Legislature(2003 - 2004)
04/16/2003 01:46 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, 2003
1:46 PM
TAPE HFC 03 - 59, Side A
TAPE HFC 03 - 59, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 1:46 PM.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Richard Foster
Representative Mike Hawker
Representative Carl Moses
Representative Bill Stoltze
Representative Jim Whitaker
MEMBERS ABSENT
Representative Reggie Joule
ALSO PRESENT
Representative Berkowitz; Tom Wright, Staff, Representative
John Harris; Leitoni Tupou, Special Assistant, Department of
Corrections; Larry Jones, Executive Director, Parole Board,
Department of Corrections; Johanna Bales, Tax Auditor,
Department of Revenue; Mike Barnhill, Assistant Attorney
General, Department of Law.
PRESENT VIA TELECONFERENCE
John Robertson, Medical Director, Department of Corrections.
SUMMARY
HB 224 "An Act relating to a tobacco product
manufacturer's compliance with certain statutory
requirements regarding cigarette sales; and
providing for an effective date."
HB 224 was REPORTED out of Committee with a "do
pass" recommendation and two previously published
zero fiscal notes, #1 from the Department of Law
and #2 from the Department of Revenue.
HB 229 "An Act relating to special medical parole and to
prisoners who are severely medically and
cognitively disabled."
CSHB 229 (FIN) was HEARD and HELD for further
consideration.
HOUSE BILL NO. 224
"An Act relating to a tobacco product manufacturer's
compliance with certain statutory requirements
regarding cigarette sales; and providing for an
effective date."
MIKE BARNHILL, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, testified in support of the bill and provided
information about the legislation. He referred to the
Master Settlement Agreement, initiated in Alaska and 45
other states as a result of the 1998 settlement of tobacco
company litigation. The Master Settlement Agreement
established a stream of revenue that lasts in perpetuity.
He noted that Alaska's most recent annual payment was for
$17.5 million.
Mr. Barnhill stated that the revenue stream could however be
reduced under certain circumstances. He noted that one
circumstance was known as a non-participating manufacturer
(NPM) adjustment. He explained that states could avoid an
NPM adjustment in two ways: first, by enacting an NPM
statute, and second, by diligently enforcing the statute.
He referenced Alaska's NPM statute, located in AS 45.53. He
explained that the statute creates economic equanimity under
the Settlement Agreement between participating and non-
participating manufacturers. He pointed out that
participating manufacturers fund the Settlement Agreement
revenue stream by raising the prices of cigarettes. He
stated that the NPM statute requires non-participating
manufacturers to deposit money into an escrow account based
on cigarette sales in the state. He noted that in FY 01 and
02, the amount deposited equaled 1.5 cents per sale.
Mr. Barnhill also addressed the enforcement of the statute.
He noted that the Department of Revenue sends letters to
non-participating manufacturers advising them of their legal
obligations. If compliance does not occur after several
letters, the manufacturers are referred to the Department of
Law, and a lawsuit may be filed if the sales are
significant. He pointed out the case of a company in India
that did not comply, resulting in a lawsuit filed by the
state of Alaska. He discussed the difficulties of filing an
international lawsuit, and noted that in 2001 Alaska, along
with the state of Maine, passed complimentary legislation
designed to enhance the states' ability to enforce their
escrow laws. He added that in 2002, the National
Association of Attorneys General formed a working group to
design model statutes and encourage uniformity between
states. He stated that the proposed legislation, HB 224,
resulted from this working group.
Mr. Barnhill explained that the statute establishes a list,
developed by the Department of Revenue, of the manufacturers
and brands of cigarettes allowed for sale in the state of
Alaska. He noted that to be on the list, a manufacturer
must do one of two things: either certify annually that
they are a participating manufacturer under the Settlement
Agreement, or a non-participating manufacturer in compliance
with state law. A distributor may refer to the list and
determine which brands they may sell. He noted that the
legislation also provides for provision of information by
manufacturers in order to monitor compliance. It also
provides penalties for non-compliance, and addresses special
conditions for foreign manufacturer enforcement. He added
that the bill provides a tax credit for distributors who
purchase a brand of cigarettes that are later taken off the
list for non-compliance.
Representative Stoltze asked for information about statutes
exempting tribal entities from paying taxes on cigarette
sales. Mr. Barnhill referred to national research
investigating Internet sites selling tax-free cigarettes.
Representative Stoltze referred to the sale of tax-free
tobacco on reservations.
JOHANNA D. BALES, TAX AUDITOR, DEPARTMENT OF REVENUE noted
that she coordinates the cigarette and tobacco products
excise tax program. She referred to the passage of the
Native Claims Settlement Act in 1977, and its establishment
of corporation status for every tribe in the state of
Alaska. She noted that the only tribe with a reservation
status was the Metlakatla Indian Community, making them the
only native tribe in the state that can purchase cigarettes
without paying tax. She noted that the Department of
Revenue had negotiated with the tribe and reached an
agreement, whereby the tribe will collect and pay state
taxes if their purchase of tobacco products exceeds a
certain amount. She added that the Klawock Indian Community
maintained 2.5 acres of Indian Country Land, which includes
a smoke shop where they can sell cigarettes without paying
tax. She concluded that Alaska differed from others states
in this issue, and did not experience the same difficulties.
In response to a question by Representative Meyer, Mr.
Barnhill clarified that the zero impact fiscal notes were a
result of existing complimentary legislation. He added that
the proposed legislation simply updates current procedures
and makes enforcement easier.
Vice-Chair Meyer asked if there was legislation considering
placing a stamp on cigarettes to indicate its place of
purchase. Mr. Barnhill noted that SB 168-CIGARETTE
SALE/DISTRIBUTION ["An Act relating to . . . payment of
cigarette taxes through the use of cigarette tax stamps; . .
."] did propose this action.
Representative Foster MOVED to report HB 224 out of
Committee with individual recommendations and accompanying
fiscal notes. There being NO OBJECTION it was so ordered.
HB 224 was REPORTED out of Committee with a "do pass"
recommendation and two previously published zero fiscal
notes, #1 from the Department of Law and #2 from the
Department of Revenue.
HOUSE BILL NO. 229
"An Act relating to special medical parole and to
prisoners who are severely medically and cognitively
disabled."
Representative Harris stated that the legislation was a
House Finance Committee bill, sponsored by his office. He
noted that the legislation related to medical leave for
disabled inmates.
TOM WRIGHT, STAFF, REPRESENTATIVE JOHN HARRIS, SPONSOR
provided information about the bill. He explained that the
bill gave the Board of Parole the ability to grant releases
to prisoners in need of extreme medical services. He noted
that the likelihood of re-offending by this population was
quite low, since these inmates were infirmed and in need of
extensive medical assistance. He also noted that released
prisoners then became eligible for medical benefits such as
Medicaid and Veteran's benefits not available to them while
interned. He added that the price of providing health
services to inmates was substantially higher than the cost
of services available in other states or public facilities.
Mr. Wright referred to the fiscal notes: one from the
Department of Corrections, reflecting a savings of $500
thousand; one from the Division of Public Assistance [DHSS]
totaling a cost of $39.1 thousand [for FY 04]; and one from
the Division of Medical Assistance [DHSS] totaling a cost of
$344.4 thousand, $137.8 thousand of which is a General Fund
match.
LARRY JONES, EXECUTIVE DIRECTOR, PAROLE BOARD, DEPARTMENT OF
CORRECTIONS testified in support of the legislation. He
identified the current statute as the primary mechanism
through which consideration was given to these disabled
inmates. He stated that the Board had been frustrated in
its efforts to consider such prisoners for parole, and noted
that since 1996 only 14 inmates had been eligible for
consideration for release.
Mr. Jones observed that the proposed legislation opened
certain statutory definitions, allowing more prisoners to
receive review before the Parole Board. He maintained that
the public safety factor was very minimal, since these
inmates were at the end stages of their lives. He pointed
out that such disabled inmates often died soon after their
release. He contended that out of the hundreds of
discretionary paroles granted by the Board each year, these
persons released for medical reasons were highly unlikely to
recidivate. He stated that the Board had recently
promulgated its regulations assuring notification of victims
in the cases of these releases. He also discussed the
hardship experienced by families of terminally ill inmates
and pointed out the benefits to them from the bill. He
reiterated the Board of Parole's support of the legislation.
JOHN ROBERTSON, MEDICAL DIRECTOR, DEPARTMENT OF CORRECTIONS,
testified via teleconference in support of the legislation.
He noted that there was an increasing population of inmates
with terminal illness, particularly those over fifty. He
cited the poor medical care that inmates may have received
prior to internment. He stated that their current
population had over 400 prisoners over the age of fifty in
need of medical assistance. He pointed out that a number of
resources became available to inmates once they were no
longer under the Department of Corrections.
Mr. Robertson also noted the great expense to the state of
Alaska of providing a correctional officer in the community
if an inmate is onsite at a hospital or clinic while still
under the full jurisdiction of the corrections system. He
estimated an expense of $36 an hour for such officers. He
also noted that an average inmate might cost $300 thousand
annually just for correctional officer expense. He added
the example of inmates who had family members in areas of
the country with up to 40 percent lower medical costs. He
reiterated that the inmates in question generally died
within six months of their discharge. He noted that these
inmates were not in a physical condition where they might
re-offend, requiring assistance simply for daily living
activities. He pointed out that inmates would have a
detailed discharge plan, outlining their place and type of
care and follow-up by parole officers.
Vice-Chair Meyer observed that the bill would also
potentially pertain to violent offenders. He raised concern
for the victims' participation in the parole process. Mr.
Barnhill clarified that victims could actually attend parole
hearings in the case of special medical parole. He noted
that the bill pertained to all prisoners under the
jurisdiction of the state of Alaska, even those in
facilities located in Arizona.
LEITONI TUPOU, SPECIAL ASSISTANT, DEPARTMENT OF CORRECTIONS,
in response to a question by Vice-Chair Meyer, confirmed
that the fiscal note reflected the cost of transporting
prisoners back to the state of Alaska from the Arizona
facility.
Vice-Chair Meyer referred to the fiscal notes and compared
the $500 decrement in the Governor's budget to the $403
thousand General Fund match listed in the fiscal note
[Medical Assistance/DHSS] for FY 08, and the ongoing $78
thousand General Fund match. He observed that by the year
2007 and 2008, the bill ceased to generate a savings. Mr.
Wright responded that the fiscal note was based on the
assumption that inmates receiving medical parole who were
then eligible for Medicaid would receive that service. He
pointed out that prisoners might participate in other health
benefits, such as native health organization benefits, or
family provided health benefits. He noted discussions with
the Department of Health and Social Services regarding the
assumption that prisoners eligible for Medicaid services
would participate in that program.
Mr. Robertson added that the average prognosis of these
inmates was three to six months. He maintained that the
fiscal assumptions were based on longevity of several years.
He indicated that fewer inmates would become eligible for
Medicaid based on their prognoses. He also speculated that
the medical cost index savings would exceed $500 thousand
annually. He pointed out that the medical cost index was
predicted to increase in the coming year by ten percent.
Mr. Jones confirmed that the average life expectancy for
these inmates historically did not exceed six months, more
likely less than three months.
Vice-Chair Meyer raised concern for the strong feelings of
victims of violent crimes, particularly in cases of sexual
assault, about the fate of their assailants. Mr. Jones
acknowledged that these victims' rights were highly valued
by the Board of Parole. He also noted that many of the
inmates had not committed violent crimes. He pointed out
that many of them were older patients, and many were not
ambulatory, reducing the concern over re-offence.
In response to a question by Vice-Chair Meyer, Mr. Jones
noted that the average birth years for these prisoners were
between 1940 and 1950.
Representative Stoltze noted Section 2, line 17, and
referred to language making information about the prisoner's
employment and residence addresses unavailable to victims.
Mr. Jones noted that this resulted from statutory cautions
surrounding discretionary paroles.
Representative Stoltze proposed that the language be changed
from "may not" include to read, "shall" include. He
maintained that victims had the right to know such
information about the released inmates.
