Legislature(1999 - 2000)
04/14/2000 01:30 PM House JUD
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE
April 14, 2000
1:30 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Joe Green
Representative Norman Rokeberg
Representative Jeannette James
Representative Lisa Murkowski
Representative Eric Croft
Representative Beth Kerttula
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 294
"An Act relating to violations of an order to submit to
deoxyribonucleic acid (DNA) testing, to court orders and
conditions of parole to collect samples for DNA testing, to
removal of material from the DNA identification registration
system; and to the collection and processing of samples from
certain burglary perpetrators for the DNA identification
registration system; and providing for an effective date."
- MOVED CSHB 294(JUD) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 409
"An Act prescribing the rights of grandparents related to
hearings on petitions to adjudicate a minor as a child in need of
aid and to the testimony of grandparents at those hearings; and
amending Rules 3, 7, 10, 15, 17(e), and 19, Alaska Child in Need
of Aid Rules."
- MOVED CSSSHB 409(HES) OUT OF COMMITTEE
HOUSE JOINT RESOLUTION NO. 49
Proposing an amendment to the Constitution of the State of Alaska
to guarantee the permanent fund dividend, to provide for
inflation proofing, and to require a vote of the people before
changing the statutory formula for distribution that existed on
January 1, 2000.
- HEARD AND HELD
CS FOR SENATE BILL NO. 177(L&C)
"An Act relating to insurance trade practices; and providing for
an effective date."
- HEARD AND HELD
PREVIOUS ACTION
BILL: HB 294
SHORT TITLE: DNA TESTING & REGISTRATION
Jrn-Date Jrn-Page Action
1/21/00 1958 (H) READ THE FIRST TIME - REFERRALS
1/21/00 1958 (H) JUD, FIN
1/21/00 1958 (H) INDETERMINATE FISCAL NOTE (ADM)
1/21/00 1958 (H) ZERO FISCAL NOTE (DPS)
1/21/00 1958 (H) GOVERNOR'S TRANSMITTAL LETTER
3/29/00 (H) JUD AT 1:00 PM CAPITOL 120
3/29/00 (H) Heard & Held
3/29/00 (H) MINUTE(JUD)
4/14/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 409
SHORT TITLE: GRANDPARENTS' RIGHTS REGARDING CINA
Jrn-Date Jrn-Page Action
2/16/00 2220 (H) READ THE FIRST TIME - REFERRALS
2/16/00 2221 (H) HES, JUD, FIN
2/23/00 2278 (H) SPONSOR SUBSTITUTE INTRODUCED
2/23/00 2279 (H) READ THE FIRST TIME - REFERRALS
2/23/00 2279 (H) HES, JUD, FIN
2/25/00 2315 (H) COSPONSOR(S): KOOKESH
3/23/00 (H) HES AT 3:00 PM CAPITOL 106
3/23/00 (H) Heard & Held
3/23/00 (H) MINUTE(HES)
4/06/00 (H) HES AT 3:00 PM CAPITOL 106
4/06/00 (H) Scheduled But Not Heard
4/11/00 (H) HES AT 3:00 PM CAPITOL 106
4/11/00 (H) Moved CSSSHB 409(HES) Out of
Committee
4/11/00 (H) MINUTE(HES)
4/13/00 3106 (H) HES RPT CS(HES) NT 5DP 1NR
4/13/00 3107 (H) DP: GREEN, DYSON, COGHILL, WHITAKER,
4/13/00 3107 (H) KEMPLEN; NR: BRICE
4/13/00 3107 (H) ZERO FISCAL NOTE (DHSS)
4/14/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HJR 49
SHORT TITLE: CONST AM: PERM FUND INCOME DISTRIBUTION
Jrn-Date Jrn-Page Action
1/31/00 2044 (H) READ THE FIRST TIME - REFERRALS
1/31/00 2044 (H) STA, JUD, FIN
2/02/00 2075 (H) COSPONSOR(S): DYSON
2/11/00 2188 (H) COSPONSOR(S): MASEK
2/21/00 2259 (H) COSPONSOR(S): KOTT
4/04/00 (H) STA AT 8:00 AM CAPITOL 102
4/04/00 (H) Scheduled But Not Heard
4/06/00 (H) STA AT 8:00 AM CAPITOL 102
4/06/00 (H) Moved CSHJR 49(STA) Out of Committee
4/06/00 (H) MINUTE(STA)
4/07/00 2913 (H) STA RPT CS(STA) NT 1DP 4DNP 2NR
4/07/00 2913 (H) DP: OGAN; DNP: JAMES, SMALLEY,
KERTTULA
4/07/00 2913 (H) HUDSON; NR: GREEN, WHITAKER
4/07/00 2913 (H) FISCAL NOTE (GOV)
4/07/00 2913 (H) REFERRED TO JUDICIARY
4/13/00 (H) JUD AT 1:00 PM CAPITOL 120
4/13/00 (H) Heard & Held
4/13/00 (H) MINUTE(JUD)
4/14/00 (H) JUD AT 1:00 PM CAPITOL 120
BILL: SB 177
SHORT TITLE: INSURANCE TRADE PRACTICES
Jrn-Date Jrn-Page Action
5/16/99 1517 (S) READ THE FIRST TIME - REFERRAL(S)
5/16/99 1517 (S) L&C
1/18/00 (S) L&C AT 1:30 PM BELTZ 211
1/18/00 (S) Heard & Held
1/18/00 (S) MINUTE(L&C)
2/29/00 (S) L&C AT 1:30 PM BELTZ 211
2/29/00 (S) Moved CS(L&C) Out of Committee
2/29/00 (S) MINUTE(L&C)
3/01/00 (S) RLS AT 11:30 AM FAHRENKAMP 203
3/01/00 (S) MINUTE(RLS)
3/01/00 2476 (S) L&C RPT CS 1DP 3NR 1AM SAME TITLE
3/01/00 2476 (S) NR: MACKIE, TIM KELLY, HOFFMAN;
3/01/00 2476 (S) DP: DONLEY; AM: LEMAN
3/01/00 2476 (S) ZERO FISCAL NOTE (DCED)
3/22/00 2692 (S) RLS TO CALENDAR AND 1 AM 03/22/00
3/22/00 2693 (S) READ THE SECOND TIME
3/22/00 2693 (S) L&C CS ADOPTED UNAN CONSENT
3/22/00 2693 (S) ADVANCED TO THIRD READING UNAN
CONSENT
3/22/00 2693 (S) READ THE THIRD TIME CSSB 177(L&C)
3/22/00 2693 (S) PASSED Y19 N1
3/22/00 2694 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
3/22/00 2697 (S) TRANSMITTED TO (H)
3/23/00 2661 (H) READ THE FIRST TIME - REFERRALS
3/23/00 2662 (H) L&C, JUD, FIN
4/10/00 (H) L&C AT 3:15 PM CAPITOL 17
4/10/00 (H) Heard & Held
4/10/00 (H) MINUTE(L&C)
4/12/00 (H) L&C AT 3:15 PM CAPITOL 17
4/12/00 (H) Moved HCS CSSB 177(L&C) Out of
Committee
4/12/00 (H) MINUTE(L&C)
4/14/00 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
DEL SMITH, Deputy Commissioner
Department of Public Safety
PO Box 111200
Juneau, Alaska 99811-1200
POSITION STATEMENT: Provided information on HB 294.
BLAIR MCCUNE, Deputy Director
Alaska Public Defender Agency
900 W Fifth Avenue, Suite 200
Anchorage, Alaska 99501-2090
POSITION STATEMENT: Provided information on HB 294.
GEORGE TAFT, Director
Scientific Crime Detection Laboratory
Department of Public Safety
5500 E. Tudor Road
Anchorage, Alaska 99507
POSITION STATEMENT: Answered questions on HB 294.
LEANE STRICKLAND, Criminalist IV
Scientific Crime Detection Laboratory
Department of Public Safety
5500 E. Tudor Road
Anchorage, Alaska 99507
POSITION STATEMENT: Answered questions on HB 294.
CHRIS BEHEIM, Criminalist IV
Scientific Crime Detection Laboratory
Department of Public Safety
5500 E. Tudor Road
Anchorage, Alaska 99507
POSITION STATEMENT: Answered questions on HB 294.
CANDACE BROWER, Parole Board Officer
Parole Board
Department of Corrections
PO Box 112000
Juneau, Alaska 99811
POSITION STATEMENT: Testified on HB 294.
REPRESENTATIVE FRED DYSON
Alaska State Legislature
Capitol Building, Room 104
Juneau, Alaska 99801
POSITION STATEMENT: Presented sponsor statement for HB 409.
REPRESENTATIVE SCOTT OGAN
Alaska State Legislature
Capitol Building, Room 432
Juneau, Alaska 99801
POSITION STATEMENT: Presented sponsor statement for HJR 49.
