Legislature(1995 - 1996)
04/11/1996 01:45 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 11, 1996
1:45 P.M.
TAPE HFC 96 - 113, Side 1, #000 - end.
TAPE HFC 96 - 113, Side 2, #000 - end.
TAPE HFC 96 - 114, Side 1, #000 - end.
TAPE HFC 96 - 114, Side 2, #000 - #378.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 1:45 P.M.
PRESENT
Co-Chair Hanley Representative Martin
Co-Chair Foster Representative Mulder
Representative Brown Representative Kohring
Representative Grussendorf Representative Parnell
Representative Kelly Representative Therriault
Representative Navarre was not present for the meeting.
ALSO PRESENT
Representative Ed Willis; Representative Scott Ogan; Bill
Parker, Deputy Commissioner, Office of the Commissioner,
Department of Corrections; Dennis DeWitt, Staff,
Representative Eldon Mulder; Allison Gordon, Staff, Senator
Steve Frank; Wendy Redman, Vice President, University of
Alaska; Sara Hannan, Executive Director, Alaska
Environmental Lobby, Juneau; Dan Ritzman, Northern Alaska
Environmental Center, Fairbanks; Mike Miller, Alaska
Commission on Aging, Juneau; Jay Livey, Deputy Commissioner,
Department of Health and Social Services; Connie Sipe,
Director, Division of Senior Services, Department of
Administration, Anchorage; Cliff Orme, (Testified via
teleconference), Chief Executive Officer, Valley Hospital
Association, Mat-Su; Alfreda Ward, (Testified via
teleconference), City Manager of Fort Yukon, Fairbanks; Jim
Hansen, (Testified via teleconference), Lease Sales Manager,
Division of Oil and Gas, Department of Natural Resources,
Anchorage; Hans Neidig, Staff, Representative Scott Ogan;
Kenneth Rogowski, (Testified via teleconference),
Environmental Specialist, Spill Prevention and Response,
Department of Environmental Conservation, Anchorage.
SUMMARY
HB 2 An Act allowing courts to require certain
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offenders as a special condition of probation to
complete a boot camp program provided by the
Department of Corrections; making prisoners who
complete the boot camp program eligible for
discretionary parole; providing for incarceration
of certain nonviolent offenders in boot camps
operated by the Department of Corrections;
allowing the Department of Corrections to contract
with a person for an alternative boot camp
program; creating the Boot Camp Advisory Board in
the Department of Corrections; and providing for
an effective date.
CS HB 2 (FIN) was reported out of Committee with a
"do pass" recommendation and with a new fiscal
note by the Department of Corrections.
HB 393 An Act relating to managed care for recipients of
medical assistance; and providing for an effective
date.
HB 393 was rescheduled for April 12, 1996, morning
meeting.
HB 394 An Act authorizing a program of natural gas and
coal bed methane development licensing and
leasing; relating to regulation of certain natural
gas exploration facilities and coal bed methane
exploration facilities for purposes of preparation
of discharge prevention and contingency plans and
compliance with financial responsibility
requirements; amending the duties of the Alaska
Oil and Gas Conservation Commission as they relate
to natural gas exploration activities and coal bed
methane exploration activities; and amending the
exemption from obtaining a waste disposal permit
for disposal of waste produced from coal bed
methane drilling.
CS HB 394 (FIN) was reported out of Committee with
a "do pass" recommendation and with a fiscal note
by the Department of Natural Resources dated
2/28/96 and the Department of Environmental
Conservation dated 2/28/96.
HB 436 An Act relating to purchase and sale of mobile
homes by mobile home dealers or agents; to mobile
home titles; and providing for an effective date.
HB 436 was rescheduled for hearing on April 12,
1996, morning meeting.
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HB 528 An Act relating to applications for certificates
of need and licensing of nursing homes; amending
the standard of review for certificates of need
for health care facilities in the state;
establishing a moratorium with respect to new
applications by prohibiting the issuance of a
certificate of need or a license for additional
nursing home capacity in the state until July 1,
1998; and providing for an effective date.
HB 528 was HELD for further consideration.
SB 250 An Act relating to the University of Alaska and to
assets of the University of Alaska; authorizing
the University of Alaska to select additional
state public domain land, designating that land as
`university trust land,' and describing the
principles applicable to the land's management;
and defining the net income from the University of
Alaska's endowment trust fund as `university
receipts' subject to prior legislative
appropriation.
SB 250 was HELD in Committee for further
consideration.
HOUSE BILL 2
"An Act allowing courts to require certain offenders as
a special condition of probation to complete a boot
camp program provided by the Department of Corrections;
making prisoners who complete the boot camp program
eligible for discretionary parole; providing for
incarceration of certain nonviolent offenders in boot
camps operated by the Department of Corrections;
allowing the Department of Corrections to contract with
a person for an alternative boot camp program; creating
the Boot Camp Advisory Board in the Department of
Corrections; and providing for an effective date."
Representative Mulder explained the differences in the work
draft #9-LS0016\O, Luckhaupt, 4/11/96. Representative
Mulder requested that the fiscal note be revised in order
that the Department of Corrections could expend the funds
this fiscal year. The fiscal note would be federal funds.
Representative Mulder MOVED TO WITHDRAW the pending motion
to change the dates from the previous meeting. There being
NO OBJECTION, it was so ordered.
Representative Mulder MOVED TO RESCIND action of adopting CS
HB 2 (FIN) from the previous meeting. There being NO
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OBJECTION, it was so ordered.
Representative Brown MOVED to adopt work draft 9-LS0016\O,
Luckhaupt, 4/11/96, as the version before the Committee.
There being NO OBJECTION, it was adopted.
REPRESENTATIVE ED WILLIS noted that he supported the current
version of the legislation. Representative Brown asked if
the reference to "maintain", Page 2, Line 1, would make the
State responsible for maintaining the building.
DENNIS DEWITT, STAFF, REPRESENTATIVE ELDON MULDER, explained
that language was used resulting from concern that the boot
camp program wants to use the State facilities at Wildwood.
Legal counsel advised to include that language.
BILL PARKER, DEPUTY COMMISSIONER, DEPARTMENT OF CORRECTIONS,
stated that the Department agrees with the changes provided
in the bill.
Representative Mulder questioned the $2 million dollars in
the fiscal note as indicated received in FY96. He stated
that the assumption was that the $2 million dollars was
related to the boot camp. Mr. Parker stated that was the
amount that the federal government needs to distribute,
although no federal funds have yet been awarded. That
amount was awarded for activity last year.
Representative Therriault questioned Page 3, Line 15,
speaking to the 150 day term sentencing. Mr. Parker
responded that the person would need to have to serve enough
time in order to complete the course if sentenced to it. He
added that the plan would be to run two five month courses.
If a person had not been sentenced for five months, they
would not be required to do the course.
Representative Martin recommended including a clause which
would authorize program receipts to be authorized by
Legislative Budget and Audit (LBA) Committee in addition to
any federal monies. Co-Chair Hanley stated that specific
language would need to be included indicating the dollar
amount. Representative Martin suggested including $1
thousand dollars program receipts in the fiscal note. They
would then be able to come to LBA if additional funds were
needed. Mr. Parker remarked that as a class, these people
were normally indigent.
Representative Kohring MOVED to report CS HB 2 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Mulder OBJECTED to
the fiscal note. Co-Chair Hanley recommended revising the
fiscal note to include $2 million dollars federal funds and
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$1 thousand dollars general fund program receipts to address
regulations if adopted. There being NO further OBJECTIONS,
it was adopted.
CS HB 2 (FIN) was reported out of Committee with a "do pass"
recommendation and with a fiscal note by the Department of
Corrections.
SENATE BILL 250
"An Act relating to the University of Alaska and to
assets of the University of Alaska; authorizing the
University of Alaska to select additional state public
domain land, designating that land as `university trust
land,' and describing the principles applicable to the
land's management; and defining the net income from the
University of Alaska's endowment trust fund as
`university receipts' subject to prior legislative
appropriation."
ALLISON GORDON, STAFF, SENATOR STEVE FRANK, noted that SB
250 would allow the University of Alaska to select 350
thousand acres of unencumbered land from the State of
Alaska. In this era of declining State funds, endowing the
University with additional lands will allow them to develop
those lands to produce income for university programs.
Under the Congressional Morrill Act of 1862, each state was
entitled to receive a grant for public lands, the income
from which would provide the financial base of operation for
at least one college or university. The University of
Alaska received about 112 thousand acres of land, less than
any other western public land state and less than the
national average entitlement by over 300 thousand acres.
Some universities have received one million acres.
She concluded that an additional grant of land would bring
Alaska up to the level of other western states and would
follow through with the original purpose of land grant
colleges.
WENDY REDMAN, VICE PRESIDENT, UNIVERSITY RELATIONS,
UNIVERSITY OF ALASKA, stated that the University of Alaska
is called a "Land Grant University". She pointed out
changes made in the bill from last year. The largest change
removed the portion of the bill which specified which lands
were available, and giving the Department of Natural
Resources (DNR) responsibility for making that
determination. The University is willing to concede with
what DNR determines is in the "best interest" of the State.
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A section has been added which would provide the same
protection for the University that the State has for the
proprietary information to the lands issue. Policy that
currently applies to the State is included. Another section
addresses the administrative foreclosure on the lands.
Ms. Redman added that the Board of Regents are trying to
determine alternative sources of revenue. Over the last
decade, the University has decreased from a 70% to 40%
dependency on general fund revenues. The majority of the
financial shift has been to the students. She emphasized
the need to generate additional money each year for the
University and thought that it could be accommodated through
the land use grant. Ms. Redman continued, DNR does not have
the resources available to adequately manage state land.
The University is looking for 1/10th of 1%. Last year, the
University received 350 million acres of land.
Representative Therriault asked if the bills language was
consistent with the language used last year. Ms. Redman
responded that the income from the receipts would be
classified as program receipts.
Ms. Redman addressed the amendment as distributed by
Representative Therriault. She stated that the amendment
was drafted in response to issues by the mining community.
The changes delete the "selection" when used with conveyance
of land rights. The intent of the bill is that land not be
tied up in any way, until the Legislature takes action to
give the lands to the University through the appropriation
process.
SARA HANNAN, EXECUTIVE DIRECTOR, ALASKA ENVIRONMENTAL LOBBY
(AEL), JUNEAU, voiced strong opposition to SB 250. She
stated that the University of Alaska's land grant obligation
is fulfilled. The State of Alaska has no additional land
obligation to the University, and has monetarily supported
the University since Statehood. The University has no
higher right to State resources than any other agency.
Ms. Hannan continued, in a time when we cannot fully fund
our public schools, it is inappropriate to give resources
worth millions of dollars to the University.
All Alaskans currently have access to share the opportunity
to the use of State lands. Putting 350 thousand acres of
State owned land into the "private" ownership of the
University preempts equal access. "Customary and
traditional use" of the land, like fishing, hunting,
camping, trapping and hiking will only be protected until
the University development plans conflict with it.
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Ms. Hannan concluded that fracturing the ownership platter
of Alaska lands would not be in the State's best interest.
If the lands should be developed by the State, then the
State should lease them. Giving away valuable resource
lands, without a plan for future Alaska's land management is
short sighted.
DAN RITZMAN, NORTHERN ALASKA ENVIRONMENTAL CENTER,
FAIRBANKS, stated that the Northern Center is opposed to SB
250 noting that the bill would remove 350 thousand acres of
public land from public control.
SB 250 exempts the selected lands from public oversight and
State land planning requirements. The University claims to
be concerned about public input into it's land management
although their recent history does not demonstrate this. He
added that the University tried to fast-track the bill right
past the public. SB 250 had only one hearing in the Senate,
which was not tele-conferenced.
Mr. Ritzman noted that the Northern Center believes that SB
250 is a "dangerous" bill for public lands. It would negate
years of good faith public participation in state land use
planning, that resulted in decisions to retain most lands
for fish and wildlife habitat, public recreation, and a host
of other purposes. The University's draft financial
management plan indicates that they would like to dispose of
much of their land holdings for cash that can be invested.
Mr. Ritzman noted that SB 250 fails to address the issue of
contiguity of land ownership. There is no provision in the
bill to prevent our land from being fragmented further,
which will lead to development conflicts with existing uses
on neighboring public and private land. He concluded that
the bill would violate the dedicated fund prohibition in the
State constitution. In addition, the University does not
have any more right to a land entitlement than the public
safety providers or the secondary school system.
Representative Therriault referenced Page 10, Section 9,
which speaks to the management and disposition of University
trust lands, with policy to provide for public notice, plans
and seeking of public comments. He disagreed that the
public was being excluded.
(Tape Change, HFC 96-113, Side 2).
Representative Therriault MOVED to adopt Amendment #1.
Representative Brown OBJECTED in order to read the
amendment. Amendment #1 was HELD with the MOTION pending.
Representative Mulder requested that staff from Department
of Natural Resources DNR) be present for the next hearing of
SB 250 was heard.
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SB 250 was HELD for further discussion.
HOUSE BILL NO. 394
"An Act authorizing a program of natural gas and coal
bed methane development licensing and leasing; relating
to regulation of certain natural gas exploration
facilities and coal bed methane exploration facilities
for purposes of preparation of discharge prevention and
contingency plans and compliance with financial
responsibility requirements; amending the duties of the
Alaska Oil and Gas Conservation Commission as they
relate to natural gas exploration activities and coal
bed methane exploration activities; and amending the
exemption from obtaining a waste disposal permit for
disposal of waste produced from coal bed methane
drilling."
ALFREDA WARD, (TESTIFIED VIA TELECONFERENCE), CITY MANAGER
OF FORT YUKON, FAIRBANKS, spoke in support of HB 394,
indicating the importance of the legislation to rural
Alaska's ability to deal with the high cost of fuels and
utilities.
HANS NEIDIG, STAFF, REPRESENTATIVE SCOTT OGAN, explained
Amendment #1, 9-LS1463\R.12, Chenoweth, 4/9/96. He stated
as the legislation currently reads, it would reduce the bond
level $25 thousand dollars on state lands. The amendment
would also include Native Corporation Lands being placed at
that rate.
Representative Mulder MOVED to adopt Amendment #1. There
being NO OBJECTION, it was adopted.
Representative Brown spoke to Amendment #2, 9-LS146\R.13,
Chenoweth, 4/11/96 which would change language on Page 6,
Line 15, from "may" to "shall".
REPRESENTATIVE SCOTT OGAN noted that he did not oppose
Amendment #2. Representative Brown MOVED to adopt Amendment
Representative Brown MOVED to adopt Amendment #3, 9-
LS1463\R.16, Chenoweth, 4/11/96, which would add standard
language addressing the royalty which the State would
receive. Representative Ogan noted that he did not object
to the amendment. There being NO OBJECTION from the
Committee, it was adopted.
Representative Brown MOVED to adopt Amendment #4, 9-
LS1463\R.17, Chenoweth, 4/11/96, which would provide a
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clarification of Title 38. Representative Ogan noted that
he did not object to the amendment. There being NO
OBJECTION from the Committee, it was adopted.
Representative Brown MOVED to adopt Amendment #5, 9-
LS1463\R.5, Chenoweth, 4/8/96, which would require the
applicant to pay a reasonable application fee not to exceed
$500 dollars. Representative Ogan noted that he did not
object to the amendment. There being NO OBJECTION from the
Committee, it was adopted.
Representative Brown spoke to Amendment #6, 9-LS1463\R.19,
Chenoweth, 4/11/96, which questions the distribution of the
public owned resources. She thought that it would only be
fair that when resources were to be disposed of, all parts
of the State be included. Representative Brown remarked
that this was a policy issue and that Southcentral Alaska
should be included.
Representative Ogan stated that he opposed Amendment #6,
commenting that the program had been designed to be for
rural Alaskans only, the area in which the energy problems
exist. He thought the proposed legislation would also help
to mitigate the environmental problem, currently estimated
to be $500 million dollars for clean-up of the fuel storage
facilities.
Representative Brown noted that there exists a "lot of room"
for expansion of the gas pipeline transmission system. She
referenced Page 6, Line 11, which she thought would create a
restriction. Representative Ogan replied that the intent
was to cover whatever the "in-place" gas pipeline
transmission systems are, and would not apply to future
systems. The intent of the legislation is to subsidize a
resource left in the ground to help with the Power Cost
Equalization problem. He thought it would not be fair to
those producing gas without the exclusion in the pipeline
system. Representative Brown WITHDREW Amendment #6. She
thought that gas producers should be consulted as to how
this action would affect them.