Representative Hawker noted the absence of information from
victims' rights advocacy groups expressing their position on
the legislation. Mr. Jones noted that one individual from a
victims' rights organization in Anchorage had testified via
teleconference at the [House] State Affairs Committee
hearing. He observed that their testimony was not entirely
negative, and recognized the Board of Parole's strong
advocacy for victims' rights.
Representative Hawker observed that the treatment programs
for these inmates were extremely expensive, with an
aggregate cost to the State of $1.1 million per year. He
suggested that communities and other services might not
support these same costs. He pointed out that Medicaid
might be expected to support them, in addition to public
assistance for living costs. He asked how those costs that
exceeded such benefits might be financed.
Mr. Robertson referred to instances when inmates traveled to
family members in another state and the bulk of the cost for
their care had been borne by the family. He also noted that
some inmates might choose home or end of life care, as
opposed to intensive care. He speculated that inmates often
opted for intensive care while incarcerated for fear of
dying within the correction system. He discussed the effect
th
of the 8 Amendment rights of inmates in determining the
standard of medical care. He added that the difficulty was
in determining the extent of care needed after the inmates
were released. He noted that the state of Alaska paid a
higher rate of reimbursement than Medicaid, which was not
available to inmates while in the Department of Corrections.
He reiterated that the cost of correction officers
represented a substantial savings not included in the fiscal
notes.
Representative Hawker questioned whether the fiscal note
from the [Department of Health and Social Services] was
incorrect if it did not include the figures pertaining to
correction officers. He suggested that the fiscal notes
were not adequately accurate or thorough.
JERRY BURNETT, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT
OF CORRECTIONS conceded that the zero savings in future
years was an estimate, since they could not accurately
predict how many inmates might be released from year to
year. He suggested that the fiscal note might be
indeterminate rather than zero.
Representative Hawker maintained that, given the
undetermined amounts in the fiscal note, the bill might
actually represent an aggregate cost to the state of Alaska
rather than a savings.
Co-Chair Harris stated that the fiscal note reflected a
projected savings to the Department of $500 thousand based
upon the release of the current number of potentially
eligible inmates. He maintained that the question was which
agencies would then assume the costs and services for the
released inmates. He speculated that some inmates might not
present any cost to the state, if families assumed the cost
of their care. He suggested that the Department of
Corrections could have estimated the future costs, as did
the Department of Health and Social Services. He
acknowledged that the focus would be on FY 04, since one
could not accurately predict potential savings or costs in
future years without knowing the number of paroled inmates.
TAPE HFC 03 - 59, Side B
Mr. Burnett suggested that if his Department projected
savings in future years, and budgeted based on those
savings, and if medical costs were to increase, this would
cause a budgetary problem. He explained that this was the
reason for not including projected savings in the fiscal
note.
Co-Chair Harris observed that the projected future costs did
seem to offset potential savings. He pointed out, however,
that the bill effectively gave the Parole Board the ability
to grant medical leave to a prisoner that they determined
presents no hazard to the public, due to their extreme
disability. He maintained that this presented a lesser
difficulty and lesser cost than providing care to these
inmates within the correctional system.
Representative Croft suggested that since the only
justification for the possible risk associated with the
legislation was cost savings, it behooved the Committee to
review accurate fiscal notes. He proposed that, even though
these were cost estimates, the Department of Corrections and
the Department of Health and Social Services communicate
with one another and use similar bases for their
projections.
Co-Chair Harris asked if the Department of Corrections could
estimate costs similarly to the Department of Health and
Social Services. Mr. Burnett speculated that these
calculations would be based upon FY 04 assumptions,
projected out using the medical rate of inflation. He
stated that the Department could provide such a fiscal note.
Co-Chair Harris estimated that the first year of savings
would total approximately $330 thousand of general funds.
Mr. Burnett confirmed that the amount would then increase by
ten percent per year. He agreed to produce such a fiscal
note.
