Legislature(1995 - 1996)
04/19/1996 03:15 PM House L&C
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 19, 1996
3:15 p.m.
MEMBERS PRESENT
Representative Pete Kott, Chairman
Representative Norman Rokeberg, Vice Chairman
Representative Brian Porter
Representative Kim Elton
MEMBERS ABSENT
Representative Beverly Masek
Representative Jerry Sanders
Representative Gene Kubina
COMMITTEE CALENDAR
HOUSE BILL NO. 407
"An Act relating to discrimination by certain insurers against a
person with a genetic defect."
- PASSED CSHB 407(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 345
"An Act relating to the procurement of investment and brokerage
services by the Alaska State Pension Investment Board."
- HEARD AND HELD
HOUSE BILL NO. 416
"An Act relating to fees or assessment of costs for certain
services provided by state government, including hearing costs
related to the real estate surety fund; fees for authorization to
operate a postsecondary educational institution or for an agent's
permit to perform services for a postsecondary educational
institution; administrative fees for self-insurers in workers'
compensation; business license fees; fees for activities related to
coastal zone management, training relating to emergency management
response, regulation of pesticides and broadcast chemicals, and
subdivision plans for sewage waste disposal or treatment; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 549
"An Act relating to partnerships; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 363
"An Act requiring banks to pay interest on money in reserve
accounts held in connection with mortgage loans."
- HEARD AND HELD
HOUSE BILL NO. 518
"An Act exempting certain persons engaged in selling or servicing
certain vehicles from overtime wage requirements."
- SCHEDULED BUT NOT HEARD
CS FOR SENATE BILL NO. 199(FIN)
"An Act relating to environmental audits and health and safety
audits to determine compliance with certain laws, permits, and
regulations."
- SCHEDULED BUT NOT HEARD
PREVIOUS ACTION
BILL: HB 407
SHORT TITLE: INSURING PERSONS WITH GENETIC DEFECTS
SPONSOR(S): REPRESENTATIVE(S) DAVIES, Brown, Nicholia
JRN-DATE JRN-PG ACTION
01/10/96 2401 (H) READ THE FIRST TIME - REFERRAL(S)
01/10/96 2402 (H) LABOR & COMMERCE, JUDICIARY, FINANCE
01/24/96 2529 (H) COSPONSOR(S): NICHOLIA
03/27/96 (H) L&C AT 3:00 PM CAPITOL 17
03/27/96 (H) MINUTE(L&C)
04/17/96 (H) L&C AT 3:00 PM CAPITOL 17
04/18/96 (H) L&C AT 2:00 PM CAPITOL 17
04/19/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 345
SHORT TITLE: PENSION INVESTMENT BOARD PROCUREMENTS
SPONSOR(S): REPRESENTATIVE(S) FOSTER, Ivan
JRN-DATE JRN-PG ACTION
05/10/95 2088 (H) READ THE FIRST TIME - REFERRAL(S)
05/10/95 2088 (H) STATE AFFAIRS, L&C, FINANCE
03/21/96 (H) STA AT 8:00 AM CAPITOL 102
03/21/96 (H) MINUTE(STA)
03/21/96 3259 (H) COSPONSOR(S): IVAN
03/26/96 (H) STA AT 8:00 AM CAPITOL 102
03/26/96 (H) MINUTE(STA)
03/27/96 3390 (H) STA RPT CS(STA) 2DNP 4NR
03/27/96 3391 (H) DNP: ROBINSON, WILLIS
03/27/96 3391 (H) NR: JAMES, PORTER, GREEN, OGAN
03/27/96 3391 (H) FISCAL NOTE (REV)
04/03/96 (H) L&C AT 3:00 PM CAPITOL 17
04/03/96 (H) MINUTE(L&C)
04/17/96 (H) L&C AT 3:00 PM CAPITOL 17
04/17/96 (H) MINUTE(L&C)
04/18/96 (H) L&C AT 2:00 PM CAPITOL 17
04/18/96 (H) MINUTE(L&C)
04/19/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 416
SHORT TITLE: OMNIBUS STATE FEES & COST ASSESSMENTS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/12/96 2432 (H) READ THE FIRST TIME - REFERRAL(S)
01/12/96 2432 (H) STATE AFFAIRS, L&C, RESOURCES, FINANCE
01/12/96 2432 (H) 7 FNS (DCED, 2-DEC, 2-GOV, LABOR, DMVA)
01/12/96 2432 (H) FISCAL NOTE (REV)
01/12/96 2433 (H) GOVERNOR'S TRANSMITTAL LETTER
04/09/96 (H) STA AT 8:00 AM CAPITOL 102
04/09/96 (H) MINUTE(STA)
04/11/96 (H) STA AT 8:00 AM CAPITOL 102
04/11/96 (H) MINUTE(STA)
04/15/96 3738 (H) STA RPT CS(STA) NT 1DP 1DNP 4NR
04/15/96 3739 (H) DP: ROBINSON
04/15/96 3739 (H) DNP: OGAN
04/15/96 3739 (H) NR: JAMES, PORTER, GREEN, IVAN
04/15/96 3740 (H) 5 FNS (2-GOV, 2-DEC, DCED) 1/12/96
04/15/96 3740 (H) 3 FNS (LABOR, DMVA, REV) 1/12/96
04/17/96 (H) L&C AT 3:00 PM CAPITOL 17
04/17/96 (H) MINUTE(L&C)
04/18/96 (H) L&C AT 2:00 PM CAPITOL 17
04/18/96 (H) MINUTE(L&C)
04/19/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 549
SHORT TITLE: LIMITED LIABILITY PARTNERSHIPS
SPONSOR(S): JUDICIARY BY REQUEST
JRN-DATE JRN-PG ACTION
04/03/96 3617 (H) READ THE FIRST TIME - REFERRAL(S)
04/03/96 3618 (H) JUDICIARY, L&C, FINANCE
04/10/96 (H) JUD AT 1:00 PM CAPITOL 120
04/10/96 (H) MINUTE(JUD)
04/12/96 3696 (H) JUD RPT 5DP 1NR
04/12/96 3696 (H) DP: PORTER, B.DAVIS, TOOHEY, BUNDE
04/12/96 3696 (H) DP: GREEN
04/12/96 3696 (H) NR: FINKELSTEIN
04/12/96 3696 (H) FISCAL NOTE (DCED)
04/12/96 3696 (H) ZERO FISCAL NOTE (REV)
04/12/96 3696 (H) REFERRED TO LABOR & COMMERCE
04/17/96 (H) L&C AT 3:00 PM CAPITOL 17
04/17/96 (H) MINUTE(L&C)
04/18/96 (H) L&C AT 2:00 PM CAPITOL 17
04/18/96 (H) MINUTE(L&C)
04/19/96 (H) L&C AT 3:00 PM CAPITOL 17
BILL: HB 363
SHORT TITLE: INTEREST ON MORTGAGE ESCROW ACCTS
SPONSOR(S): REPRESENTATIVE(S) BUNDE
JRN-DATE JRN-PG ACTION
12/29/95 2361 (H) PREFILE RELEASED
01/08/96 2361 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2361 (H) STATE AFFAIRS, L&C, FINANCE
01/18/96 (H) STA AT 8:00 AM CAPITOL 102
01/18/96 (H) MINUTE(STA)
01/23/96 (H) STA AT 8:00 AM CAPITOL 102
01/23/96 (H) MINUTE(STA)
02/01/96 (H) STA AT 8:00 AM CAPITOL 102
02/01/96 (H) MINUTE(STA)
02/20/96 (H) STA AT 8:00 AM CAPITOL 102
02/20/96 (H) MINUTE(STA)
02/21/96 2826 (H) STA RPT CS(STA) NT 1DP 2DNP 3NR
02/21/96 2826 (H) DP: GREEN
02/21/96 2826 (H) DNP: JAMES, PORTER
02/21/96 2826 (H) NR: IVAN, ROBINSON, WILLIS
02/21/96 2826 (H) ZERO FISCAL NOTE (DCED)
02/21/96 2826 (H) REFERRED TO LABOR & COMMERCE
04/17/96 (H) L&C AT 3:00 PM CAPITOL 17
04/17/96 (H) MINUTE(L&C)
04/18/96 (H) L&C AT 2:00 PM CAPITOL 17
04/18/96 (H) MINUTE(L&C)
04/19/96 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
REPRESENTATIVE JOHN DAVIES
Alaska State Legislature
Capitol Building, Room 422
Juneau, Alaska 99801
Telephone: (907) 465-4457
POSITION STATEMENT: Prime sponsor of HB 407.
TIM VOLWILER
8030 North Douglas Highway
Juneau, Alaska 99801
Telephone: (907) 463-4825
POSITION STATEMENT: Testified against HB 345.
WILLIE ANDERSON
NEA - Alaska
114 Second Street
Juneau, Alaska 99801
Telephone: (907) 586-3030
POSITION STATEMENT: Testified against HB 345.
JIM SIMEROTH, President
Kenai Peninsula Education Association
P.O. Box 921
Kenai, Alaska 99611
Telephone: (907) 283-5177
POSITION STATEMENT: Testified against HB 345.
GEORGE DOZIER, Legislative Assistant
to Representative Pete Kott
Alaska State Legislature
Capitol Building, Room 432
Juneau, Alaska 99801
Telephone: (907) 465-3306
POSITION STATEMENT: Explained HB 416.
JUANITA HENSLEY, Chief
Driver Services
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, Alaska 99811-0020
Telephone: (907) 465-4361
POSITION STATEMENT: Answered questions on HB 416.
NANCY SLAGLE, Director
Division of Budget Review
Office of Management and Budget
Office of the Governor
P.O. Box 110020
Juneau, Alaska 99811-0020
Telephone: (907) 465-4681
POSITION STATEMENT: Answered questions on HB 416.
CATHERINE REARDON, Director
Central Office
Division of Occupational Licensing
Department of Commerce and
Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2534
POSITION STATEMENT: Answered questions on HB 416.
BILL EZELL
Accounting Firm of Deloitte and Touche
Limited Liability Partnership
Address not provided
Telephone: (703) 532-3566
POSITION STATEMENT: Testified in support of HB 549.
PATTI SWENSON, Legislative Assistant
to Representative Con Bunde
Alaska State Legislature
Capitol Building, Room 108
Juneau, Alaska 99801
Telephone: (907) 465-6824
POSITION STATEMENT: Gave sponsor statement for HB 363.
LUCILLE STIETZ
National Bank of Alaska
P.O. Box 107025
Anchorage, Alaska 99510
Telephone: (907) 257-3434
POSITION STATEMENT: Testified against HB 363.
STEVE CONN, Executive Director
Alaska Public Interest Research Group
P.O. Box 101093
Anchorage, Alaska 99503
Telephone: (907) 278-3661
POSITION STATEMENT: Testified in support of HB 363.
LISA BELL, Senior Vice President
and Chief Operating Officer
Alaska Federal Savings Bank
2094 Jordan Avenue
Juneau, Alaska 99801
Telephone: (907) 790-5104
POSITION STATEMENT: Testified against HB 363.
ACTION NARRATIVE
TAPE 96-38, SIDE A
Number 001
The House Labor and Commerce Standing Committee was called to order
by Chairman Pete Kott at 3:15 p.m. Members present at the call to
order were Representatives Porter, Elton, Rokeberg and Kott.
HB 407 - INSURING PERSONS WITH GENETIC DEFECTS
Number 049
CHAIRMAN PETE KOTT announced the committee would address HB 407,
"An Act relating to discrimination by certain insurers against a
person with a genetic defect."
REPRESENTATIVE JOHN DAVIES, prime sponsor of HB 407, explained he
has prepared a proposed committee substitute (CS) for HB 407, work
draft C. He informed the committee the main change is on page 2,
lines 5 through 10, subsection (b).
Number 114
REPRESENTATIVE NORMAN ROKEBERG moved to adopt the proposed CSHB
407, 9-LS1209\C, Ford, 4/16/96.
CHAIRMAN KOTT asked if there was an objection. Hearing none, CSHB
407, 4/16/96, Ford, Version C, was before the House Labor and
Commerce Committee.
Number 197
REPRESENTATIVE DAVIES explained the purpose of the addition in the
CS is to try to respond to some of the concerns that were addressed
at the last hearing. There may be situations where having some
sort of genetic marker in concert with a probability of the
development of a disease or actually having some other medical
condition that would presuppose the symptoms would develop soon.
He said he tried to say that you wouldn't apply this bill in the
case where a person had asymptomatic genetic characteristic and
some other indicator that there was a probability of developing
some disease where there was a probability of substantial increase
in claims. The bottom line is if the circumstances that are
present would indicate, to a reasonable person with the history,
that there would be a substantial increase in claims then this bill
wouldn't apply. He said what he is trying to get at is a situation
where the only piece of information is an asymptomatic genetic
characteristic. There are many circumstances where just that alone
has absolutely no probability that attaches to that, but you would
have a particularly significant disease develop - it's
indistinguishable from the rest of the population in the insurance
pool.
Number 326
REPRESENTATIVE BRIAN PORTER said, "I would assume then that the
term `actuarial projection' in this context means that a person
that is found to have this genetic characteristic, that that
genetic characteristic has had in the past enough experience that
sans symptoms, that's known, it's extremely likely that `X' is
going to happen and that `X' is going to be more (indisc.--
coughing)."
Number 391
REPRESENTATIVE DAVIES pointed out he has submitted the CS to a
couple of insurance organizations to see what their view is. He
said his understanding is that their response is that this
significantly improves the bill from their point of view, but it
might not quite get it over the hurdle. He referred to a response
from the Health Insurance Association of America (HIAA) which says
that they don't support policies or practices by which any person
who has a health insurance plan is singled out for termination of
coverage or premium increase because of claims history results of
any medical test, including genetic tests. He said their testimony
has been that they are unaware of any current use or plans by their
member companies that require applications for private health
insurance to undertake any type of genetic tests for the purpose of
obtaining major medical coverage. Representative Davies said it
would be his understanding that there isn't any widespread or
prevailing practice in the insurance industry to do this right now.
What he is concerned about are those small number of instances
where individuals for pathological reasons are getting singled out
for discrimination in particular cases. