained that
the tax is still based on the annual registration fee.
Representative Hanley express concern that municipalities
would receive the same amount of revenue for each year. Ms.
Hensley clarified that the fee would be collected every two
years with a reflection of one year collected tax base.
Municipal revenues would be cut in half if the tax base is
not doubled for a biannual collection. Title 28.15.431
would have to be amended to double the tax base structure.
Ms. Hensley noted that the legislation also allows payment
by credit card.
JEANNIE LARSON, STAFF, REPRESENTATIVE MARTIN observed that
the tax structure could be taken out of statute to allow
municipalities to set fees. Ms. Hensley noted that the
Department of Public Safety would oppose the suggestion to
allow municipalities to set fees. She emphasized that the
Department wishes a standard fee structure.
RON KING, PROJECT MANAGER, MOBIL SOURCES, DEPARTMENT OF
ENVIRONMENTAL CONSERVATION referred to the department's
fiscal note. He noted that the department has provided
three fiscal notes based on different options. The
department supports option one. Option one would provide
that if an individual fails to renew the emmissions permit,
the Department of Environmental Conservation would inform
the Department of Public Safety.
Mr. King explained that failure to renew could result in a
violation of $100 hundred dollars issued by the municipal
police department or a civil action through the small claims
court.
Mr. King discussed the Department of Environmental
Conservation's fiscal notes. He noted that a $2 to $3
dollar per vehicle fee would be collected. He noted that
section 21 amends AS 28.10.431 which addresses only
Anchorage and Fairbanks. Ms. Hensley noted that section 14
of the proposed committee substitute addresses the program
fees collected by the Division of Motor Vehicles. Program
authority would be under section 19.
Representative Martin noted that sections 10 and 15 allow
registration to be paid by credit card. He noted that there
are difficulties with implementation of biannual
registration.
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Ms. Larson recommended that sections 2, 7, 10, 14, 15 and 19
be retained to allow the Department of Environmental
Conservation greater enforcement authority.
CRYSTAL SMITH, ALASKA MUNICIPAL LEAGUE stressed that state
collection of the municipal motor vehicle registration tax
is the most efficient. She felt fee values should be
increased. She spoke in support of a change to a two year
collection of the tax. She discussed the municipal fiscal
note. She noted that enforcement would be a local police
function. She stressed that monitoring of the program would
cost the municipality of Anchorage $181.6 thousand dollars.
Co-Chair Larson noted that the word "biannual" would need to
be deleted if the Committee does not change the collection
period from an annual fee. Mr. King stressed that if the
registration is kept on an annual basis the Department of
Environmental Conservation would not have to exercise any
fee requirements under section 19. He added that the
Department would have improved enforcement abilities. He
suggested that section 19 would allow the Department of
Environmental Conservation to establish a fee to fund the
Mobil Source Program by program receipts. He estimated the
proposed change would result in a general fund savings of
$287.0 thousand dollars. He noted that municipalities could
increase revenues through the issuance of citations.
Representative Martin spoke against increased fees. He
spoke in favor of deleting all sections except sections 10
and 15. Representative Therriault agreed that only
retention of sections 10 and 15 should be retained.
Representative Brown suggested that fees should be
considered in light of the state's declining revenues. She
suggested that the enforcement authority be retained if the
fee sections are deleted. Mr. King reiterated that sections
2, 7, 10, 14, 15 and 19 would result in a zero fiscal note
and that no fees would be executed by the Department of
Environmental Conservation unless regulations are exercised.
(Tape Change, HFC 94-127, Side 2)
Representative Martin MOVED to delete all material except
sections 10 and 15; and amend the title to reflect the
change.
Representative Brown MOVED to AMEND the motion to include
the retention of sections 2 and 19. Representative Martin
OBJECTED. Representative Brown argued that the amendment to
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the amendment would strengthen the enforcement.
Representative Martin spoke in opposition to the motion to
amend. A roll call vote was taken on the amendment to the
amendment.
IN FAVOR: Brown, Larson
OPPOSED: Hanley, Foster, Martin, Parnell, Therriault
Representatives Grussendorf, Hoffman, Navarre, and MacLean
were not present for the vote.
The MOTION FAILED (2-5).
Ms. Hensley noted that the Division needs legislative
authority to pay the credit card collection fee. She
estimated that the Division would need a $225.0 thousand
dollar fiscal note to reflect the credit card collection
cost.
Representative Martin reiterated the motion to delete all
material except sections 10 and 15; and amend the title to
reflect the change.
In response to a question by Representative Brown, Ms.
Hensley clarified that the department needs authorization to
seek appropriation to pay credit card costs. She estimated
that credit card fees would equal approximately $225.0
thousand dollars a year. Ms. Hensley discussed costs
associated with credit card collection and defaulted checks.