RONALD LORENSEN, Attorney
One Sealaska Plaza, Suite 300
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions regarding HJR 49.
SHELTON GREEN, Staff
to Senator Lyda Green
Alaska State Legislature
Capitol Building, Room 125
Juneau, Alaska 99801
POSITION STATEMENT: Answered questions regarding HJR 49.
SENATOR DAVE DONLEY
Alaska State Legislature
Capitol Building, Room 508
Juneau, Alaska 99801
POSITION STATEMENT: Presented sponsor statement for SB 177.
ACTION NARRATIVE
TAPE 00-61, SIDE A
Number 0001
CHAIRMAN PETE KOTT called the House Judiciary Standing Committee
meeting to order at 1:30 p.m. Members present at the call to
order were Representatives Kott, Green, Rokeberg, James, and
Kerttula. Representatives Croft and Murkowski arrived as the
meeting was in progress.
HB 294 - DNA TESTING & REGISTRATION
Number 0030
CHAIRMAN KOTT announced the first order of business is HOUSE BILL
NO. 294, "An Act relating to violations of an order to submit to
deoxyribonucleic acid (DNA) testing, to court orders and
conditions of parole to collect samples for DNA testing, to
removal of material from the DNA identification registration
system; and to the collection and processing of samples from
certain burglary perpetrators for the DNA identification
registration system; and providing for an effective date."
Number 0078
DEL SMITH, Deputy Commissioner, Department of Public Safety, said
he had testified a couple of weeks ago on HB 294 when
Representative Croft expressed concerns that an individual had to
obtain a court order in order to have deoxyribonucleic acid (DNA)
removed if the individual was found not guilty or the conviction
was reversed. He noted that along with Anne Carpeneti,
Department of Law, they had developed a potential amendment that
would hopefully address Representative Croft's concerns. He
explained that HB 294 is a bill that expands requirements of who
must give DNA to include those who commit felony burglary and the
reason for that is that statistics indicate that nationally 52
percent of people who have committed burglaries also committed
violent crimes subsequently. He commented that if law
enforcement has the DNA earlier from felony convictions then law
enforcement might be able to prevent or solve some violent crimes
sooner.
MR. SMITH mentioned that HB 294 also expands who [has authority
to] take a DNA sample as technology has changed since the
original bill was written in 1995 when the department just took a
blood [sample]. Now the department wants to expand the 1995 law
to allow a juvenile or adult correctional probation officer, a
probation officer, a parole officer or a peace officer to take a
DNA sample. He repeated that those are the primary changes in HB
294 and the bill would be retroactive to January 1, 1996 for
convictions or felonies that have occurred since that time.
Number 0274
CHAIRMAN KOTT asked how oral samples are taken.
MR. SMITH replied that originally a DNA sample required blood and
that is why the original law stipulated that a medical person or
health care professional had to take the sample. However,
technology has evolved rather quickly since 1995 and the sample
now can be taken in a non-intrusive manner with an oral swab
which is placed in a container that is marked and given to the
lab.
CHAIRMAN KOTT inquired as to what kind of container is used to
transport the swab sample and what is the time line, if there is
one, for ensuring that the DNA sample is transmitted, received,
and analyzed before it has lost its [viability].
MR. SMITH answered that pursuant to the 1995 creation of the
registry the department had been freezing any sample collections,
blood or otherwise, in the lab. However, in just the last
several months the department has begun processing those samples.
He informed the committee that frozen samples last indefinitely.
He explained that the samples are taken out [of the freezer],
processed, and the DNA profile is created. He observed that an
officer, a parole officer, or somebody else can take a DNA
sample, put it into a small container, get it to the lab, and
then the sample would be frozen until there was time to process
it.
Number 0364
CHAIRMAN KOTT asked if Mr. Smith could amplify the rationale for
being retroactive to January 1, 1996.
MR. SMITH replied that January 1, 1996, is when the department
started taking all of the DNA samples that are currently in the
DNA database for convictions and violent crimes; it seemed to
make sense that the department would collect [samples] for
convictions from that period if DNA samples were to be expanded
to include burglary. However, he recognized that the department
is concerned about making HB 294 retroactive, but those
convictions presumably have not gone away since 1996. If they
[those convictions] have gone away then the individual is no
longer convicted and would not be subject to HB 294.
REPRESENTATIVE CROFT asked if DNA samples collected in 1996 are
stored somewhere.
MR. SMITH replied that samples taken in 1996 to the present are
stored at the crime lab in a refrigerator freezer so that they do
not deteriorate.
Number 0450
REPRESENTATIVE CROFT stated that HB 294 expands [DNA collection]
authority to a different class of crime (burglaries). Therefore,
he inquired as to how the department has DNA samples in its
possession for this class of crime if the department did not have
authority to collect [DNA samples] from this class of crime in
1996.
MR. SMITH answered that is true. However, if the legislature
were to pass HB 294 and make it retroactive for burglary
convictions since January 1, 1996, the department would have to
make contact with those people who had been convicted since that
date and attempt to make the collection.
REPRESENTATIVE CROFT inquired as to what happens if convicted
people refuse [to allow DNA collection]. He assumed that the
department has the power to force collection of DNA samples.
MR. SMITH replied that refusal under the current law to give a
sample is a misdemeanor crime, however, he cannot anticipate a
situation where the department would hold a convicted person down
and forcibly take a DNA sample.
Number 0528
REPRESENTATIVE MURKOWSKI asked Mr. Smith to assume that he has a
burglary that goes back to 1996 and then asked if he would really
retroactively track down convicted burglars and try to obtain a
DNA sample.
MR. SMITH suggested that it may be that some of these individuals
are incarcerated now and thus would be easy to find. He
emphasized that the law does give the department authority to go
back and find these individuals whether they are on probation or
parole and request a sample.
Number 0585
CHAIRMAN KOTT asked if the department was doing DNA tests in
1996.
MR. SMITH explained that the department started taking the first
samples in 1996, but did not process any of those samples because
when the original law, HB 27, passed technology was in flux. He
informed the committee that the department had just obtained
staff and processing equipment last year under a federal grant to
start processing and loading into a national combined database
called CODIS (Combined DNA Index System). He remarked that
technology had moved from one in a couple of million
discrimination about who the individual was to today's technology
where one in one billion is the current level. He added that the
department had waited until last year to start processing because
the department wanted to get the latest technology and national
standard.
Number 0685
BLAIR McCUNE, Deputy Director, Alaska Public Defender Agency,
commented that it is a good idea to allow peace officers and
juvenile adult corrections officers to collect samples rather
than just medical personnel since the sample can be easily taken
by a swab. However, he noted that his agency is concerned about
the change made to Section 6 which he has not seen yet. He
explained that his agency does not like the idea of a required
court order to destroy the material or get the material out of
the hands of the Department of Public Safety (DPS) if someone is
found not guilty or acquitted. He commented that the Alaska
Public Defender Agency does not represent people in criminal
proceedings so the agency would not have a lawyer to help request
a court order since a court order is usually done by an
administrative proceeding through DPS directly. Therefore, he
mentioned that he was glad to hear that there are perhaps some
changes to that section and he would be happy to review them.
MR. McCUNE emphasized that the main problem for the agency is the
bill's expansion into burglary. He estimated that in Alaska
annually there are roughly 900 people arrested for burglary,
which is a huge additional amount of samples that would have to
be collected and stored. He indicated that HB 294 is an invasion
of privacy, but he guessed that the theory is that people who
commit burglary also may commit further offenses, namely, sexual
offenses. However, many youthful offenders commit burglaries and
are successfully rehabilitated and do not commit further
offenses. Therefore, he indicated that in view of the problems
that DPS acknowledges they have in testing the samples already in
their possession, the agency does not see how having additional
samples collected is a wise idea.
Number 0883
CHAIRMAN KOTT informed the committee that the amendment that has
been offered would change a little bit of the language in Section
6 of HB 294 which would then read, if the amendment were
approved, "The Department of Public Safety shall upon receipt of
a court order destroy the material in the system relating to a
person. The court shall issue the order if it determines
that..." and the rest of the language is the same. Therefore,
the amendment removes the words "issued at the request of a
person whose DNA has been collected under (b) of this section."
MR. McCUNE said that the problem he had with HB 294 is that he is
not sure how to obtain a court order. For example, he asked if
someone wold have to file a law suit with the court to obtain a
court order because the court would not have jurisdiction in the
criminal case to [issue a court order on its own]. He noted that
sometimes the court can issue orders when cases are dismissed for
returned evidence which has been admitted. However, he explained
that it is unclear to the agency whether Section 6 requires a
separate civil action.
Number 0992
REPRESENTATIVE MURKOWSKI turned to Mr. McCune's testimony that
there had been problems with testing samples and so it was his
recommendation that the legislature did not need to add to the
numbers that the lab would be testing. She asked George Taft if
the Public Safety crime laboratory has had problems with DNA
testing samples.
