Legislature(1999 - 2000)
04/15/2000 09:20 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
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HOUSE FINANCE COMMITTEE
April 15, 2000
9:20 A.M.
TAPE HFC 00 - 121, Side 1
TAPE HFC 00 - 121, Side 2
TAPE HFC 00 - 122, Side 1
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 9:20 a.m.
PRESENT
Co-Chair Mulder
Co-Chair Therriault Representative Foster
Vice Chair Bunde Representative Grussendorf
Representative Austerman Representative Moses
Representative J. Davies Representative Phillips
Representative G. Davis Representative Williams
ALSO PRESENT
Representative John Coghill; Jeannie Smith, Staff, Senator
MacKie; Guy Bell, Director, Division of Retirement and
Benefits, Department of Administration; Dave Gray, Staff,
Senator MacKie; George Capacci, General Manager, Alaska
Marine Highway System, Department of Transportation and
Public Facilities; Patti Swenson, Staff, Representative
Bunde; Wendy Redman, Vice President, Statewide Programs,
University of Alaska; Jeannie Smith, Staff, Senator MacKie;
David Logan, Dentist, Juneau; Larry Persily, Deputy
Commissioner, Department of Revenue.
TESTIFIED VIA TELECONFERENCE
Denny Kay Weathers, Anchorage.
SUMMARY
HB 121 "An Act relating to patients' rights under a
health care insurance plan or contract providing
coverage for dental care, and prohibiting certain
practices by health care insurers relating to
dental care."
CSHB 121 (L&C) was REPORTED out of Committee with
"no recommendation" and a zero fiscal note by the
Department of Community and Economic Development
and a zero fiscal note by the Department of
Administration, both published on 4/14/00.
HB 281 "An Act providing for the issuance of general
obligation bonds in the amount of $665,000,000 for
the purposes of paying the cost of design,
construction, and renovation of public elementary
and secondary schools, renovation of state
buildings, capital improvements at the University
of Alaska, and capital improvements to state
harbors; and providing for an effective date."
HB 281 was heard and HELD in Committee for further
consideration.
HB 311 "An Act eliminating a requirement that a social
security number be provided by an applicant for a
hunting or sport fishing license or tag."
CSHB 311 (JUD) was REPORTED out of Committee with
"no recommendation" and a fiscal impact note by
the Department of Revenue, published 4/10/00.
CSSB 85(RLS)
"An Act relating to credited service in the public
employees' retirement system for temporary
employment; and creating a public service benefit
in the public employees' retirement system."
CSSB 85(RLS) was REPORTED out of Committee with a
"do pass" recommendation and with a Department of
Administration, published 2/15/00.
SB 288 "An Act authorizing the Department of
Transportation and Public Facilities to enter into
an agreement with the Inter-Island Ferry Authority
regarding the operation of the Clarke Bay
Terminal, Prince of Wales Island."
SB 288 was REPORTED out of Committee with a "do
pass" recommendation and with a fiscal impact note
by the Department of Transportation and Public
Facilities, published 3/24/00.
CSSB 192 (FIN)
"An Act making and amending capital appropriations
and reappropriations and capitalizing funds; and
providing for an effective date."
CSSB 192 (FIN) was postponed.
CS FOR SENATE BILL NO. 85(RLS)
"An Act relating to credited service in the public
employees' retirement system for temporary employment;
and creating a public service benefit in the public
employees' retirement system."
JEANNIE SMITH, STAFF, SENATOR MACKIE testified in support of
SB 85. She noted that the legislation was introduced on
behalf of constituents in Kodiak. She stressed that the
legislation would be an effective management tool to
minimize the impact of current and future budget reductions.
The bill would allow employees to meet their retirement
eligibility threshold sooner than they would otherwise be
able. Employees prone to use this benefit for retirement
credit are employees with higher service totals. Employer
costs decrease when these employees are replaced through
reduced costs to the Supplemental Benefit System (SBS) and
the retirement system. The replacement of Tier I and Tier II
category employees with new Tier III employees would lower
benefit costs. The fiscal note reflects a $4 thousand dollar
designated fund source of the Public Employees Retirement
Trust Fund. The legislation would be a simple economic tool
that may be used to minimize the impact of downsizing
Alaska's state government.
Ms. Smith noted that the legislation was changed in the
Senate Rules Committee to include certain legislative
employees. She noted that the full actuarial time would be
counted.
Co-Chair Therriault questioned if two years service in the
Public Employee's Retirement System (PERS) is needed to get
the credit in the Teacher's Retirement System (TRS). Ms.