Co-Chair Larson suggested that credit card collection will
result in increased efficiency.
There being NO OBJECTION, all material except sections 10
and 15 was deleted; and the title amended to reflect the
change.
Representative Brown expressed concern with the cost of
credit card collection.
Co-Chair Larson MOVED to report CSHB 328 (FIN) out of
Committee with individual recommendations and with the
accompanying amended fiscal note from the Department of
Public Safety for $225.0 thousand dollars. There being NO
OBJECTION, it was so ordered.
CSHB 328 (FIN) was reported out of Committee with "no
recommendation" and with a fiscal impact note by the
Department of Public Safety.
SENATE BILL NO. 45
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"An Act relating to persons under 21 years of age;
providing for designation of `safe homes' for runaway
minors; and providing for an effective date."
Representative Brown noted that Amendment 2A, which was
adopted by previous action of the Committee, deleted
"immediately" on page 4, line 31. She suggested that
"immediately" be added back.
Co-Chair Larson MOVED to RESCIND the Committee's action in
adopting AMENDMENT 2A. There being NO OBJECTION, it was so
ordered.
Representative Brown MOVED to ADOPT AMENDMENT 2A as amended
to add "immediately" after "make reasonable attempts to" on
page 4, line 31. There being NO OBJECTION, it was so
ordered.
Representative Foster MOVED to report HCS CSSB 45 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
CSHB 328 (FIN) was reported out of Committee with "no
recommendation" and with a fiscal impact note by the
Department of Public Safety.
SENATE BILL NO. 141
"An Act extending workers' compensation coverage to
certain high school students in uncompensated
work-study programs."
Co-Chair Larson provided members with proposed committee
substitute, work draft 8-LS0355\Q, dated 3/23/94 (copy on
file).
JOSH FINK, STAFF, SENATOR KELLY testified in support of SB
141. He noted that current law allows students enrolled for
credit at a public high school in a course which combines
academic instruction with work experience outside the school
for a public or private nonprofit employer to be an employee
of the state for workers' compensation purposes. The bill
would broaden coverage so that all students participating
for no financial compensation in on-the-job-training, as
part of an academic program would be covered. This would
provide workers' compensation coverage to students who
participate in automotive maintenance, welding, carpentry,
and various other work study programs.
Mr. Fink noted that the bill was amended so that
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uncompensated students injured at the worksite, in a work-
study program, are considered state employees for the
purpose of medical benefits only under workers'
compensation. Uncompensated students who are injured would
not receive compensation for lost wages as they received no
compensation for the work study.
Mr. Fink noted that the proposed committee substitute would
provide the exclusive liability provision to the work site,
school district and to the state. He noted that no claim
has ever been filed under current statutes.
Representative Brown referred to page 1, lines 11 - 14. Mr.
Fink explained that school districts want to be able to
offer activities such as automotive body shop, but be
protected from liability.
DUANE GUILEY, FINANCE DIRECTOR, DEPARTMENT OF EDUCATION
further explained that the purpose of exclusive liability in
the state of Alaska is to provide, without proving fault, to
the injured party medical payments and if they were making
wages, lost wages. The legislation clarifies that the state
of Alaska bares the financial responsibility for the
situation. The Department of Education would prefer that
the student be employees of the school district sponsoring
the activity or of the employer providing the work
experience. He noted that under the legislation there would
be no limitation of state liability. He noted that if the
legislation is passed the Department of Education will seek
a way to bill the expense to the district participating in
the program.
Mr. Guiley discussed student work experience at the Kotzebue
Technical Center and AVETEC. He clarified that students not
working for a salary are covered by school districts as
voluntary employees under a $200.0 hundred dollar
endorsement to their workers' compensation policy. He noted
that self insured districts cannot buy volunteer endorsement
policies. Salaried students must be covered by the
employer's policy.
Representative Parnell observed that employers are not
willing to shoulder the cost of increased premiums. Mr.
Fink agreed that employers do not have protection of
workers' compensation statutes.
Mr. Fink reiterated that the legislation would allow medical
costs without compensation. He asserted that there has not
been a previous claim filed by a student.
In response to a question by Representative Martin, Mr. Fink
noted that the Department of Education has submitted a
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fiscal note for $24.0 thousand dollars. He noted that the
fiscal note is an estimate of actual costs. He suggested
that the fiscal estimation is high.
Co-Chair Larson MOVED to ADOPT work draft, #8-LS0355\Q,
dated 3/23/94 (copy on file). There being no OBJECTION, it
was so ordered.
Representative Foster MOVED to report CSHB 141 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being no OBJECTION, it was
so ordered.
HCS CSSB 141 (FIN) was reported out of Committee with "no
recommendation" and with two fiscal impact notes one by the
Department of Administration and one by the Department of
Education; and with a zero fiscal note by the Department of
Commerce and Economic Development.
