Legislature(2019 - 2020)ADAMS 519
03/23/2020 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB55 | |
| SB172 | |
| SB115 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 115 | TELECONFERENCED | |
| += | SB 55 | TELECONFERENCED | |
| += | SB 172 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 23, 2020
1:38 p.m.
1:38:50 PM
CALL TO ORDER
Co-Chair Johnston called the House Finance Committee
meeting to order at 1:35 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Kris Curtis, Legislative Auditor, Alaska Division of
Legislative Audit; Erin Shine, Staff, Representative
Jennifer Johnston; Dan Stickel, Chief Economist, Economic
Research Group, Tax Division, Department of Revenue.
PRESENT VIA TELECONFERENCE
Sara Chambers, Director, Division of Corporations, Business
and Professional Licensing, Department of Commerce,
Community and Economic Development; Richard Wein, Chair,
Alaska Medical Board, Sitka.
SUMMARY
CSSB 55(2nd JUD)
APPOINTMENTS TO COURT OF APPEALS
CSSB 55(2d JUD) was REPORTED out of committee
with a "do pass" recommendation and with one
previously published fiscal impact note: FN2
(AJS).
CSSB 115(FIN)(efd fld)
MOTOR FUEL TAX; EV REG. FEE
CSSB 115(FIN) was REPORTED out of committee with
seven "do pass" recommendations, two "do not
pass" recommendations, and two "no
recommendation" recommendations and with one new
indeterminate note from the Department of
Revenue, one new zero note from the Department of
Transportation and Public Facilities and one
previously published fiscal impact note: FN2
(ADM).
CSSB 172(L&C)
EXTENDING THE STATE MEDICAL BOARD; AUDIT
CSSB 172(L&C) was REPORTED out of committee with
a "do pass" recommendation and with one
previously published fiscal impact note: FN2
(CED).
Co-Chair Johnston reviewed the agenda for the meeting.
CS FOR SENATE BILL NO. 55(2d JUD)
"An Act relating to judges of the court of appeals;
and providing for an effective date."
1:39:35 PM
Co-Chair Johnston asked if there was any committee
discussion.
Co-Chair Foster MOVED to REPORT CSSB 55(2d JUD) out of
committee with individual recommendations and the
accompanying fiscal note.
CSSB 55(2d JUD) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN2 (AJS).
CS FOR SENATE BILL NO. 172(L&C)
"An Act extending the termination date of the State
Medical Board; requiring a report on the State Medical
Board's audit compliance; and providing for an
effective date."
1:40:22 PM
Co-Chair Johnston asked the Department of Commerce,
Community and Economic Development (DCCED) to review the
fiscal note.
SARA CHAMBERS, DIRECTOR, DIVISION OF CORPORATIONS, BUSINESS
AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE,
COMMUNITY AND ECONOMIC DEVELOPMENT (via teleconference),
reviewed the fiscal note for the bill. The fiscal note
recognized that the State Medical Board was set to sunset.
The amount included covered board operations only. She
explained that if the board sunset, the amount would not be
continued in the budget. She explained that the amount
would need to be reauthorized, which the bill would do. She
elaborated that the licensing for medical professions was
not included because if the board sunset, the department
would take over the responsibility for licensing, which
would be a different fiscal note.
1:41:58 PM
Representative Sullivan-Leonard requested to hear from the
legislative auditor. First, she addressed a question to the
department. She had concern about the board extension in
light of its noncompliance with a statute from 2017
regarding the prescription database. She asked why the
challenge with noncompliance was taking place.
Ms. Chambers replied that DCCED also had some concerns,
which was part of the reason why the governor had appointed
new board members and why there was a new executive
administrator for the program. She understood that the
board had expressed some misunderstandings and
misconceptions over certain aspects in the audit findings.
The department was committed to moving the board forward
quickly to get into compliance with the PDMP [Prescription
Drug Monitoring Program]. There were related issues the
department had been working on with Representative
Josephson's office that could come up at another time that
could strengthen the PDMP. She elaborated that concerns
included a lack of funding for the PDMP; however, the
issues were outside of the medical board's purview to
ensure providers required to register were registered. The
department had addressed the issues and the new iteration
of the board and DCCED staff were committed to staying on
top of the issue. She believed the new board chair
Dr. Wein was available online and could also address the
topic.