Smith explained that the legislation would address employees
in the Department of Education and Early Development that
switched from PERS to TRS. The intent is for the employee to
pay the full actuarial cost of their temporary time, state
benefits and interest. The net impact to the state of Alaska
is zero.
Vice Chair Bunde asked how departments have reacted to the
legislation. Ms. Smith responded that other states are
allowing flexibility between departments to minimize the
impacts of downsizing. She noted that the agencies are
supportive.
Representative J. Davies questioned if the credit from the
first service would be transferred to the second service.
Ms. Smith clarified that the legislation would allow the
service to be transferred.
In response to a question by Co-Chair Therriault, Ms. Smith
clarified that temporary time could be added to their
threshold, but that it is impossible to use the time to
change their Tier I or Tier II status.
GUY BELL, DIRECTOR, DIVISION OF RETIREMENT AND BENEFITS,
DEPARTMENT OF ADMINISTRATION provided information on the
legislation and provided a brief summary of the three
sections. Section 1 would allow employees to use temporary
time for 20/30 and out. Currently, employees have to have 20
or 30 years of membership service depending on their
employment. They can purchase their temporary time toward an
actuarially adjusted higher benefit, but not to add years
toward their retirement. The legislation would allow
temporary time toward their retirement. An employee with 29
and a half years of service and 6 months of temporary time
could pay for the temporary time in order to retire.
Mr. Bell noted that the second provision would address
legislative employees prior to 1979. These employees were
classified as temporary and their time did not count in
PERS. Their status was changed in 1979 and they were allowed
to claim the service until 1980. The legislation would
reopen the window and allow employees to purchase their time
toward the conditional legislative retirement benefit of
five legislative sessions. This provision would apply to a
small number of people at no state cost.
Mr. Bell discussed the third provision of SB 85. Individuals
with a minimum of two years paid up service in PERS would be
allowed to combine their service with TRS to reach the five-
year vesting requirement for a retirement benefit. The
Department of Administration would assure that the employee
and employer contribution meets the actuarial for the
benefit requirement. An actuarial adjustment could be made.
The provision would only apply to a small number of people.
Mr. Bell noted that there would be a small fiscal cost [$4
thousand dollars].
Vice Chair Bunde reiterated that only a small number of
people would be affected. Mr. Bell gave the example of an
individual that worked in the Department of Transportation
and Public Facilities and then transferred to the Department
of Education and Early Development. Some of his service is
in TRS and some is in PERS. The total is more than 5 years,
but he is not vested in either system.
Mr. Bell observed that the agencies have not expressed
concern with the legislation and that the bill is very
limited in scope.
Representative Foster MOVED to report CSSB 85 (RLS) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSSB 85(RLS) was REPORTED out of Committee with a "do pass"
recommendation and with a Department of Administration,
published 2/15/00.
CS FOR SENATE BILL 288
"An Act authorizing the Department of Transportation
and Public Facilities to enter into an agreement with
the Inter-Island Ferry Authority regarding the
operation of the Clarke Bay Terminal, Prince of Wales
Island."
DAVE GRAY, STAFF, SENATOR MACKIE testified in support of SB
288. He explained that the legislation would authorize the
Inter-Island Ferry Authority to assume operation of the
Hollis terminal. The Inter-Island Ferry Authority is made up
of five municipalities and six unincorporated communities
that are primarily on Prince of Wales Island. The Authority
has been working for the past five years to provide service
between Prince of Wales Island and Ketchikan and Petersburg.
The Authority is ready to go to bid on their first ship,
which would be ready by June. Legislative authority is
required before the Authority can take over operation of the
Hollis terminal. The Authority will do the ticketing and
docking on the Hollis side. The Authority will own the ships
they operate. There will eventually be a new terminal on the
northern end of the island. The state will retain operation
of the Ketchikan and Petersburg facilities.
Co-Chair Therriault questioned how many employees would be
affected by the legislation.
Vice Chair Bunde clarified that the state of Alaska will no
longer provide service from Hollis. Mr. Gray observed that
additional state service could occur on occasion.
GEORGE CAPACCI, GENERAL MANAGER, ALASKA MARINE HIGHWAY
SYSTEM, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES
provided information on SB 288. He clarified that the
Authority will be responsible for maintenance and care of
the facility. There are three state employees associated
with the Hollis terminal. Two would be eliminated with the
transfer of responsibilities to the Authority. One employee
would remain to maintain the Craig reservation office and
handle through traffic reservations throughout the system.