SENATE BILL NO. 251
"An Act relating to the commercial fishing revolving
loan fund and the fisheries enhancement revolving loan
fund."
SENATOR GEORGE JACKO maintained that the fishing industry is
undergoing an economic crisis due to weak markets. He
observed that fishermen have experienced difficulty in
meeting their loan and tax obligations. He asserted that
the legislation would make the Commercial Fishing Revolving
Loan Fund more flexible in order to meet the needs of the
fishing industry.
Senator Jacko explained that the legislation would allow IRS
debts that threaten ownership to be paid from the Commercial
Fishing Revolving Loan Fund. Loans would be one time only
and capped at $30,000. The legislation contains a three
year sunset. He emphasized that there are 12,000 permits in
arrears to the IRS.
Senator Jacko noted that the legislation would also allow
the department to refinance loans up to $300,000 thousand
dollars incurred by borrowers for the purchase of a
commercial fishing vessel or for gear. He discussed factors
which have lead fishermen into fiscal difficulties.
(Tape Change, HFC 94-128, Side 1)
Senator Jacko observed that the legislation also amends the
Fisheries Enhancement program to provide authority to the
Department of Commerce and Economic Development to use
excess funds in the fisheries Enhancement Revolving Loan
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Fund for the purposes of the Commercial Fishing Revolving
Loan Fund. He maintained that loan priority will be
established through regulation. Expenditures would be
prioritized in the following manner:
1. Limited Entry Permits
2. Vessels
3. Gear
4. Refinance loans
5. Hatcheries
Senator Jacko observed that loans would be categorized as
(a) or (b) loans. The (a) loans would be made to finance
the purchase of limited entry permits. The (b) loans would
be made for repair, restoration, or upgrading of existing
vessels and gear or purchase or limited entry permits, gear
or vessels. Loans are distinguished on page 1, line 7
through page 3, line 23. He discussed requirements of the
loan. He observed that fishermen would need to be current
in their IRS filings in order to apply for the loans. He
noted that there is a two year Alaska residency requirement.
A lack of employment opportunity in the area of residence or
economic dependency on the fisheries must be demonstrated.
The applicant must have been active in the fisheries for
three of the last five years. The applicant must have a
commercial fishing license for the year immediately
proceeding the loan application.
In response to a question by Representative Navarre, Senator
Jacko clarified that payments would be made directly to the
IRS. He reiterated the loans would be one time eligibility.
He observed that the $30,000 thousand dollars loan cap would
address 80 percent of the IRS obligations.
Senator Jacko explained that limited entry permits cannot be
used as collateral for loans.
Representative Hanley argued that the federal government
would not take permits if holders attempt to contact and
negotiate for repayment of obligations. He did not see the
need for the state to assume the risk of repayment. Senator
Jacko maintained that the program would act as assurance to
the IRS for a means of repayment in order to achieve an
executed agreement.
Representative Navarre noted that payment can be suspended
for one year upon a showing of good cause. He observed that
the tax liability could have been incurred through
activities other than commercial fishing. He questioned the
constitutionality of the program.
Senator Jacko emphasized the goal of the program is to
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prevent loss of limited entry permits to the IRS.
Representative Parnell echoed concerns that tax obligations
could be the result of other activities. Representative
Therriault hypothesized that the tax liability would not
have to be associated with commercial fishing.
Representative Navarre suggested that the state negotiate
with the federal government to allow state purchase of
seized permits.
FRANK HOMAN, COMMISSIONER, LIMITED ENTRY COMMISSION provided
members with a chart summarizing tax delinquencies among
permit holders (Attachment 1). He gave a brief history of
the Commissioner's interactions with the IRS. The
Commissioner was unable to reach an agreement with the IRS
in regard to seized permits. He emphasized that the state
will not lose money as a result of the program. Permits
would be held as collateral. He reviewed areas of the state
having difficulty with tax delinquencies as detailed in
attachment 1.
In response to a question by Representative Therriault, Mr.
Homan explained that the IRS did not want restrictions
placed as to how they could discharge the permits. He noted
that all transfers must come through the Limited Entry
Commission. He observed that if the state is given first
right at permit purchase the bidding may not be as active.
Representative Navarre queried the status of permits under
dispute by both the federal and state governments for the
default of payments. Representative Hanley observed that
the federal government generally wins in state/federal
disputes.
Representative Hanley expressed concern that the
difficulties experienced by the fishing industry are not
temporary.
In response to a question by Representative Therriault, Mr.
Homan further discussed the permit as collateral for the
loan. Representative Therriault noted that the permit is
generally used as collateral for its purchase. He asked if
provisions are included to allow loans not to exceed the
equity of the permit. Mr. Homan stressed that it would be a
criteria of the Division of Investment.