GEORGE TAFT, Director, Scientific Crime Detection Laboratory,
Department of Public Safety, testified via teleconference from
Anchorage. He acknowledged that the lab has had problems in
funding the testing. However, he noted that today he had signed
a grant opportunity to get all of those samples analyzed by
contracting out in the very near future. From a National
Institute of Justice (NIJ) grant, he expected to get all of those
samples analyzed expeditiously, probably within the next two or
three months.
Number 1040
REPRESENTATIVE MURKOWSKI indicated her understanding that the
problems experienced by the lab were funding problems rather than
problems with how the lab is collecting or testing.
MR. TAFT replied that her understanding was correct.
REPRESENTATIVE MURKOWSKI inquired as to the shelf life of these
samples that the lab collects.
MR. TAFT answered that these are dry, frozen samples and can be
analyzed 400 years later.
REPRESENTATIVE ROKEBERG asked if the sample could be reduced
after it has been analyzed into some type of film or photographic
profile so that the lab does not have to keep the sample.
MR. TAFT replied that the lab does have a profile. However, when
a sample is matched in CODIS then the lab has to re-examine the
sample to make sure that it does in fact match, which is the
reason for keeping samples.
LEANE STRICKLAND, Criminalist IV, Scientific Crime Detection
Laboratory, Department of Public Safety, remarked that the lab
does not want to destroy any evidence that has been analyzed
because technology changes. She reminded the committee that
technology has changed over the last five years and with changing
technology the lab wants to continue to be able to analyze the
samples as well as have samples if an analysis by an outside
agency is requested for the defense.
Number 1152
CHAIRMAN KOTT asked if the lab currently does DNA testing.
MR. TAFT replied in the affirmative.
CHAIRMAN KOTT asked if the samples that the lab will out source
are from the lab's backlog.
CHRIS BEHEIM, Criminalist IV, Scientific Crime Detection
Laboratory, Department of Public Safety, observed that the grant
is just for the backlog of convicted offender samples. He
informed the committee that recently $15 million was appropriated
by the federal government to address the nationwide backlog of
convicted offender samples.
CHAIRMAN KOTT asked if Mr. Beheim could give the committee an
idea of how many samples are on backlog.
MR. BEHEIM answered that at the present time, since 1996, the lab
has collected approximately 1900 samples and has analyzed 350 of
those in house using the latest technology. However, he
anticipated that the grant would pay for the remaining backlog.
CHAIRMAN KOTT inquired as to where the outside analysis will be
done.
Number 1230
MR. BEHEIM explained that outside analysis will be put out to
competitive bid to an outside lab that meets quality assurance
guidelines specified by the DNA Advisory Board and strict
accreditation guidelines.
CHAIRMAN KOTT asked if Mr. Beheim was aware of any qualified labs
in Alaska.
MR. BEHEIM answered that there are none at this time.
CHAIRMAN KOTT inquired as to how long it takes to analyze one
sample.
MR. BEHEIM replied that the information that he is receiving from
the grant people is that the laboratories who will be bidding are
high production labs which, upon receipt of the samples, are
capable of turning out samples in a matter of weeks.
CHAIRMAN KOTT asked Mr. Beheim if he could give the committee an
idea of what it costs for each analysis.
MR. BEHEIM answered that NIJ allows $50 for each sample and he
had just heard from them that samples can be processed for as
little as $35 for each sample on a competitive bid for convicted
offender samples.
Number 1301
REPRESENTATIVE CROFT surmised that if there are about 1,000
samples of which the lab has analyzed 350, then there should be a
backlog of 650 samples.
MR. BEHEIM specified that there are approximately 1,600 backlog
samples.
REPRESENTATIVE CROFT related his understanding that Mr. McCune
had said there were about 300 burglaries each year. He asked if
the backlog at the lab had been built up over the last four years
since 1996.
MR. BEHEIM answered yes.
Number 1392
REPRESENTATIVE CROFT inquired as to how many samples the lab
could analyze each year.
MR. BEHEIM anticipated that the lab could probably analyze 100
samples each month. Although it is much more economical to
contract out to a private lab capable of doing high volume using
robots, the crime lab does case-related analysis which is much
more time consuming and not suitable for contracting out. He
noted that private labs wanted about $1,000, which does not
include court testimony, for each case-related sample.
Therefore, the whole purpose of the contract is to deal with
convicted offender samples which are more adapted toward
automation and the use of [robots]. He pointed out that
nationwide there are approximately 750,000 samples that have been
collected and need to be analyzed due to new technology, and the
number is growing all the time.
REPRESENTATIVE CROFT asked if [DPS's] fiscal note for the
laboratory services component was zero due to the grant because
if there are 300 new cases each year and they cost $1,000, then
it is going to cost the state $300,000 each year to analyze
samples.
MR. BEHEIM replied that the 300 [new cases] each year would be
additional convicted offenders if Alaska has that many
burglaries. Those samples cost about $35 each to contract. He
informed the committee that this is the first year grant money
has been available and Congress has anticipated funding for the
next number of years because of the great interest in the use of
DNA technology to help solve crimes.
REPRESENTATIVE CROFT acknowledged that although the collection is
cheap at $35, the analysis is what costs money.
MR. BEHEIM reiterated that analysis by a private lab set up with
robotics and high volume is $35-$50.
Number 1457
CHAIRMAN KOTT remarked that it would appear that the collection
costs more than the analysis. He asked Mr. Taft what would
become of NIJ grant money if HB 294 did not pass and the
legislature did not authorize retroactivity for those 1,600
samples.
MR. TAFT answered that the lab would not get the money unless the
lab used it for analyzing convicted offender samples because the
grant money is designated for [that] particular purpose.
CHAIRMAN KOTT recognized that the grant money could only be used
for analyzing convicted offender samples. He asked if the lab
already had the grant or is it something for which the lab has to
apply.
Number 1499
MR. TAFT replied that he has the application ready to go and the
deadline is May.
REPRESENTATIVE CROFT asked if the committee had to add burglary
to obtain the grant.
MR. TAFT answered no.
REPRESENTATIVE CROFT inquired as to what the lab had to do to
obtain the grant.
MR. TAFT replied that the lab does not have to do anything other
than apply for the grant. He specified that the grant addresses
the sample backlog that the lab already has on hand.
REPRESENTATIVE CROFT surmised, then, that it does not matter to
the federal government whether the Alaska State Legislature
passes HB 294 or not, in terms of the grant.
MR. TAFT agreed because the grant just addresses the current
backlog and grant money available in the future will also pay for
samples that are collected.
Number 1558
MR. SMITH said he wanted to comment on the court order. He noted
that he had never anticipated that someone would have to file
suit to get evidence out of the court. He explained that the
reason the department wanted a court order and required that the
individual request it is because the individual is probably the
most motivated person who would pursue procedure to make sure
that evidence was returned to that non-convicted individual. He
commented that he wants an audit trail of why the DNA sample
disappeared, which a court order would provide for the
department. It is a way to keep everything above board.
CHAIRMAN KOTT indicated that he understood that in Mr. Smith's
mind an individual would not have to litigate to regain
possession of their DNA sample.
MR. SMITH anticipated that if an individual was found not guilty
or the conviction was reversed, the individual would contact the
department or the district attorney and the authorities would ask
the court to give the authorities an order to get rid of the DNA
sample of that individual. He acknowledged that it had made
sense for the individual to have some standing to go in and say
that he/she wanted a court order. However, he had never
anticipated that there would be a requirement for civil
litigation, which does not make any sense to him.
Number 1641
CHAIRMAN KOTT admitted that it did not make sense to him either.
He asked Mr. McCune if he had heard Mr. Smith's remarks.
Chairman Kott observed that Mr. McCune was gone.
CANDACE BROWER, Parole Board Officer, Parole Board, Department of
Corrections, urged the committee to consider the expansion of who
is allowed to take DNA samples because it has been incumbent on
the Department of Corrections (DOC) to collect the samples,
however the narrow definition of medical personnel really limits
who is able to do this in correctional facilities. She said that
in view of the fiscal situation [DOC's] medical staff are
stretched thin and the department would appreciate the
flexibility to train correctional staff and probation officers to
take samples. She echoed earlier testimony that taking DNA
samples is a very simple process. She acknowledged that some are
concerned about taking DNA samples and the privacy issue, but it
is important to remember that DNA analysis also works to
eliminate people from suspicion. She agreed that the effect of
DNA analysis is double-edged.
Number 1712
CHAIRMAN KOTT remarked that under the provisions of HB 294
correctional officers can conduct the test in correctional
facilities.
MS. BROWER answered yes, but reiterated that currently
correctional officers cannot take DNA samples.
CHAIRMAN KOTT inquired as to what kind of training she envisions.
MS. BROWER informed the committee that DOC's medical staff has
some authority to do some training of correctional officers for
such things as dispensing medication. The training would be an
in-house process.
Number 1743
CHAIRMAN KOTT asked Ms. Brower to assume that one of her
correctional officers took the sample with a swab, placed the
swab in a container, and dropped it on the floor. He asked if
the correctional officer would have to take an additional sample.
MS. BROWER answered that she did not know.
CHAIRMAN KOTT continued with the illustration and asked if the
correctional officer did have to take an additional sample, would
the prisoner be subject to a misdemeanor crime [for refusing to
give a second DNA sample].
MS. BROWER replied that she did not have an answer to that
either. Furthermore, she was unsure if the tests are fragile.
CHAIRMAN KOTT commented that he was sure that rubber gloves must
be put on and the area sanitized. He asked Mr. Taft to speak to
the illustration about what would happen if a sample swab was
dropped. He asked Mr. Taft if dropping a swab would necessitate
taking another swab.
MR. TAFT deferred to Ms. Strickland.
Number 1813
MS. STRICKLAND replied that if someone dropped a swab she would
recommend that they take another swab, however, testing at the
lab is only going to react with DNA. She pointed out that the
lab can determine if there is any problem with contamination.
CHAIRMAN KOTT asked if the lab could use the existing first
sample if the convicted defendant decided he/she did not want to
give another sample.
MS. STRICKLAND reiterated the recommendation to take another
sample, however the first sample could be analyzed and it could
be whether there additional DNA is present other than DNA from
one individual.
CHAIRMAN KOTT said maybe that is the answer. He related his
understanding that a convicted individual would not be subject to
another misdemeanor crime [for refusal to give another DNA
sample] because the first sample could be analyzed.
MS. STRICKLAND answered yes.
CHAIRMAN KOTT remarked that it may be a little more difficult but
he is sure that with today's technology it can be done.
Number 1868
REPRESENTATIVE GREEN asked if tobacco or some other substance in
the mouth would have an effect [on the sample]. He thought that
other substances would have an effect, and therefore dropping a
swab on the floor, unless the floor was extremely sterile, could
contaminate the swab.
MS. STRICKLAND agreed that dropping a swab on the floor is not
what the lab would choose and in such a case the lab would hope
that another sample would be collected. She reminded the
committee that if additional DNA was present on the floor, it
would be detected on the swab. Furthermore, as she had testified
previously, it has been shown that there are some substances,
such as tobacco, that can block the process wherein no DNA typing
[occurs].
REPRESENTATIVE GREEN asked "then why not take two samples?"
MS. STRICKLAND agreed that would be a good option.
CHAIRMAN KOTT agreed that maybe two samples would be the answer.
REPRESENTATIVE GREEN agreed with Chairman Kott and mentioned that
normally both swabs would not be dropped.
CHAIRMAN KOTT asked whether the person would have to give the
second sample.
REPRESENTATIVE GREEN suggested that the two swabs should be taken
at the same time.
CHAIRMAN KOTT remarked that this is something that can be worked
out internally. He announced that there is an amendment on the
table and he is not sure where it originated.
Number 1945
MR. SMITH noted that the amendment developed as a result of
concerns mentioned by Representative Croft during a hearing a
couple of weeks ago. The department asked Ms. Carpeneti,
Department of Law, to draft the amendment and the amendment was
provided to Chairman Kott's staff yesterday just in case Chairman
Kott wanted to consider it.
REPRESENTATIVE MURKOWSKI offered Amendment 1 which read:
Page 3, line 13: After "order" insert:
","
Page 3, line 14: delete all material
Page 3, line 15: delete "section,"
Page 3, line 15: delete "the [A]" and insert:
"a"
REPRESENTATIVE CROFT commented Amendment 1 is fine.
CHAIRMAN KOTT related his understanding from Mr. Smith that
although Amendment 1 will address Representative Croft's concern,
Mr. Smith is neither partial nor impartial to it.
Number 2013
REPRESENTATIVE CROFT indicated that he supported Amendment 1 and
acknowledged that a court order should not be required at the
request of a person but rather the court order should be part of
a regular administrative process. He said he is not even sure a
court order is needed but at least it should not be solely at the
request of the person. He mentioned that he had considered an
arrangement whereby the court would make a list each year of
people who had been acquitted and have their records expunged.
Number 2040
CHAIRMAN KOTT asked whether there was any objection to the
adoption of Amendment 1. There being none, Amendment 1 was
adopted.
REPRESENTATIVE KERTTULA moved to delete everything [from HB 294]
except those sections that allow the Department of Corrections to
broaden its [authority] in regard to who can collect samples;
thereby allowing correctional officers to collect samples as well
as medical personnel. She said that HB 294 is just too great a
step at this moment. Although the packet includes [information]
that in other states there seems to be come correlation [between
committing a burglary and progression on to a more violent
crime], Representative Kerttula said she is not ready to take
that step yet between burglars and offenders.
CHAIRMAN KOTT called for an at-ease at 2:06 p.m. and called the
meeting back to order at 2:07 p.m.
Number 2106
REPRESENTATIVE KERTTULA clarified that her proposed amendment
removes Sections 5, 7, and 8. She pointed out that in Section 8
there is an effective date [after which] people's court order to
get their samples removed will not be honored. [Indisc.]
MR. SMITH informed the committee that he would prefer to have HB
294 remain as it came into the committee. However, at a minimum,
the expansion of DOC's ability to authorize the taking of samples
by correctional and parole officers is critical.
REPRESENTATIVE MURKOWSKI noted that the legislature had adopted
this DNA identification system in 1995, and therefore she assumes
that most of the other states have adopted similar registration
systems.
MR. SMITH replied that he believed that all 50 states have
adopted DNA registration systems and Alaska is one of nine states
that have signed on to the national system.
Number 2181
REPRESENTATIVE MURKOWSKI asked where do the other states fall in
terms of taking samples from burglars.
MR. SMITH answered that there are several states which take
samples from burglars. He informed the committee that in his
research he had found that burglars were included [in DNA
testing] based upon statistics which show that 52 percent of
convicted burglars went on to commit and were caught for a
violent crime later. Although he did not know how many states
test burglars for DNA, he has heard that some states want to go
as far as testing for DNA at the time of arrest. He thinks that
is going too far. He noted that the department had retained DNA
testing just for felony burglary convictions because the
department sees a nexus between burglary and violent crimes.
Number 2230
REPRESENTATIVE MURKOWSKI asked if the 52 percent figure is an
Alaskan or national statistic.
MR. SMITH clarified that the 52 percent figure is from Florida,
Virginia, and a couple of other states; it is not an Alaskan
statistic.
MR. SMITH answered, in response to Representative Murkowski, that
he was not able to find statistics to support the burglary theory
in Alaska.
Number 2257
REPRESENTATIVE MURKOWSKI said there was no objection to Amendment
2.
CHAIRMAN KOTT replied that there was an objection.
REPRESENTATIVE MURKOWSKI remarked that she appreciates where the
department is coming from with HB 294 as well as the department's
request to recognize the code of burglary as a gateway crime.
However, she expressed the need to ensure that the legislature
has all possible information to prosecute those crimes, and
therefore she wishes that the committee had a little more
[information] than the generalities presented today. She
announced that she has not yet decided about Amendment 2.
Number 2307
REPRESENTATIVE ROKEBERG related his belief that Amendment 2 is a
good amendment, which he is supporting. He referred to the rest
of HB 294 as a "Clockwork Orange" bill or "Big Brother" stepping
up.
REPRESENTATIVE KERTTULA agreed that Amendment 2 is difficult and
she feels like she would like to do everything possible to solve
crimes, especially sexual offenses. However, the cases she has
had involving burglary do not [support the notion that] burglary
[led a violent crime]. Therefore, she does not think there is a
very high standard of evidence to get the committee to pass HB
294.
A roll call vote was taken. Representatives Croft, Kerttula,
Rokeberg, and James voted for the amendment. Representatives
Murkowski, Green and Kott voted against it. Therefore, Amendment
2 passed by a vote of 4-3.
Number 2402
REPRESENTATIVE KERTTULA made a motion to move HB 294 as amended
out of committee with individual recommendations and the
accompanying fiscal note. She pointed out that the title change
will be necessary.
CHAIRMAN KOTT agreed that a title change will be necessary and he
noted that he will make a request for that. He asked if there
was any objection to the motion.
REPRESENTATIVE GREEN objected. He said that HB 294 had been
gutted and the committee does not have anything before it. He
asked why should the books be cluttered up with nothing?
REPRESENTATIVE CROFT noted that there was a substantial amount of
testimony stating that it is important to authorize correctional
officers the ability to take DNA samples rather than just medical
doctors. He acknowledged that Representative Green is correct in
that the committee is not expanding HB 294 to other crimes yet
but is only considering crimes against the person. He explained
that DOC did want to have the ability to authorize more people to
take DNA samples so that DOC did not have to have doctors do it
all the time. Although HB 294 does not make a major step into a
whole new policy area or expanding a policy area on burglaries,
it does achieve something technical which DOC says it needs.