Co-Chair Therriault noted that there would be a $141
thousand dollars savings to the state that would begin in
the year 2002.
Representative Foster MOVED to report SB 288 out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
SB 288 was REPORTED out of Committee with a "do pass"
recommendation and with a fiscal impact note by the
Department of Transportation and Public Facilities,
published 3/24/00.
HOUSE BILL NO. 121
"An Act relating to patients' rights under a health
care insurance plan or contract providing coverage for
dental care, and prohibiting certain practices by
health care insurers relating to dental care."
Representative Con Bunde, Sponsor spoke in support of HB
121. He noted that the legislation no longer prohibits
insurers from reimbursing a covered person at a different
rate because of the person's choice of dentist. He observed
that the legislation was introduced to aid dentists to serve
their patients effectively. He maintained that the House
Labor and Commerce Committee version is supported by the
parties impacted by the legislation. The legislation
supports consumers by allowing them the right to receive
full information regarding their care options without
fearing adverse actions from insurance companies. The bill
also allows patients to take civil action against health
care insurers to enforce their rights and requires a dental
treatment plan review or utilization review to be conducted
by a dentist.
PATTI SWENSON, STAFF, REPRESENTATIVE BUNDE provided
information on the legislation. She noted that the
legislation was amended in the House Labor and Commerce
Committee on page 2, line 8 - 13 to allow individuals to use
a dentist outside of the dental preferred provider
organization. The language was added to satisfy union
opposition to the bill.
In response to a question by Representative Phillips, Ms.
Swenson stated that the legislation would apply anywhere
there is a dental preferred provider organization.
Representative J. Davies asked for more information
regarding arbitration.
Ms. Swenson explained that insurance companies have a formal
system of arbitration. The arbitration is to be a final
agreement. If the parties do not agree a civil action can
take place. Representative Bunde added that the arbitrator's
decision is the end of the process. Patients can go on to
sue.
Representative J. Davies expressed concern that there be a
time limit to the arbitration. He asked if arbitrators must
act in a specified time period. Ms. Swenson did not know if
a time limit exists, but stressed that it would cost the
insurance company to continue the arbitration.
DAVID LOGAN, DENTIST, JUNEAU spoke in support of the
legislation as an advocate for patients. He pointed out that
dentists do not receive an economic benefit from the
legislation. Each company has a different arbitration plan.
Most plans do not have a time specification. He pointed out
that patients would have rights with the Insurance
Commission to expedite the process.
Representative Foster MOVED to report CSHB 121 (L&C) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 121 (L&C) was REPORTED out of Committee with "no
recommendation" and a zero fiscal note by the Department of
Community and Economic Development and a zero fiscal note by
the Department of Administration, both published on 4/14/00.
HOUSE BILL NO. 311
"An Act eliminating a requirement that a social
security number be provided by an applicant for a
hunting or sport fishing license or tag."
REPRESENTATIVE JOHN COGHILL, SPONSOR testified in support o
HB 311. The legislation would repeal the requirement to
provide a social security number on hunting or sport fishing
licenses or tags. He observed that there is a larger issue
regarding the use of social security numbers for
identification. He observed that federal law requires the
use of social security numbers for a number of documents
including recreational licenses. He suggested that the use
of social security numbers on hunting or sport fishing
licenses or tags is less secure than on other records such
as marriage licenses. The federal code does not specifically
identify that licenses being addressed.
Representative Coghill referred to a memorandum by Terry
Lauterbach dated March 23, 1999. Ms. Lauterbach concluded
that the legislation could jeopardize federal funds for
child enforcement. He noted that other states have
challenged the federal requirement without consequences. He
observed that "recreational license " is not defined in
federal code. He suggested that the federal requirement
could be challenged on the basis of security. Recreational
licenses are sold in a number of businesses in the state of
Alaska. He observed that the effective date would be January
1, 2001. He maintained that it would be easier to obtain
social security numbers from hunting and fishing licenses
than from a marriage or driver's license.
Co-Chair Therriault observed that cases of stolen identity
have occurred through the use of social security numbers. It
can be difficult and expensive to straighten out cases of
stolen identity.
Representative J. Davies observed that social security
numbers were added on hunting and fishing licenses when
state welfare reform legislation was updated to comply with
federal code. He expressed concern that overturning the
federal requirement would create difficulty.
Co-Chair Therriault observed that the original legislation,
which was passed, to come into compliance had a sunset date.