Representative Hawker referred to a savings in the first
year of roughly $500 thousand, based on 13 inmates
identified as potential medical parolees. He asked whether
this number of potential parolees regenerated from year to
year. Mr. Tupou reiterated that, over the past seven years,
the Board reviewed only 14 inmates for medical parole. He
explained that current law effectively forced inmates to
wait until nearly the point of death before coming before
the Board. He noted that the proposed legislation gave the
Board more flexibility in when they could review
applications for medical parole.
Mr. Robertson maintained that the issue was not about the
number of potential parolees, but rather about the types of
illnesses that require expensive treatment. He expressed
confidence in the potential savings of $500 thousand. He
suggested that with the increasing prison population, there
was not a question of whether savings would be realized each
year, but that the amount of savings would depend on the
illnesses and cost of care and not the number of inmates.
Representative Croft MOVED Amendment #1:
Page 2, line 14, after "because of the prisoner's":
INSERT "severe"
Page 2, line 21, after "suffering from the":
INSERT "severe"
Page 2, line 24, after "suffering from the":
INSERT "severe"
Page 3, line 3 after "likely to remain subject to the":
INSERT "severe"
Page 3, line 25, after "subject to the":
INSERT "severe"
Co-Chair Harris OBJECTED.
Representative Croft pointed out that there was
inconsistency in referring to the level of disability. Co-
Chair Harris REMOVED his OBJECTION.
There being NO OBJECTION the amendment was ADOPTED.
Representative Croft MOVED Amendment #2.
Page 2, DELETE line 11.
Page 3, line 21:
DELETE: "reduces"
INSERT: "eliminates"
Co-Chair Harris OBJECTED.
Representative Croft noted his discomfort with the level of
risk associated with repeat offenses. He asked for more
information from the Department regarding this concern.
Mr. Jones contended that the weight of the decision,
although subjective, was placed on the board. He explained
that the board's standard was "reduces" since "eliminates"
constituted death of the inmate.
Representative Croft referred to Section 1, stating "the
prisoner is incapacitated to an extent that incarceration
does not impose additional restrictions . . . " He asked
for clarification as to the citation of criteria for the
likelihood of reoffense. Mr. Jones cited Section 1,
subsection 2, (A) "the prisoner will live and remain at
liberty without violating any laws or conditions imposed by
the board; and (B) "because of the prisoner's severe medical
or cognitive disability, the prisoner will not pose a threat
of harm to the public if released on parole;".
Representative Croft noted that this language was prefaced
by: "a reasonable probability exists" that the prisoner does
not pose a threat of harm.
Mr. Robertson noted that the initial review of these
prisoners was first done at the medical level. He noted
that they would not recommend prisoners for medical parole
who had any reasonable probability for repeat offense. He
conceded that these estimates were not infallible. He gave
the example of a prisoner who had Lou Gerrig's disease,
which prevented them moving from their bed. He maintained
that the risk of such an individual re-offending was only
one percent, although they were not eligible for medical
parole since they did not fit specific criteria. He
suggested that in terms of language, it would be difficult
to draw the terms at 100 percent certainty.
Representative Croft WITHDREW the amendment. He expressed
his view, however, that the bill still contained too vague a
definition of allowable potential risk.
Representative Stoltze MOVED Amendment #3.
Page 3, line 17-18
DELETE: "However the copy of the application sent to
the victim may not include the prisoner's proposed
residence and employment addresses."
REPLACE with: "The copy of the application sent to the
victim shall include the prisoner's proposed residence
and employment addresses."
Mr. Tupou stated that the Department of Corrections had no
objection to the language change.
Co-Chair Harris asked why the language of "may not include"
was originally included in statute. Mr. Jones speculated
that victims' rights rose to the forefront in the late
nineties after this statute was written. He stated that the
Board had no objection to the language change.
Vice-Chair Meyer observed that if the inmate released was a
sex offender, their address would be made public in any
case. He stated his support of the amendment.
Co-Chair Williams WITHDREW his objection.
There being NO OBJECTION the amendment was ADOPTED.
CSHB 229 (FIN) was HEARD and HELD for further consideration.
ADJOURNMENT
The meeting was adjourned at 2:57 PM
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