1:44:16 PM
Representative Sullivan-Leonard directed a question to the
legislative auditor. She noted that Ms. Curtis had
[previously] provided a good overview of the audit. She
asked if it would be prudent to extend the board one year
instead of five. She was interested in seeing the board
show its compliance with statute. She wondered if there had
been any discussion on the idea.
KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF
LEGISLATIVE AUDIT, answered that the concerns had been
raised in the Senate Labor and Commerce Committee. She
reported that the bill had been amended to include
uncodified law to have the Division of Legislative Audit
provide an updated status of the prior audit findings the
following year in order to check on compliance. The bill
allowed for a full sunset review in three years.
Additionally, the division would review the Board of
Pharmacy that had a sunset audit within the next two years.
The division would be reviewing compliance for the [PDMP]
database over all occupations.
Representative Sullivan-Leonard thought if there was not
enough pressure for the board to be compliant that it may
just continue what it is doing. She asked if Ms. Curtis
felt confident there was enough fortitude within the new
board to get into full compliance.
Ms. Curtis responded that she could not comment on the new
board as it had not been part of the audit. She could not
comment on whether there was fortitude amongst the board
members to take action. She believed the board was paying
attention to the audit findings based on testimony in other
committee hearings. The board had stated on the record that
it planned to take action.
Co-Chair Johnston added that Dr. Wein, a new member on the
board, was available online.
1:46:28 PM
Representative Sullivan-Leonard had concern about the board
moving forward to a five-year extension, especially due to
the restructuring of the board and past noncompliance with
the PDMP database passed in statute in 2017. She understood
there were some changes going forward. She asked for
assurance that the board and physicians in Alaska would be
in full compliance.
RICHARD WEIN, CHAIR, ALASKA MEDICAL BOARD, SITKA (via
teleconference), assured the committee that the members on
the Alaska Medical Board were critically aware of the many
issues it was facing. The board looked forward to
addressing and solving the issues and moving forward. He
believed the board had the fortitude to continue the work.
He assured the committee that, as the current chair, he was
not interested in any misunderstandings and misconceptions
held by the previous board. The board would move forward
with the current team that had been very helpful getting
the completely new board up to speed. He assured the
committee the board would be on top of things, would be
fully compliant, and would be happy to update the
legislature or provide whatever it may need to allay any
concerns.
1:48:32 PM
Representative Carpenter understood there was a changeover
in the board. He asked if the department was providing the
board with everything it needed in order for the board to
"right the ship" and get it headed in the right direction.
Mr. Wein answered in the affirmative. He detailed that he
had received incredible support from the executive
administrator, the division director, and legal in his work
to understand all of the issues. He had been in contact
with the executive administrator on a daily basis and a
working group had been formed with other board chairs
including the Board of Pharmacy and Board of Nursing in
order to collaborate, find common ground, and work
together. He believed it was a new day, coupled with all of
the aspects surrounding the burden of COVID-19, including
the fast tracking of licensure, eliminating any backlog,
and ensuring the state had the capacity to meet any medical
crisis. He reported that the board had just concluded a
meeting 30 minutes earlier. He was gratified at the support
the board was receiving from the department, especially due
to the board's steep learning curve. He highlighted his
vast experience in credentialing and reviewing medical
issues and he felt confident the board could meet the
challenge.
Representative Carpenter asked if the board had been able
to establish some objectives that it felt were necessary to
meet in a given timeline. He recognized that the current
[COVID-19] crisis likely had the board's attention.
1:51:41 PM
Mr. Wein answered in the affirmative. He highlighted the
board's ability to multitask. The full board had a meeting
scheduled for the coming Thursday and it would meet, as
necessary. The formal meeting had been scheduled for May,
but due to everything going on, it was necessary to get
down to business and get it done. The board had a number of
objectives it would have to triage into order of
importance. He assured the committee that compliance was at
the top of the list.