(TAPE CHANGE, HFC 00 - 121, SIDE 2)
Co-Chair Therriault noted that states that have not included
hunting and fishing licenses did not lose funds.
Representative Coghill spoke in support of the legislation.
He noted that the whole issue has to be revisited in the
next year under the current statute. He maintained that a
challenge to the federal requirement is worthy and
necessary.
Vice Chair Bunde stated that he knows someone who had his or
her identity stolen through his or her social security
number. He observed that the person's credit was negatively
impacted for five years. While he acknowledged the problem
he expressed concern that the legislation is "like plugging
a hole in a dike." He suggested that it is easy to obtain
social security numbers in a variety a ways. He stated that
he would support the proposal if it wouldn't result in the
loss of federal funds. He added that social security numbers
on hunting and fishing licenses has assisted child support
enforcement.
Representative Austerman observed that there is a bigger
long-term issue. He referred to the memorandum by Ms.
Lauterbach and noted that funds could be affected.
Representative Coghill acknowledged that the legislation
would not resolve the greater problem [of identity theft]
but emphasized that the dialog needs to be started. He
maintained that the challenge is worthy and pointed out that
there is a security issue.
Representative Coghill maintained that the legislation would
be a vote of confidence in the people of Alaska. He stressed
that the federal government would assume that the state of
Alaska is willing to incorporate the information without a
challenge.
Representative Phillips questioned the impact to the state.
She observed that the Department of Fish and Game would have
costs associated with changing forms. She stressed that
there is no way to assure safety in this day and age of
technology.
Representative Coghill observed that the effective date was
chosen to allow the department to print forms for the
following year without additional cost.
In response to a question by Representative Austerman,
Representative Coghill pointed out that inclusion of the
social security number is mandatory.
Representative J. Davies acknowledged that identity theft is
a problem, but did not think the legislation was the way to
solve the problem. He observed that there are businesses
that will research a person's social security number and
other financial information for $35 dollars. He expressed
concern that TANF and other federal funds could be lost. He
observed that other states have begun challenges and
recommended that the state of Alaska wait to see where the
challenges go or at least get an opinion from the Attorney
General.
DENNY KAY WEATHERS, ANCHORAGE testified via teleconference
in support of the legislation. She observed that her son
lost a piece of identification that was found and used to
run up phone charges. She does not have a social security
number and is not employed. She pointed out that a social
security number is only required for employment by the
federal government, however the state of Alaska requires
social security numbers (SSN) for hunting and fishing
licenses. She stressed that non-residents are not required
to have a social security number. She provided members with
CRS Report for Congress, November 21, 1991, The Social
Security Number: Chronology of Federal Developments
Affecting Its Use (copy on file). She reviewed the report.
The federal Tax Reform Act of 1976 authorizes states to use
Social security numbers in administration of any tax,
general public assistance, driver's license or motor vehicle
registration law and to require individuals affected by such
laws to furnish their SSNs to the states. In addition,
states are permitted to use Social security numbers for
requests for information from any agency operating pursuant
to the Aid to Families with Dependent Children program and
the Child Support and Establishment of Paternity program.
The Commercial Motor Vehicle Safety Act of 1986 gave the
secretary of Transportation authority to require that states
to include a SSN on commercial vehicle licenses.
Ms. Weathers stressed that SSN information was intended to
be confidential. She observed that SSNs are required for
commercial fishing permits. Fishing tenders come from all
over. Commercial fishermen are required to give their SSN
and name to fish tenders.
Ms. Weathers continued support for a challenge to the
federal requirement to include social security numbers. She
observed that other states are challenging the federal
mandate for inclusion of Social security numbers. She
observed that there are challenges in the states of Idaho,
New Mexico, Michigan, Montana and North Carolina. She added
that some individuals do not give their Social security
numbers on religious basis. She concluded that section 3 of
the Statehood Act states that anything repugnant to the
United States Constitution or the principals of the
Declaration of Independence would be unlawful. She concluded
that allowing the federal government to legislate for the
state is against these principals. She maintained that there
are no federal laws requiring social security numbers, only
federal mandates.
Ms. Weathers quoted Article I, Section 2 state of Alaska
Constitution: "All political power is inherent in the
people. All government originates with the people, is
founded upon their will only, and is instituted solely for
the good of the people as a whole." She urged the
legislature to uphold the people's right to not have a
social security number.