Representative Brown spoke to Amendment #7, 9-LS146\R.18,
Chenoweth, 4/11/96, which would insert language addressing
gas found in association with oil. She stressed that this
section was the governing portion which determines contents
of the leases.
Representative Ogan noted that he opposed the amendment. He
pointed out that specific language already exists in the
bill which states gas can not be produced if it is below
three thousand feet. He acknowledged that he did not intend
to limit gas production in the rural communities. Gas could
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be associated with methane resulting from coal when and if
the source was not identifiable. He suggested that type of
gas should not be excluded and pointed out that Amendment #4
already addressed the statutes in Title 38.
Representative Mulder questioned the possibility of a
natural gas development occurring in a commercially
developed oil deposit.
JIM HANSEN, (TESTIFIED VIA TELECONFERENCE), LEASE SALE
MANAGER, DIVISION OF OIL & GAS, DEPARTMENT OF NATURAL
RESOURCES (DNR), ANCHORAGE, advised that, above three
thousand feet, the chances of an oil deposit would be
remote. Gas not associated with coal could exist in the
region. He noted that the chance of finding gas with oil in
that shallow of a surface was remote. He also acknowledged
that little is known about that area of Alaska and agreed
that anything could happen.
Co-Chair Hanley asked if oil had been discovered, what would
be the status of the gas associated with that oil.
Representative Ogan replied, if the gas is not below three
thousand feet, it can continue to produce that gas.
Language exists in the bill which stipulates that if oil is
encountered, operations would immediately be ceased.
Representative Brown noted that the issue of "discovery of
gas with heavy oil" had not been addressed in the proposed
legislation.
KENNETH ROGOWSKI, (TESTIFIED VIA TELECONFERENCE),
ENVIRONMENTAL SPECIALIST, SPILL PREVENTION AND RESPONSE
(SPAR), DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ANCHORAGE,
noted that Page 9 addressed the law and regulations
associated with gas and oil. He reiterated that if oil was
found in the gas, operations would halt immediately.
Representative Brown questioned if it had been the intent to
sell the gas rights within a reservoir which also had oil in
it. Representative Ogan commented that the Oil and Gas
Conservation Commission will protect and conserve oil
resources in association with the gas above three thousand
feet. That agency controls production practices.
Representative Brown MOVED to adopt Amendment #7.
Representative Martin OBJECTED.
A roll call was taken on the MOTION to adopt Amendment #7.
IN FAVOR: Brown, Hanley.
OPPOSED: Parnell, Kelly, Kohring, Martin, Mulder,
Foster.
Representatives Navarre, Therriault and Grussendorf were not
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present for the vote.
The MOTION FAILED (2-6).
Representative Brown MOVED to adopt Amendment #8, 9-
LS1463\R.18, Chenoweth, 4/11/96, which would delete the
language on Page 5, Lines 20-22: "If rent is not paid when
due, the director shall mail the lessee written notice of
nonpayment at the end of each month, while the rent remains
unpaid, for a period of two months".
Representative Ogan voiced objection to the amendment. Mr.
Hansen agreed with Representative Brown noting that language
would create a burden on DNR keeping track of lease payment
schedule. He noted that lease payments are currently due
annually. If a lease is to be terminated due to none-
payment of rent, notification is provided. Following
further discussion, between Committee members and Mr.
Hansen, Representative Brown recommended that the amendment
be HELD until Mr. Hansen could provide specific information.
(Tape Change, HFC 96-114, Side 1).
Representative Brown spoke to Amendment #9, 9-LS1463\R.6,
Chenoweth, 4/8/96, which would address language on Page 4,
Line 22, and would insert "that it is in the best interests
of the state". She noted that in some villages, there is
adamant opposition to the oil and gas operations being
conducted near their area. Some of those concerns could be
mitigated in a best interest finding by attaching to the
lease stipulations, language addressing the pipeline
placement. She emphasized that a standard needs to be
included.