RAY GILLESPIE, testified on behalf of four aquaculture
associations. He noted that aquaculture associations
support the legislation. He referred to provisions on page
6, which allow the Commissioner of Department of Commerce
and Economic Development to move excess money from the
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Commercial Fisheries Revolving Loan Fund to the Fisheries
Enhancement Revolving Loan Fund in order to refinance loans.
He noted that loans were made at higher than current
interest rates. The ability to reduce loans for aquaculture
associations would indirectly benefit fishermen. He noted
that aquaculture association loans are secured by a
volunteer enhancement tax. The enhancement taxes cannot be
repealed until loans are paid.
Representative Hanley summarized that reduction of interest
rates would reduce payments to the Funds. He discussed the
operation of the Funds. He expressed concern that the
legislature retain its ability to control the amount loaned
through the fund programs.
Co-Chair MacLean noted that the department has projected
that $14 million dollars will be available for loan
activity, $9 million dollars will be used to satisfy normal
loan demand, and $5 million will be used for the applicants
of the bill. Fifty percent of any remaining funds could be
transferred to the Fisheries Enhancement Revolving Loan
Fund.
(Tape Change, HFC 94-128, Side 2)
Representative Hanley stressed that priorities for loan
payments should be set in statute.
Mr. Gillespie replied that the Commercial Fisheries
Revolving Loan Fund demands will be the top priority, before
any funds are transferred. He maintained that any funds
transferred must be determined to be an excess of the
demands of the Commercial Fisheries Revolving Loan Fund as
determined by the Commissioner.
Co-Chair MacLean observed that the Department has determined
that there will be no excess funds available in the current
fiscal year.
Mr. Gillespie explained that the impact of reductions would
be experienced in future years. At that time the
Commissioner could exercise discretion to transfer excess
funds.
Representative Hanley questioned the amount needed to
refinance the loans. Senator Jacko pointed out that the
demand for hatchery loan refinancing will be more than is
available.
KENT DAWSON, NORTHWEST SEAFOODS, SILVER LINING SEAFOODS
spoke in support of the provision to allow hatcheries to
lower their debt burden. He maintained that the health of
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the hatcheries is directly related to the health of the
fishing industry.
He noted that hatcheries operated by the aquaculture
associations cannot secure bank refinancing since the state
holds their collateral.
GREG WINEGAR, LOAN MANAGER, DEPARTMENT OF COMMERCE AND
ECONOMIC DEVELOPMENT stated that refinancing hatcheries
loans would be separate from the legislation. He clarified
that loans can be refinanced under the Commercial Fisheries
Revolving Loan Fund. If money was available the department
could refinance under the Fisheries Enhancement Revolving
Loan Fund. Discussion pursued regarding refinancing
interest rates. He anticipated that there will not be funds
available for transfer in FY 95.
Representative Navarre discussed loan financing requirements
and mechanisms. Mr. Winegar explained that the legislation
would allow the department to refinance other than state
held loans.
Representative Navarre questioned if loans could be provided
based on the value of collateral. He suggested that
sections referring to loans for tax obligations be deleted
in order to assure that constitutional problems do not
occur.
Representative Brown discussed delinquent revolving loan
fund loans. Mr. Winegar clarified that permanent fund
dividends can be garnished.
Co-Chair MacLean provided members with AMENDMENT 1 (copy on
file). Amendment 1 would delete "one-half of". She
explained that the amendment would allow the entire surplus
balance from the Commercial Fisheries Revolving Loan Fund to
be transferred to the Fisheries Enhancement Revolving Loan
Fund. She maintained that future surplus funding should be
available for hatchery loans.
Senator Jacko explained that the provision to allow only
half of the surplus funds to be transferred was adopted to
assure that Commercial Fisheries Revolving Loan Fund retain
sufficient funds.
In response to a question by Representative Navarre, Mr.
Winegar noted that $44 million dollars have been
reappropriated from the Commercial Fisheries Revolving Loan
Fund to the General Fund after loan demand. There has not
been excess funds in the Fisheries Enhancement Revolving
Loan Fund.
Representative Navarre noted that the amendment could reduce
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money appropriated back to the General Fund for general
appropriations. Discussion pursued in regards to the effect
of section five on legislative appropriations.
Co-Chair MacLean MOVED to ADOPT AMENDMENT 1. Representative
Navarre OBJECTED. A roll call vote was taken on the MOTION.
IN FAVOR: Therriault, Foster, Larson, MacLean
OPPOSED: Brown, Hanley, Martin, Navarre, Parnell
Representatives Hoffman and Grussendorf were not present for
the vote.
The MOTION FAILED (4-5).
Representative Foster MOVED to report HCS CSSB 251 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. The motion was held pending in
order to allow members to allay constitutional concerns.
ADJOURNMENT
The meeting adjourned at 3:45 p.m.
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