LARRY PERSILY, DEPUTY COMMISSIONER, DEPARTMENT OF REVENUE
testified in opposition to HB 311. He observed that the
Child Support Enforcement Division statutes sunset in the
next year. He stressed that there is legislation in Congress
to overturn requirements for SSN on hunting and fishing and
recreational licenses. He suggested that a resolution could
be passed requesting Congress to overturn the requirement.
He acknowledged that there are some individual states
fighting the requirement. Indications are that the federal
government will penalize states that do not enforce federal
requirements and that they will loss their federal funds for
child support and TANF. He pointed out that there were
options to avoid vendors from seeing SSNs. Applicants can go
to a Fish and Game office or apply by mail. If someone does
not have a SSN they can fill out an affidavit and attach it
to their application. He observed that the Child Support
Enforcement Division cannot suspend a recreational license.
Only those convicted of criminal non-support or contempt can
loose their license. Personal uses and subsistence uses are
unaffected.
Co-Chair Therriault noted that the zero fiscal note shows
the potential loss of revenue.
Co-Chair Mulder MOVED to report CSHB (JUD) out of Committee
with the accompanying fiscal note. There being NO OBJECTION,
it was so ordered.
CSHB 311 (JUD) was REPORTED out of Committee with "no
recommendation" and a fiscal impact note by the Department
of Revenue, published 4/10/00.
HOUSE BILL NO. 281
"An Act providing for the issuance of general
obligation bonds in the amount of $665,000,000 for the
purposes of paying the cost of design, construction,
and renovation of public elementary and secondary
schools, renovation of state buildings, capital
improvements at the University of Alaska, and capital
improvements to state harbors; and providing for an
effective date."
Co-Chair Mulder explained that HB 281 contains the school-
construction package. Members were provided with a proposed
committee substitute, work draft 1-LS1201\V, 4/15/00 and a
spreadsheet listing schools that would be included (copies
on file). Schools, the university and ports and harbors
would receive funding. The total cost of the package would
be $269,595.8 million dollars and tobacco bond revenues
would fund the legislation. He observed that: "It is the
intent of the legislature that the sale of a portion of the
revenue derived from tobacco settlement litigation described
under sec. 3(a) of this Act result in funding of $1,400,000
annually for smoking education and cessation programs
administered by the state."
In response to a question by Co-Chair Therriault, Co-Chair
Mulder clarified that the student housing identified in the
legislation would be at the Alaska Vocational Technical
Center in Seward. There is a piece of property that is
across the street that would be used to build additional
housing.
Co-Chair Therriault asked for more information regarding the
University of Alaska, Mat-Su Ortner building replacement.
WENDY REDMAN, VICE PRESIDENT, STATEWIDE PROGRAMS, UNIVERSITY
OF ALASKA explained that the Mat-Su Ortner building
replacement has been on the University of Alaska's capital
list for many years. She observed that the facility would be
for the maintenance shop. They are currently using a
classroom. It is high on the Board of Regent's priority
list.
Ms. Redman noted that the definition under the projects
should be broader than "deferred maintenance". She observed
that "deferred maintenance/renewal and replacement/ code
compliance" has been used in the past. She suggested that
the legislation be amended on page 5, lines 16, 21, and 24
to include the broader definition.
Vice Chair Bunde noted that "construction and renovation" is
used on line 12. Ms. Redman noted that the terms were not
used in the budgeting process.
Vice Chair Bunde referred to page 2, section 1. He observed
that funding would not be reduced below $1.4 million
dollars. He questioned if the language should be more
flexible to allow additional money to be appropriated if
there is a surplus. Co-Chair Therriault stressed that the
legislature could appropriate additional money and agreed
that the language could be clarified.
Representative Phillips recommended that "GO" be replaced
with "revenue" bonds.
Representative Williams asked how many projects could be
completed with the tobacco securitization. Co-Chair
Therriault responded that $269 million dollars is the total
amount. Co-Chair Mulder explained that a higher amount could
increase the cost of the bonds from 6.5 to 7 percent or
higher. Representative Williams recommended that the state
use as much as possible. Co-Chair Mulder stressed that the
settlement would continue in perpetuity, if the bonds
proceeds are realized in the level that is anticipated that
they would be retired in 20 years and the MSA could be
leveraged again. If there are problems in realizing the
income stream as established in the MSA then risk is born by
the holders of the bonds. There is a potential to be
extended to 40 years.
Co-Chair Therriault reviewed questions that arose during the
meeting.
(TAPE CHANGE, HFC 00 - 122, SIDE 1)
Co-Chair Mulder requested that the legislation be held to
further review the suggestions.
HB 281 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was recessed at 10:55 a.m.
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