Therefore, he mentioned that he will vote to move the bill.
REPRESENTATIVE ROKEBERG indicated that he thinks HB 294 is a
great bill and will save costs.
CHAIRMAN KOTT remarked that he does not know how much effort is
required to swab somebody's mouth but there are Q-tips to buy.
He called for a brief at ease at 2:22 p.m. and called the meeting
back to order at 2:23 p.m.
TAPE 00-61, SIDE B
A roll call vote was taken. Representatives Croft, Kerttula,
Rokeberg, James, Murkowski and Kott voted in favor of moving the
bill. Representative Green voted against it. Therefore, HB 294
as amended, CSHB 294(JUD), moved from the House Judiciary
Standing Committee by a vote of 6-1.
HB 409-GRANDPARENTS' RIGHTS REGARDING CINA
Number 0033
CHAIRMAN KOTT announced the next order of business is SPONSOR
SUBSTITUTE FOR HOUSE BILL NO. 409, "An Act prescribing the rights
of grandparents related to hearings on petitions to adjudicate a
minor as a child in need of aid and to the testimony of
grandparents at those hearings; and amending Rules 3, 7, 10, 15,
17(e), and 19, Alaska Child in Need of Aid Rules." [Before the
committee is CSSSHB 409(HES).]
REPRESENTATIVE FRED DYSON, Alaska State Legislature, said that
last year the legislature passed a bill that allowed foster
parents to have a voice at child-in-need-of-aid (CINA) hearings,
treatment plans and placement for children. This bill, HB 409,
is very similar and adds grandparents to the list of people who
should be given the opportunity to be advised of what is
happening and to speak in court in relation to their
grandchildren. He clarified that HB 409 does not make
grandparents a party in a legal sense rather only that they be
informed and have a chance to have a voice [because] often
grandparents are the most stable influence in the lives of
children in dysfunctional homes. He mentioned that the
Department of Law raised the point in the House Health, Education
& Social Services Committee (HES) that some children, due to
broken, mixed, melded and merged families may have more than a
dozen folks claiming to be grandparents. He informed the
committee that the HES committee amendment made limits
grandparents to those grandparents that identify themselves and
can demonstrate that they have a biological relationship to the
children. He urged the committee to move HB 409.
Number 0108
REPRESENTATIVE JAMES made a motion to move [CSSSHB 409(HES)] out
of committee with individual recommendations and the attached
fiscal note.
REPRESENTATIVE CROFT said he did not want to object but wanted to
clarify that HB 409 says "notice." He noted that he heard some
of the HES hearings when people discussed how difficult it might
be to notify grandparents and thus grandparents are in the
special category of receiving a notice if they ask to be
notified. He commented that asking to be notified is an
imminently practical solution to that problem.
CHAIRMAN KOTT noted that the motion [to move CSSSHB 409(HES) from
committee] has been made. There being no objection, CSSSHB
409(HES) moved from the House Judiciary Standing Committee.
HJR 49-CONST AM: PERM FUND INCOME DISTRIBUTION
Number 0206
CHAIRMAN KOTT announced the next order of business is HOUSE JOINT
RESOLUTION NO. 49, Proposing an amendment to the Constitution of
the State of Alaska to guarantee the permanent fund dividend, to
provide for inflation proofing, and to require a vote of the
people before changing the statutory formula for distribution
that existed on January 1, 2000. [Before the committee was CSHJR
49(STA).]
REPRESENTATIVE SCOTT OGAN, Alaska State Legislature, noted that
he had distributed to committee members a list of people who had
contacted Representative Green's office in support of HJR 49.
[This list illustrates that] HJR 49 has [prompted] a fair amount
of people contact the sponsor. He requested that the committee
put HJR 49 up for vote [because] until the legislature takes the
dividend program off the table, the legislature will not develop
a long-term solution to the state's financial situation.
Number 0254
REPRESENTATIVE GREEN asked Representative Ogan if he was aware
that there have been some model studies indicating that if the
legislature stays with the current way the formula uses the
Permanent Fund (PF) earnings, the PF will eventually go the other
way and will have to be re-determined. If the legislature puts
HJR 49 into the constitution then the legislature does not have
the opportunity to react.
REPRESENTATIVE OGAN acknowledged that he is aware of those
studies and said that 83 percent of the people who voted in the
September 14, 1999 election did not believe in the study. He
noted that the study is an indictment of the existing [PF]
program which has been working for 18 years. He indicated that
the study was based on many assumptions; for example, the study
assumed that Alaska is never going to develop the Arctic National
Wildlife Refuge (ANWR) or gas-to-liquids (GTL) or the gas
pipeline. He commented that the study had assumed that Alaska
was an old state in "state years" and he takes issue with those
assumptions since he tends to be a little bit more of an optimist
about the future of Alaska. He mentioned that Alaska should not
run on high just because some study said something. Although HJR
49 does inhibit the legislature's ability to do something, it
does not eliminate their ability; it just raises the bar from a
simple majority vote to a two-thirds vote. He specified that in
the worst-case scenario happens then the legislature would react
and could change the [PF] program and put it before the voters.
He recognized that Representative Green was correct in that the
legislature could not do it as easily as a statute change, but
the legislature could still react.
REPRESENTATIVE GREEN noted that all it [the scenario] requires is
the reversal of a bull market and the situation exists. He
pointed out that historically a bull market cannot continue
forever.
Number 0357
REPRESENTATIVE ROKEBERG informed everyone that Representative
Green is referring to the "mother of all models" study done by
Callan & Associates in January 2000, the study done prior to the
plebiscite on September 14, 1999. Representative Rokeberg asked
if Representative Ogan was aware of that.
REPRESENTATIVE OGAN replied that he was not aware of that;
however, he thinks both studies came to the same conclusion.
REPRESENTATIVE ROKEBERG clarified that the studies did not come
to the same conclusion; the Callan & Associates study was the
first time a run had been done with actual numbers. He noted
that Callan & Associates had presented the study to the Senate
and House Finance Committees for the PF Corporation in order to
brief the legislature about the effects of what would happen in
"up and down" markets. Callan & Associates chose the decade of
the '70s when there were three down years in a row and had shown
impacts on the dividend and the inflation-proofing calculation
under existing statute in view of the fact that the statute
requires a pay back. Callan & Associates had concluded that
without the very large amount of earnings reserve that was in
place in January [2000] the PF Corporation could continue paying
a dividend, but it would go down substantially. Representative
Rokeberg envisioned that there would be a ten-year period when no
inflation proofing would take place. If, after that time, the
market came back up, the inflation proofing that had not been
paid would have to be paid back [to the PF]. Therefore, the PF
would always be behind.
REPRESENTATIVE ROKEBERG emphasized that the inflation-proofing
formula in Alaska statute is broken. However, Representative
Ogan has the temerity to come into this committee and tell this
legislature that the people of the state should put into the
constitution a piece of statute that does not even work correctly
because Alaska has gotten away with an "up" market for years.
For example, he mentioned that the particular Callan & Associates
model was only for a three-down-year period with only 10 percent
per year three years in a row. He indicated that the Nikkei
average in Japan's stock market went down and stayed down ten
solid years during the decade of the '90s. He acknowledged that
the United States stock market is down 35 percent in the last 30
days on the Nasdaq and that the U.S. stock market had the biggest
meltdown today that it has had since October '87. Therefore, he
really thinks that HJR 49 is irresponsible.
Number 0478
REPRESENTATIVE OGAN asked the Chairman to call a point of order
as it is inappropriate for Representative Rokeberg to question
people's motives.
REPRESENTATIVE ROKEBERG replied that this is a working committee
and the question is on the floor [for discussion]. He stated
that he is not questioning Representative Ogan's motives rather
he is questioning Representative Ogan's intellectual honesty when
Representative Ogan talks to the voters of this state.
REPRESENTATIVE OGAN said that if Representative Rokeberg had been
present yesterday, Representative Rokeberg would have heard him
say that he does not claim to be a financial expert and is
willing to consider enshrining other models into the
constitution. He viewed HJR 49 as a policy call because Alaska's
PF program is seriously in need of protection. He reiterated
that yesterday he did say there should be a discussion of perhaps
a different formula. He indicated that the only way the public
is going to trust the legislature is if the legislature
constitutionally enshrines some use of the PF dividend program
and this is the issue with which the legislature needs to come to
grips if it ever plans to use the PF earnings reserve [with
public consent]. He noted that when the PF was set aside the
intention was [to provide government funds for a rainy day]. He
recognized that HJR 49 is a committee call. He emphasized that
he is open to discussion of what kind of formula to enshrine.