Co-Chair Foster MOVED to REPORT CSSB 172(L&C) out of
committee with individual recommendations and the
accompanying fiscal note.
Representative Sullivan-Leonard OBJECTED.
Representative Sullivan-Leonard MOVED to AMEND the bill to
extend the board to 2021 instead of 2023 in order to see
proof of the board's compliance, especially at a time where
things were happening rapidly with COVID-19. She stressed
the importance of knowing the board could be relied on to
do what was best for the state. She did not currently have
full faith that was the case.
Co-Chair Johnston OBJECTED for discussion.
1:53:36 PM
AT EASE
1:53:58 PM
RECONVENED
Representative Sullivan-Leonard WITHDREW her first motion
and restated the motion. She moved Conceptual Amendment 1,
which would change the date from 2023 to 2021 on page 1,
line 5.
Co-Chair Johnston OBJECTED for discussion. She asked Ms.
Curtis to comment on the proposed amendment.
Ms. Curtis replied that the concern had been raised in the
Senate. She explained that in order to have a 2021 sunset
date, the division would have to start an audit
immediately. She reported that the division did not have
the staff to do that; therefore, the division would not
have the ability to provide the legislature an audit
required by statute to be considered during the sunset
process. The date was not doable from the audit
perspective. She explained that in order to address the
concern, there would be a legislative audit review within
one year to focus on the specific areas the board had not
been compliant. She elaborated that the division had
recommended a five-year extension and the Senate had
reduced it to three years. After one year, the division
would report its review findings to the legislature and the
legislature could take action at that time if desired.
1:55:40 PM
Representative Knopp opposed the amendment. He highlighted
that the board was brand new. He elaborated that all of the
deficiencies had existed with the prior board. He believed
the replacement of the entire board by the administration
was the desired action. He noted that Dr. Wein was aware of
the issues and concerns and sounded sincere in his plan to
address them. He elaborated that Dr. Wein had acknowledged
what the issues were and had relayed it was the number one
priority. He believed the review the Division of
Legislative Audit would conduct in one year was
appropriate.
Representative Josephson asked if the division could do an
audit by 2022.
Ms. Curtis replied it was doable if it was the will of the
legislature. She had pointed out the cost of audits when
discussing the issue with the Senate. She noted there were
limited resources. She elaborated that when the Legislative
Budget and Audit Committee had asked the division to
conduct performance audits, the division did so when
resources were available. She detailed that sunset audits
had a statutory due date; therefore, the division conducted
those first. The financial audit and federal compliance had
timelines and requirements. She explained that with other
available resources and on its down time, the division
would do other audits requested by the legislature to look
at specific things. She clarified that the division would
prioritize the sunset review of the medical board over
other audits if there was a statutory due date.
Representative Carpenter asked when the division's planned
review [of the State Medical Board] would be published.
Ms. Curtis answered that assuming financial and federal
compliance audits were complete on time, staff was
typically freed up in January. She elaborated that the
division could do a sample and inquiry to figure out to
what degree the board was complying. She explained that the
review could be done more quickly than an audit required to
be conducted in accordance with auditing standards. She
relayed that the medical board sunset audit had taken
approximately 500 hours at an hourly rate of about $80. She
reiterated there was a cost associated with increasing
audit activity.
Representative Carpenter asked if the review would start in
January 2021.
Ms. Curtis could not say exactly. She explained that it
depended on COVID-19. She elaborated that the division
could suddenly take much longer to do an audit working
remotely. Typically, audit staff became available in
January. She estimated that she could provide a memo-type
report to the Legislative Budget and Audit Committee by
March for consideration and release to the public.
1:58:49 PM
Representative Carpenter referenced the two previous audits
mentioned in the most recent audit that noticed problems
[with the board]. He asked how long the board had been
extended in each of the two previous audits.
Ms. Curtis answered that in the previous audit the board
had been given an eight-year extension. She did not know
about the one prior to that.
Representative Carpenter stressed the importance of nipping
the situation in the bud if there had been noncompliance
for eight years or more. He thought sounded like a report
would come to the legislature in the first quarter of the
next calendar year to show whether compliance was taking
place. He asked for the accuracy of his statements.