Representative Ogan voiced opposition to the amendment. He
noted that the Findings Section of the proposed legislation
suggests that it be in the best interest of the State that
the resource be developed. He added that surface rights
were addressed in Amendment #1 and that existing language on
surface rights is in Title 38. That language would apply.
Insertion of the proposed language could "open the door" to
a requirement for a best interest finding now excluded in
statute. He thought that the director of the Oil and Gas
Division would act in the "best interest of the State".
Mr. Hansen agreed with the language proposed in Amendment
interest finding. Representative Ogan stated that best
interest findings are an extensive inventory of the area,
and calculated that it would be an expensive process.
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Representative Parnell asked if there was alternative
language which could be used. Co-Chair Hanley questioned if
the proposed language would be more "helpful" to the
Department. Mr. Hansen recommended receiving that opinion
from the Attorney General's office. Representative Brown
noted that virtually all leases representing the States
resources go through a "best interest" finding process. She
thought that discovery and eventual production would have a
large impact, warranting issues which need to be addressed.
She recommended that addition of the language would create a
standard. Representative Brown suggested that it was not
clear that public comment could reveal what was occurring
and recommended that the standard be included.
Representative Parnell advised using the language "after
review of all available information, the director determines
it is in the State's interest". Representative Brown
agreed. Representative Parnell suggested that would include
public comments, as well as other information.
Representative Ogan voiced concern that the added language
would allow the Commissioner of DNR to be responsible for
more findings and hearings which would ultimately be
expensive for the State and the user.
Representative Parnell thought that current language in the
bill would prove to have a negative reaction and that the
director would then not have a basis from which to deliver a
lease. The intent of the proposed language would remove
this concern from the best interest findings category. He
added that he would hope to reach a "middle ground" between
the various points of view.
Representative Parnell MOVED the amended language to
Amendment #9 which would delete "on the basis of public
comments received" and insert "after review of all available
information, the director determines it is in the State's
interest....." Representative Kelly voiced concern that
special interest groups would sway the director's decision
rather than that decision being based on substantive and
factual information.
Representative Brown recommended deleting "all". Following
discussion, most Committee members agreed to delete "all".
Representative Parnell MOVED to amend the amended language,
deleting "all". There being NO OBJECTION, it was deleted.
Representative Parnell MOVED to adopt the amended Amendment
environmentalist would use that change to benefit their
interests.
A roll call was taken on the MOTION.
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IN FAVOR: Parnell, Therriault, Brown, Grussendorf,
Kohring, Martin, Mulder, Hanley.
OPPOSED: Kelly.
Representatives Navarre and Foster were not present for the
vote.
The MOTION PASSED (8-1).
Representative Brown MOVED to adopt Amendment #8, 9-
LS1463\R.15, Chenoweth, 4/11/96. Representative Mulder
OBJECTED.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Grussendorf, Parnell.
OPPOSED: Therriault, Kelly, Kohring, Martin,
Mulder, Hanley.
Representatives Navarre and Foster were not present for the
vote.
The MOTION FAILED (3-6).
Representative Mulder MOVED to report CS HB 394 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTIONS, it
was so ordered.
CS HB 394 (FIN) was reported out of Committee with a "do
pass" recommendation and with a fiscal note by the
Department of Natural Resources dated 2/28/96 and a zero
fiscal note by the Department of Environmental Conservation
dated 2/28/96.
HOUSE BILL 528
"An Act relating to applications for certificates of
need and licensing of nursing homes; amending the
standard of review for certificates of need for health
care facilities in the state; establishing a moratorium
with respect to new applications by prohibiting the
issuance of a certificate of need or a license for
additional nursing home capacity in the state until
July 1, 1998; and providing for an effective date."
CLIFF ORME, (TESTIFIED VIA TELECONFERENCE), CHIEF EXECUTIVE
OFFICER, VALLEY HOSPITAL ASSOCIATION, MAT-SU, voiced support
for a one year moratorium on applications for certificates
of need and licenses for nursing home capacity. He added
his support of a working group being created for studying
and issuing a report on long term care. Mr. Orme agreed
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with the primary substance of the legislation, although, did
not agree with Section 1, the Findings, indicating that the
State has a problem with the distribution of nursing home
beds. He thought that the most cost effective way of
addressing the concerns would be to affiliate long term care
services with a hospital association.
Representative Martin asked why the moratorium should be
limited to one year. Mr. Orme noted that a one year
moratorium would in effect be a two year moratorium because
of building stipulations.
MIKE MILLER, ALASKA COMMISSION ON AGING, JUNEAU, stated that
the Alaska Commission on Aging is in support of HB 528.
That group would prefer the original bill which provided for
a two year moratorium. He concurred that the resolution
stated "it all". The availability of nursing home beds in
many areas does exceed the actual need.
CONNIE SIPE, DIRECTOR, DIVISION OF SENIOR SERVICES,
DEPARTMENT OF ADMINISTRATION, spoke in support of the
legislation and of the two year moratorium as indicated in
the original legislation. She requested that a study be
provided determining the areas where additional nursing home
beds were needed.
(Tape Change, HFC 96-114, Side 2).
Ms. Sipe continued, "home and community-based services"
enable elderly Alaskans to entirely avoid or postpone
nursing home placement. These are programs specifically
designed to keep seniors out of nursing homes.
A two year moratorium on long-term care beds would allow
time for the community based service programs to more fully
develop. Also, it would allow the Department of Health and
Social Services (DHSS), Division of Senior Services, time to
create a plan for the orderly development and proper mix of
community based services and long-term care beds.
Co-Chair Hanley pointed out that once the beds are built,
they will need to be paid for. This is a formula-funded
concern and the Department will be required to pay at that
level. He reminded Committee members that there are
competing needs for Medicaid dollars, both nursing homes and
hospital bases. The moratorium would provide the nursing
home group time to reevaluate their needs.
JAY LIVEY, DEPUTY COMMISSIONER, DEPARTMENT OF HEALTH AND
SOCIAL SERVICES, commented that the Department generally
supports HB 528, and that it would be essential in
controlling Medicaid costs. The average Medicaid cost per
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person per year is approximately $86 thousand dollars. A
patient can be kept in a home-based community setting for
approximately $30 thousand dollars per year. About 85% of
the private nursing home revenues originate from Medicaid
dollars.
Mr. Livey pointed out that there are one hundred forty-seven
(147) proposed new beds to be built around the State in the
next five years. If all those beds were built, the cost to
the Medicaid program would be nearly $57 million dollars,
with $28 million dollars in general funds. He stated that
the Department does not know how the Medicaid budget could
absorb that amount of money.
There are basic issues within the Medicaid program which
need to be addressed.
* Nursing care is a mandatory service.
* Medicaid patients enjoy freedom of choice.
* All costs must be incurred by an efficient
and economically operated facility.
If a bed is built and receives a certificate of need, the
State would end up paying the bill which will create a
serious situation for the Medicaid budget over the next five
years.
Mr. Livey pointed out that there is no facility in the State
that currently looses revenue and that no current facilities
will be harmed by the proposed legislation. The Department
supports the original language of the bill including a two
year moratorium. The Department also recognizes that this
is only a temporary measure. Medicaid has the
responsibility to provide long-term care services to older
Alaskans.
Representative Martin asked who authorizes the
certification. Mr. Livey replied that the certificate of
need comes to the Department, where it is reviewed and if
the project meets the criteria, the certificate of need is
then granted by the commissioner.
Representative Martin asked the cost of empty beds. Mr.
Livey responded that the total cost of running a nursing
home is spread across the total number of Medicaid patients
who are in the home. Currently in Alaska, there exists one
hundred fifteen (115) vacant beds.
Representative Martin inquired if the increased number of
seniors currently living in the State has resulted from a
migration north or the natural aging of current residents.
Ms. Sipe stated that it was difficult to track migration.
She added, studies do exist which demonstrate what Alaska is
15
experiencing; this is called "new elders". Alaska finally
has elders staying in the State, aging in place and not
moving away. More people are staying longer, many elders
are living longer and the life expectancy has increased
dramatically in the last ten years. Representative Martin
suggested that the State of Alaska has too many generous
programs for seniors, thus encouraging out-of-state seniors
to move to Alaska.
HB 528 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 4:20 P.M.
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