REPRESENTATIVE OGAN asked permission to digress and talk about
another bill or at least other concepts which are included in
other legislation. He acknowledged that some of the concepts
might be good, but there are parts that he does not like.
Therefore, any concept should be kept in the context of what the
formula is going to be and thus the committee should have the
discussion and not "blow it [one concept, HJR 49,] out of the
water" just because of somebody's study.
Number 0567
REPRESENTATIVE KERTTULA announced that Mr. Lorensen, Attorney, is
waiting on line. She informed the committee that Mr. Lorensen
had testified in Senate Finance and had provided to her, which
she in turn provided to committee members, the opinion of
Morrison & Foerster. She mentioned that she had requested Mr.
Lorensen's presence because there was question enough about the
fund and the dividend program as it is and to her, it seems
apparent that the committee does not have to wait for an opinion
from the Internal Revenue Service (IRS). If HJR 49 passed, it is
fairly obvious that the legislature would be jeopardizing the
state's tax free status. Therefore, she had called Mr. Lorensen
in order to get to the heart of that information.
Number 0666
RONALD LORENSEN, Attorney, testifying via teleconference from
Anchorage, said he has reviewed HJR 49. He noted that several
different outside counsel opinions have been issued on the tax
question over the years, a couple of [those opinions] date back
to 1988. Those counsel opinions have not been released and
probably will not be released because they raise important
questions about taxes in relation to the fund. He explained that
the counsel opinions had made some recommendations for changes,
many of which have been made. Because of those changes made
since 1988 a very strong basis has been provided for saying that
under the current status the PF income would not be taxable under
federal tax law. He pointed out he provided the Senate Finance
Committee with the 1998 Morrison & Foerster opinion, which is now
a matter of public record. That opinion did raise some important
concerns in the context of a very similar proposal for a
constitutional amendment that had been offered back in 1998. The
1998 proposal looked very similar to the one being heard both in
the House and Senate this year. He indicated that the 1998
opinion really raised some important questions as to what the IRS
would look for.
MR. LORENSEN informed the committee that what the IRS would look
for, which becomes the key question, as to whether or not the PF
is a state fund and asset that is subject to taxation or not, is
if the legislature would lose its ability to appropriate that
money. He remarked that the key question is discussed in the
opinion and the effect of the constitutional amendment is to do
exactly that. This bill, HJR 49, would remove from the
legislature the ability to decide what should happen to the
income of the PF from year to year and cast in stone in the
constitution the distribution mechanism, which is now in statute.
He pointed out that the difference between the constitutional
amendment and the statute is that when [the distribution
mechanism] is in the constitution the legislature does not have
the ability to change that distribution mechanism on its own.
However, [with the distribution mechanism] in statute the
legislature, at least in theory, retains the ability every year
whether to decide to do something different with that income. He
reiterated that as long as the legislature retains the ability to
decide how that income would be distributed, the IRS would
continue to be consider the PF as state income which is not
subject to taxation. He specified that ultimately it comes down
to: will the legislature retain the ability to decide what
happens to that income for which the state would like to assert
tax exempt status?
Number 0826
REPRESENTATIVE OGAN asked if Mr. Lorensen is an attorney.
MR. LORENSEN replied yes.
REPRESENTATIVE OGAN inquired if Mr. Lorensen had seen the
language in Section 3 of HJR 49.
MR. LORENSEN answered that he has HJR 49.
REPRESENTATIVE OGAN said he had put language in Section 3 to
address the [IRS] question. He noted that he had acquired the
idea from the gas pipeline situation in which the port authority
requested an opinion from the IRS as to whether or not the gas
pipeline would be taxable; apparently, the IRS had come back with
a favorable ruling. He asked Mr. Lorensen if Section 3 would
effectively settle the question.
MR. LORENSEN stipulated that he is not a tax expert and not
familiar with IRS tax procedures; however, he related his
understanding that the IRS does not have to give a tax opinion in
which case a person is left in limbo. In such a case, he did not
know how a person would even address or anticipate that
possibility in this kind of an effective date provision. He
commented that the approach of the effective date provision made
sense if a person could get a ruling from the IRS, however he is
not confident that a person could count on the IRS actually
taking a position.
Number 0914
REPRESENTATIVE OGAN pointed out that the constitutional amendment
(HJR 49) does not happen until the IRS makes a ruling; however,
he appreciated Mr. Lorensen's observations regarding a ruling
from the IRS if the IRS did make a ruling.
REPRESENTATIVE CROFT remarked that he was playing with the
"Mother of all Models" (MOMA) crash model numbers. He then
turned to Section 3, which he thought said that "'final
decision' means a ruling, order, or decision that cannot be
appealed to the Internal Revenue Service." He asked if, at some
point, someone could appeal an IRS ruling to the court.
REPRESENTATIVE JAMES replied yes.
MR. LORENSEN said that he does not know that the IRS can appeal
its own ruling. However, he guessed that at some level of the
IRS agency Section 3 contemplates that a determination would be
made [with the idea that no appeal could be made because the
determination was already made at the highest IRS level].
REPRESENTATIVE CROFT assumed that the legislature would have the
right to take the determination to court if the legislature
disagreed with the ruling.
MR. LORENSEN replied that he did not know the answer. He
reiterated that he did not know if the determination is in the
context of litigation or if the legislature can file a court case
just because the legislature did not like the IRS ruling.
Number 0991
REPRESENTATIVE CROFT said that if it is just preliminary
[ruling], it might not. However, if it is a ruling on an actual
tax matter, then clearly the legislature has the right to have a
court hearing if the legislature does not think it should be
paying tax.
MR. LORENSEN commented that Representative Croft's explanation
might be right, but the legislature probably would not get to
that actual tax matter ruling until after the legislature has a
real case or controversy, as the lawyers say.
REPRESENTATIVE CROFT concluded then that the legislature has to
put the amendment in, the tax comes in and then the legislature
starts litigating and gets to the core.
MR. LORENSEN agreed as that is the way it has been done in a
couple of decisions over the last decade. He recalled that there
was some dispute in the early 1990s over the taxability of state-
created funds and that ended up being litigated.
Number 1026
REPRESENTATIVE CROFT asked Mr. Lorensen to go back to the key
point of taking what the legislature has the discretion to do and
putting that discretion where the legislature cannot change it.
Representative Croft asked if there are court cases that
emphasize the control that the sovereign still retains over the
distribution technique.
Number 1045
MR. LORENSEN replied that although he cannot point to specific
cases, the simple answer is yes. The IRS looks at whether or not
the legislature has retained the ability to deal with whatever
fund is at issue.
REPRESENTATIVE CROFT acknowledged that in that sense the
legislature is taking the very step with HJR 49 that puts the PF
fund at the most tax risk. He remarked that a big [tax] factor
is how much control the legislature has over the fund.
Therefore, he surmised that by taking the fund out of legislative
control the legislature steps right into one of those IRS defined
categories.
MR. LORENSEN stated that he believed that Representative Croft's
assessment is correct.
Number 1075
REPRESENTATIVE GREEN inquired as to the time frame for litigation
if a tax were imposed [on the PF fund] and the legislature
appealed it. He reminded the committee that the discussion
concerns hundreds of millions of dollars and if [litigation]
carries over to another year, then the dollar amount doubles and
the situation becomes even worse. He expressed concern that
somewhere down the road if [the PF loses money], there would be
no funds to pay tax [which might result in drawing upon the PF]
corpus [to obtain funds].
MR. LORENSEN answered that, practically speaking, the committee
is talking about a litigation sequence that probably would not be
resolved in less than two years and could be longer than three.
REPRESENTATIVE GREEN exclaimed that at a billion dollars a year
that is...
REPRESENTATIVE ROKEBERG reminded Representative Green that "you
never ask the question unless you know the answer."
Number 1129
REPRESENTATIVE CROFT inquired as to the consequence if the
legislature is wrong. He asked if the legislature would be
treated as a corporation and if so, what is the corporate tax
rate?
MR. LORENSEN replied that he believes that the corporate tax rate
is 39 percent but, again, he does not claim to be a tax expert.
REPRESENTATIVE ROKEBERG said that the corporate tax rate varies.
REPRESENTATIVE KERTTULA noted that Mr. Lorensen has worked with
the PF too.
MR. LORENSEN explained that he has a private law practice in
Juneau but he is also outside counsel to the PF under contract.
Number 1210
REPRESENTATIVE JAMES commented that she knows why the sponsor has
put HJR 49 before the committee and she knows that his beliefs
are very deep seated. Furthermore, his district is probably very
supportive and demanding of this issue. She remarked that her
district has been labeled the most conservative in the state only
because the percentage of registered Republicans in her district
is more than in any other district. In regard to the September
14, 1999, vote, the 83 percent "no" vote did not mean absolutely
"no, no way." She surmised that the vote really meant that the
voters thought that getting into the earnings reserve was a
"camel's nose under the fence," which she believes to be the
case.