Ms. Curtis confirmed that the division would do a
compliance review in 2021. She detailed that the current
bill would sunset the board in 2023, which meant a full
sunset audit would be conducted in 2022. Currently, the
division was scheduled for a detailed review over the next
two years.
2:00:06 PM
Representative Sullivan-Leonard WITHDREW her conceptual
amendment. She was trying to highlight the urgency and
demand for the state medical board to be in compliance and
working on the incredible medical situations facing the
state. She looked forward to the report in the following
year.
Co-Chair Johnston asked Ms. Curtis to outline the options
that the Legislative Budget and Audit Committee had if it
found the review lacking.
Ms. Curtis believed the committee had the ability to submit
a bill at the committee level.
2:01:26 PM
There being NO further OBJECTION, it was so ordered.
CSSB 172(L&C) was REPORTED out of committee with a "do
pass" recommendation and with one previously published
fiscal impact note: FN2 (CED).
2:01:38 PM
AT EASE
2:22:01 PM
RECONVENED
CS FOR SENATE BILL NO. 115(FIN)(efd fld)
"An Act relating to vehicle registration fees; and
relating to the motor fuel tax."
2:22:07 PM
Co-Chair Foster MOVED to ADOPT the proposed committee
substitute (CS) for CSSB 115(FIN), Work Draft 31-LS0895\G
(Nauman, 3/23/20).
Co-Chair Johnston OBJECTED for discussion.
ERIN SHINE, STAFF, REPRESENTATIVE JENNIFER JOHNSTON,
reviewed the changes in the CS (version G). The CS
incorporated four amendments adopted by the committee the
previous day. Amendment 2 added new language on page 1,
lines 4 through 14 and page 2, lines 1 through 11.
Amendment 4 added new language on page 2, lines 15 through
17 as follows:
...the owner of a vehicle powered by alternative fuel
shall pay a special biennial registration fee of
$100...
Ms. Shine pointed to page 2, line 20 where the definition
of alternative fuel had been added by Amendment 4. Page 3,
Section 5, lines 19 through 21 incorporated Amendment 1.
The last change was on page 5, lines 9 and 10 included the
effective date and conforming changes. The bill specified
"Except as provided in sec. 10 of this Act, this Act takes
effect January 1, 2021." Section 10 on line 9 gave the
transition regulations an immediate effective date.
2:24:09 PM
Co-Chair Johnston asked the Department of Revenue (DOR) to
review the fiscal note.
DAN STICKEL, CHIEF ECONOMIST, ECONOMIC RESEARCH GROUP, TAX
DIVISION, DEPARTMENT OF REVENUE, relayed that DOR's fiscal
note reflected the changes made in the CS, primarily the
January 1, 2021 effective date and the increase to the
refined fuel surcharge from $0.95 per gallon to $1.50 per
gallon, which had not been included in previous versions of
the bill. The note showed an indeterminate revenue impact
for two reasons. First, the department did not have data
available to estimate the impact of the allowed refunds for
marine fuel used by vessels for commercial fishing. He
explained that under the bill, any commercial fishing
marine fuel would be allowed a refund of $0.05 per gallon,
meaning the tax would not be increased on that portion of
marine fuel. Second, it was unknown how COVID-19 may impact
fuel demand. Based on the fall revenue forecast and not
including the commercial fishing impacts, the bill would
increase revenue by $16.9 million in FY 21, $33.3 million
in FY 22, decreasing to $31 million in FY 26. He clarified
the amounts pertained only to the motor fuel tax increase
portion. There would be an additional increase for the
refined fuel surcharge component of $1.8 million in FY 21,
$3.5 million in FY 22, decreasing to $3.3 million in FY 26.
Co-Chair Johnston WITHDREW her OBJECTION to the adoption of
the CS. There being NO further OBJECTION, it was so
ordered.
Co-Chair Foster MOVED to REPORT CSSB 115(FIN) out of
committee with individual recommendations and the
accompanying fiscal notes.
Representative Sullivan-Leonard OBJECTED. She opposed the
tax. She stated there was an incredible disparity with the
tax, especially in her region of the state. She referenced
a comment that people chose where they lived. She agreed
and noted that people chose to live in rural and urban
areas; however, at a time when unemployment insurance had
risen by 500 percent, residents who drive would be taxed
more due to the bill. She did not believe it made any
sense. She realized the date had changed in the bill;
however, the concept of an increased gasoline tax did not
go unnoticed in her district.
2:28:02 PM
Representative Wool spoke to his support for the bill. He
shared that he had voted on the increase to the motor fuel
tax several years earlier that had added just under one
penny. He thought it was likely the only revenue bill the
legislature had passed during his tenure. He stated that
legislators received numerous emails asking why they were
not looking into [new] revenues. He stressed that state
coffers were decreasing by the minute and expenses were
increasing. He believed the legislature needed to look into
revenue. He highlighted it had been previously stated that
the motor fuel tax had not been raised since the 1970s. He
pointed out that the pennies increase in the 1970s equated
to about $0.50 currently. He emphasized that the state had
not kept up with inflation and had the lowest motor fuel
tax in the country. He believed the state would rank number
four or five if the tax was doubled. He reasoned that the
price of motor fuel should decrease due to the drop in oil
price, which would likely result in a net reduction at the
pump.
Representative Wool noted that the Municipality of
Anchorage had recently instituted a municipal motor fuel
tax; therefore, half the people in the state were already
paying an additional motor fuel tax. He knew that Mat-Su
residents drove to Anchorage frequently and he knew that
many of his constituents lived in remote areas like Chena
Hot Springs and other areas that required driving many
miles to town and burning substantial gas. He thought the
tax increase was the least the legislature could do,
especially when many citizens were asking it to act. He
thought the legislature should try to help citizens and
provide solutions. He supported adding the small amount of
revenue of $15 million in FY 21 and $30 million in FY 22.
He noted that people would likely not be driving and
purchasing gas the way they had in the past. He stated that
the change was a small gesture towards increasing revenue,
though he did not believe it was enough. He supported
looking into new revenue and believed the state's savings
would be rapidly diminishing. He thought the bill was a
step in the right direction.
2:30:35 PM
Representative Carpenter acknowledged the sound logic of
comments by Representative Wool; however, he noted the
argument did not account for the cost of government. He
detailed that compared to other states with a similar
population size and GDP [gross domestic product], Alaska's
government expense was significantly higher. He stated that
Alaska's cost of government was higher than it should be
based on its population and GDP. He highlighted that the
increased tax would take $16.9 million out of the private
sector to help sustain a government that was already too
large. He did not believe it made sense, especially when
considering the fiscal crisis. He guessed that the private
sector would be hurting for 12 to 24 months. He underscored
that taking $17 million out of the private sector economy
was not without consequences. He thought the state could
wait to patch potholes another year as opposed to
increasing funding. He believed it was wrong to increase
taxes on the private sector at present.
2:32:42 PM
Co-Chair Johnston believed it was very important for the
legislature to increase the tax. She shared that it was not
only her constituents who had asked for the increase. She
highlighted that the Alaska Trucking Association was asking
for and supported the increase. She explained that a
maintenance station had closed down between the districts
represented by Representative Carpenter, Representative
Knopp, and herself. She stressed it was the main
thoroughfare for getting food, safety, and supplies to the
Kenai Peninsula. She did not know how many committee
members had driven the pass on a winter night, but the
situation had been catastrophic to the safety and the needs
of the Kenai Peninsula.
Co-Chair Johnston reported that the road service in her
district had been cut dramatically back. She explained that
the first two roads classified as a level one priority out
of Anchorage were the Seward and Glenn Highways. The level
two priority included main thoroughfares in Anchorage owned
by the state. She explained that the roads up to her
district on the hillside had been poorly maintained,
sanded, and plowed due to a lack of resources and there had
been multiple accidents including buses. She had heard from
people on the Glenn Highway about issues due to lack of
sanding and plowing.