REPRESENTATIVE JAMES commented that her 35 years' experience with
tax preparation and education has left her scared to do anything
about the PF that would put it in any jeopardy. She said that
the situation can be solved another way, and furthermore the
situation that Representative Ogan is trying to fix can be
resolved without doing HJR 49. She noted that she has been a
proponent of doing nothing this year until the legislature works
out something that the public will buy into, which she believes
the legislature can do. However, she did not know what that
"something" is nor does she think any legislator knows; still,
the legislature needs to work on it. The legislature needs to
come to a conclusion and determine how much money is needed and
where it is going to come from.
REPRESENTATIVE JAMES informed the committee that she had sent out
a survey recently and those who have responded have proven that
her understanding of the 83 percent vote is fairly correct.
Although the answers on her survey range all over the place,
there is a small percentage that says "leave the earnings alone
and leave the PF dividend alone and don't do anything but just
get out of there and don't touch anything." She emphasized that
she does not want to discredit Representative Ogan for what he is
doing because he honestly believes that HJR 49 is a solution.
However, she does not believe that [HJR 49] is a solution because
she believes it does pose a threat for which the legislature has
no defense or answer.
Number 1385
REPRESENTATIVE ROKEBERG apologized for his earlier, but he feels
very strongly about it. He noted that he had asked
Representative Ogan before [if he wanted to watch the video] of
the Callan & Associates presentation to the Finance Committee,
which he offered to provide to Representative Ogan because he
needs to understand [some of the problems]. Representative
Rokeberg said that before "something" is put into the
constitution Representative Ogan should make sure that was fixed
first.
REPRESENTATIVE ROKEBERG informed the committee that personally he
believes that the legislature needs to develop some type of
endowment system so that the legislature does not get involved in
an inflationary deposit that has to be piecemealed out as a
direct appropriation. He commented that one reason the market
crashed today was because the consumer price index (CPI) release
was the worst in years. The CPI came out at 0.7 percent for the
month of March [2000] and the core rate was 0.4 [percent].
Accordingly, the CPI figure was 8.4 percent adjusted non-core on
an annualized basis and the market "tanked." He explained that
those figures mean that the PF interest reserve and corpus go
down at the same time that the legislature must withdraw a larger
amount of money from the PF earnings reserve to inflation-proof
the fund and place it in the corpus. He remarked that the
legislature has been able to do this because the PF has been in
an up-market condition. However, no plan can be made on that
basis nor can [plans] be memorialized into the constitution that
do not fit all scenarios. He reiterated that there is much
disinformation [on this topic], and therefore people really need
to know the truth.
Number 1503
REPRESENTATIVE GREEN said he subscribed to the same theory. He
noted his appreciation of Representative Rokeberg's explanation
as to why he is so excited because any time a representative
testifies at a committee or on the floor, no other legislator
should demonstrate a critical or belittling demeanor.
Representative Green hoped that Representative Ogan understood
that although the majority of the committee is not in favor of
HJR 49, by no means is Representative Ogan discredited, in fact,
Representative Green champions the fact that Representative Ogan
brought something forward because that is what the legislature
needs, more ideas.
REPRESENTATIVE OGAN said that he does not take things personally
because he also gets excited sometimes. Furthermore, he noted
his acceptance of criticism as a positive thing. Moreover, he
said that he does not disagree with much of what he has heard.
Although he does not claim to be a financial expert, he
recommended that the legislature fix this system if it is broken.
He recognized that the "fix" is going to result in very
contentious debate because the legislature has lost the
confidence of the people. Therefore, maybe someone else, such as
another legislature should try to fix the problem. Perhaps, HJR
49 would be a good vehicle to fix the problem. Although the
legislature needs to come up with a fix, he does not think people
are going to trust the legislature until they know that the PF
program is not going to go away, especially since the courts
themselves have said that the PF program is at the whim of the
legislature.
Number 1667
REPRESENTATIVE CROFT noted that there are two points to this
issue. First, should it be constitutionalized at all. Second,
if it is constitutionalized, what does the legislature want to
put in the constitution. He explained that HJR 49 proposes to
immortalize a five-year running average methodology into the
constitution. He echoed Representative Rokeberg's point that the
PF has been in on one of the biggest stock market rides in
history. Now that the stock market has just hit a correction
bump or may remain flat for a while the legislature would run a
risk by setting in stone a five-year running average. He
explained that when the stock market flattens, the PF will
[continue to] pay for the 20 percent years with nothing in the
bank from which to draw. He envisioned a scenario in which the
PF Corporation comes to the legislature and says that the PF
Corporation had a bad year with zero income, although the last
four years have been fabulous. In such a scenario, the
legislature owes a dividend based on a great four years plus one
zero year, but there would be no dollars to make the dividend
payments.
Number 1812
REPRESENTATIVE CROFT pointed out that if the stock market suffers
a two-year flat run, then the PF will have blown the entire
reserve. If there is a three-year flat run, depending on how
much and what negative, then the PF goes broke. He acknowledged
that the consequences of a flat stock market can be solved in a
couple of ways. For instance, instead of using a five-year
average the PF could use what it earns in the year, however that
method has a high degree of volatility. He indicated that an
endowment approach could be a possible solution, especially since
most of the committee likes the stability that an endowment
approach would bring. However, the idea of an endowment did not
receive much discussion at all.
Number 1872
REPRESENTATIVE CROFT asked if the committee was sure it wanted to
constitutionalize the PF formula in view of the tax consequences
of such action. He acknowledged that constitutionalization of
the PF formula is advantageous when the stock market is riding
high; however, is it the one that the legislature wants to set in
stone? He noted that a five-year running average is normally
figured by taking five years and dividing it into fifths and it
comes out to about 20. He explained that half of the 20 goes to
the dividend and then rules say that the Corporation shall
calculate the amount to transfer for inflation proofing based on
the United States CPI. [After hearing Representative Rokeberg's
assessment of the current market,] Representative Croft
envisioned that the current situation, the stock market figures
and the CPI figures combined, is the worst possible scenario.
He explained that the legislature by law, and now by constitution
if HJR 49 passes, must deposit a large amount of money into the
PF for inflation proofing. Furthermore, the legislature [would
have] no money with which to pay for inflation proofing and would
still have to pay a dividend based on four years back. If what
happened this week [in the stock market] remains as is or happens
again in the future, under this constitution, the PF really would
be "train wrecked."
REPRESENTATIVE ROKEBERG reiterated that the dividend would be
gone.
REPRESENTATIVE GREEN agreed.
REPRESENTATIVE CROFT noted that the whole reserve account would
be gone.
Number 1930
REPRESENTATIVE JAMES explained that the dividend is calculated at
50 percent of the earnings or half of what is in the earnings
reserve, [although statute] does not specify that is what
happens. She commented that inflation proofing does not get done
[if there is not enough money to cover it].
REPRESENTATIVE CROFT quoted from statutes Sec. 37.13.140. Income.
as follows:
Income available for distribution equals 21 percent of
the net income of the fund for the last five fiscal
years, including the fiscal year just ended, but may
not exceed net income of the fund... plus the
balance...
In other words, "the running five is used unless it is on the
bottom, in which case it is just everything that remains. It is
figured on what the PF made this year and what is in the bank.
If it is more than that then that is all that is available." He
quoted "dividends shall be 50 percent of the income available for
distribution as defined above."
Number 1999
REPRESENTATIVE JAMES agreed and noted that the earnings reserve
has shrunk if [the amount] was [not such that] the 21 percent
could be done. She reiterated that [dividends are based on] half
of what [is in the earnings reserve], which is the measure, and
half [of that is] put into the dividend fund. Finally, what is
left is used to inflation-proof. She remarked that any money
after inflation proofing is either carried over to the next year
or is used for PF management operations costs.
REPRESENTATIVE CROFT reminded the committee that the merits of
HJR 49 are under discussion. He recognized that Representative
James was correct in her explanation that half of the earnings
reserve goes to the dividend but the part that goes to inflation
proofing does not talk about 50 percent of what is left or
anything.
REPRESENTATIVE JAMES agreed that inflation proofing has nothing
to do with the 50 percent figure.
REPRESENTATIVE CROFT noted that the CPI is spoken of in
conjunction with inflation proofing. So he presented the
following example:
OK, we're down to the bottom of the barrel; we're
taking half of the barrel but it is huge. I mean the
inflation number is not related to the barrel anymore,
it is related to an absolute. So you could say "give
away half of some number and I'm paying you zero
because I don't have any income this year." Take half
of this small number and pay the dividends (you don't
have anything to pay that) and take this huge inflation
number out there and put that back in but, of course,
back...
Number 2110
REPRESENTATIVE ROKEBERG acknowledged that [the money] goes from
the earnings reserve to the corpus so it is zeroing out the
earnings reserve.
REPRESENTATIVE JAMES agreed that it zeroes out the earnings.
REPRESENTATIVE ROKEBERG remarked that inflation proofing is worse
than the other because the PF can never catch up. He recognized
that after dividends are paid out of the PF the amount available
for spending has gone down and inflation proofing has to be added
though it can be put off limits. He added that the PF ends up at
basically net zero so the PF takes the next year's cash flow
infusion and does it all over again. Therefore, the dividend is
paid after the calculation and everything else keeps going into
the corpus and thus the PF is always broke.
REPRESENTATIVE GREEN remarked that some people call it a
convolution.
Number 2155
REPRESENTATIVE CROFT noted that the committee has been
discussing the $400 or $800 million gap and [on top of that the
legislature could] owe the PF $1 billion for inflation proofing.
REPRESENTATIVE ROKEBERG agreed with Representative Croft.
REPRESENTATIVE CROFT remarked that the legislature does not have
a $400 million problem but rather a $1.4 million problems because
by law and by constitution the legislature has to pay whatever
for $8 billion in the PF. Furthermore, the legislature's $400
million gap would remain.
REPRESENTATIVE ROKEBERG said that is the point he was making
earlier. If the market is going up, the PF is earning more and
the dividend goes up. He explained that the PF pays the dividend
and then whatever residual values are left [pay for] inflation
proofing for that year. However, if inflation goes down, the
legislature has to go back to ten years before and fill the rest
of it back into the corpus. Therefore, the PF is back to zero
again; that is really what is broken.
Number 2241
REPRESENTATIVE GREEN reminded the committee that with all of that
there is also the possibility of getting hit with income tax,
which would leave the legislature with only 55 or 60 percent of
the PF.
REPRESENTATIVE ROKEBERG explained that the IRS imposed income tax
[would be on] what the earnings were, just like a corporation,
then they double tax it to the dividend.
Number 2267
REPRESENTATIVE OGAN pointed out that the state would not
hemorrhage on income tax because of Section 3 of HJR 49.
REPRESENTATIVE CROFT stated that he does not know that what
Representative Ogan says is true, however this formula only works
well in a great stock market with low inflation, which does not
happen very often. Alaska has been very lucky over the last 15
years. He noted that people could say "We'll always have a great
stock market and low inflation" but if either one of those two
things stop happening problems surface under this [PF] formula.
REPRESENTATIVE GREEN agreed and said that such knowledge was not
understood by very many legislators let alone the people in the
street who voted.
Number 2338
REPRESENTATIVE ROKEBERG agreed.
REPRESENTATIVE MURKOWSKI surmised that the point and purpose of
the sponsor, in bringing HJR 49 forward, is to enshrine it to
protect the dividend. If the legislature is going to protect the
dividend through HJR 49, the public needs to understand that
putting this language in the constitution, which says that the
legislature will "guarantee the permanent fund dividend...," may
in fact mean that the legislature will continue to pay out a
dividend. However, that pay out may occur at the expense of all
of the state's savings and at the expense of the corpus of the
fund. She does not believe that is what the public really wants
nor does she believe that the legislature can guarantee the
dividend.
Number 2449
REPRESENTATIVE GREEN agreed that the legislature cannot guarantee
a PF dividend under any plan that may be presented. The only way
the legislature could guarantee a PF dividend is, as long as
there is a PF, by continuing to contribute to it.
TAPE 00-62, SIDE A
REPRESENTATIVE ROKEBERG added that it is absolutely dishonest [to
provide a guarantee].
Number 0058
SHELTON GREEN, Staff to Senator Lyda Green, Alaska State
Legislature, noted that if HJR 49 passes, the legislature will
still control who receives the dividend, which is important to
the question of imminent control that the legislature will have
on the money [the dividend program]. He reminded the committee
that the Morrison & Foerster report speaks about a gray area
referred to as "beyond the reach of government." He pointed out
that the legislature would still control, in statute, who would
receive a dividend. The legislature is constitutionalizing only
statutes concerning the dividend and inflation proofing rather
than all of the earnings. The money that is left over every
year is still going to be in statute.
MR. GREEN referred to Representative Murkowski's comment
regarding what the legislature is trying to get to in promising a
dividend. He explained that the legislature [, beyond promising
a dividend,] is also trying to promise people the right to vote
on what would happen with their dividend. Furthermore, the
legislature is trying to reach a place to allow the public to
vote before the legislature spends money that would have gone to
dividends. He commented that no one is opposed to using parts of
the earnings reserve or unrefuted income for state spending
[rather the interest is in accessing the money] in a gracious
manner.
Number 0160
REPRESENTATIVE GREEN inquired as to how the legislature maintains
control for that which is covered by this constitutional
amendment.
MR. GREEN replied that the money which is left over every year
after paying dividends and inflation proofing is not
constitutionalized. He reiterated that the legislature would
still maintain control.
REPRESENTATIVE GREEN said that no one is talking about the left
over money rather this committee is talking about the big chunk
[of money] which does go into the constitution; the concern is
that the big chunk will be taxed.
MR. GREEN commented that he understood what Representative Green
was saying. He restated Mr. Lorensen's earlier testimony that
the PF money is all out of the reach of the government and there
is a litmus test that must be passed before the PF loses its
current status.
Number 0230
REPRESENTATIVE ROKEBERG explained that the PF has become a
political issue in this state already and with the
disinformation, misunderstanding and ignorance of people
surrounding this issue he would hope that this gets cleared up
before the next election.
REPRESENTATIVE CROFT mentioned that someone had said "use the
rest" and that may be true but HJR 49, page 2, lines 1 and 2,
says "All income from the permanent fund shall be distributed as
provided for by statutory formula that existed on January 1, 2000
(AS 37.13.140 and 37.13.145)." He indicated that [AS 37.13].140
and [AS 37.13].145 talk about dividend and inflation proofing.
Number 0373
MR. GREEN specified that [those statutes] give the legislature
the means to calculate and that would be in the constitution.
Although Mr. Green sympathized with Representative Rokeberg's
concerns, he pointed out that the actual money (or numbers)
available for distribution is still at the will of the
legislature.
REPRESENTATIVE CROFT asked if all income from the PF shall be
distributed as provided.
REPRESENTATIVE GREEN inquired if that was not the current plan.
Number 0420
MR. GREEN replied that there was a piece of legislation in 1997,
HJR 18, which [proposed] to take all the earnings and put them
into the constitution. He added that the sponsor had spoken with
the drafters in Legislative Legal in an effort to not repeat that
[proposed] legislation because it was the purpose of the sponsor
to leave out [of the constitution] money that was left over every
year.
REPRESENTATIVE CROFT recognized that Mr. Green had accomplished
the desired result.
Number 0454
CHAIRMAN KOTT indicated HJR 49 would be held over.
CHAIRMAN KOTT called for a brief at-ease that lasted about one
minute and then the meeting was called back to order.
SB 177-INSURANCE TRADE PRACTICES
Number 0493
CHAIRMAN KOTT announced the next order of business is CS FOR
SENATE BILL NO. 177(L&C), "An Act relating to insurance trade
practices; and providing for an effective date."
SENATOR DAVE DONLEY, Alaska State Legislature, said that SB 177
brings Alaska into alignment with the majority of states as far
as allowing their Division of Insurance to take enforcement
action to protect the individual consumer regarding violations of
the Unfair Claims Practices Act. He noted that SB 177 is
supported completely by the Division of Insurance and makes a
very important change to maintain the status quo for the issue of
proximate cause to protect homeowners all over Alaska. He
explained that the purpose is to make sure that homeowners'
insurance protection policies pay for damages [as expected by the
homeowner and for which he/she had] paid. He commented that SB
177 is a good, positive, and balanced pro-consumer piece of
legislation. He informed the committee that SB 177 has been
amended several times through the process to make it clear that
the bill does not create a private cause of action and that the
enforcement of the Unfair Claims Practices Act is the exclusive
jurisdiction of the Division of Insurance. He indicated that SB
177 is long overdue.
Number 0560
CHAIRMAN KOTT indicated that he will hold SB 177 over until
tomorrow.
SENATOR DONLEY informed the committee that he supports the House
Labor & Commerce version of SB 177.
CHAIRMAN KOTT asked if that included the amendment that
Representative Rokeberg has.
SENATOR DONLEY clarified that his support does not include the
new amendment presented by Representative Rokeberg. However,
Representative Rokeberg's amendment has a piece to which Senator
Donley and the division are amenable.
REPRESENTATIVE MURKOWSKI inquired as to what piece they are
referring to.
CHAIRMAN KOTT answered that the committee will find out tomorrow
and indicated that HCS CSSB 177(L&C) will be held over.
ADJOURNMENT
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 3:20 p.m.
| Document Name | Date/Time | Subjects |
|---|