Co-Chair Johnston explained that because resources had been
stretched, the maintenance and operation [office] out of
Girdwood was responsible for the highway from Girdwood to
Anchorage and for the Seward Highway south. The Kenai
office was responsible for the Seward Highway north. She
reported that the highway was not being plowed or sanded as
could be needed for safety. She stated that the bill was
timely, and the implementation date had been postponed
until 2021 with the recognition that it was currently an
interesting time for all businesses. She supported moving
the bill forward.
2:36:04 PM
Representative Carpenter stated that the remarks made by
Co-Chair Johnston were opinion and not fact.
Co-Chair Johnston replied that the remarks were her
statement based on what she knew.
Representative Knopp had never seen the highway so poorly
maintained or shut down as many times as it had been in the
current year in his 40 years living on the peninsula. He
stated it was a fact that the Department of Transportation
and Public Facilities had lost millions of dollars in
revenue over the years. He highlighted that the documents
showing road maintenance was down did not lie. He stated it
was the current reality. He reported that the critical
maintenance station had been closed, positions had been
lost in Homer and Soldotna, and there was no longer
continuance from night shift to day shift. He referenced
Representative Wool's statement that the tax had not been
increased since the 1970s, which was a long time. He
supported the use of the funds for highway maintenance and
was hoping improvements would be made.
Representative Carpenter communicated that he had driven
the roads during the day and night, and he did not believe
they were different than in the past. He did not believe it
was accurate to say the roads had not been maintained. He
stressed that the roads had been maintained but may have
seen a delay. He believed that putting sand on a road did
not make it safer. He remarked that there were always
conditions on roads that required driving at a prudent
speed. He stated that sanding or plowing a road did not
necessarily make it safer. He did not believe the level of
maintenance was responsible for causing accidents or making
the road less safe. He countered that the speed of driving
made the road less safe in most cases. He thought Co-Chair
Johnston had used the word catastrophic.
Co-Chair Johnston could not be certain she had used the
word catastrophic.
2:39:09 PM
AT EASE
2:40:39 PM
RECONVENED
Representative LeBon shared that the past summer he and
Representative Wool had visited the trucking company
Sourdough Express based in his district in Fairbanks. He
detailed that representatives from the Alaska Trucking
Association had been present at the meeting and had
communicated that it was a crisis situation. They had been
told that the Dalton Highway from Fairbanks to the North
Slope was in desperate need of the minimum amount of
maintenance. He elaborated that they had visited a repair
shop and seen equipment that had been beaten from the
condition of the road. He stated it was real money and the
roads had to be maintained. He emphasized that the
lifeblood to the North Slope was the Dalton Highway. He
listened when the Alaska Trucking Association and the
primary operator - Sourdough Express - were telling
legislators that the monies designated for highway
maintenance were critical to their operation.
Representative Sullivan-Leonard MAINTAINED her OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Wool, Josephson, Knopp, LeBon, Ortiz, Foster,
Johnston
OPPOSED: Sullivan-Leonard, Tilton, Carpenter, Merrick
The MOTION PASSED (7/4).
There being NO further OBJECTION, it was so ordered.
CSSB 115(FIN) was REPORTED out of committee with seven "do
pass" recommendations, two "do not pass" recommendations,
and two "no recommendation" recommendations and with one
new indeterminate note from the Department of Revenue, one
new zero note from the Department of Transportation and
Public Facilities and one previously published fiscal
impact note: FN2 (ADM).
2:42:54 PM
AT EASE
2:44:04 PM
RECONVENED
Co-Chair Johnston recessed the meeting to a call of the
chair [note: the meeting never reconvened].
ADJOURNMENT
2:44:15 PM
The meeting was adjourned at 2:44 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 115 Public Testimony Rec'd by 032320.pdf |
HFIN 3/23/2020 1:30:00 PM |
SB 115 |
| SB 134 AMHTA Support 3.23.20.pdf |
HFIN 3/23/2020 1:30:00 PM |
SB 134 |
| SB 115 ver. G 3.23.2020.pdf |
HFIN 3/23/2020 1:30:00 PM |
SB 115 |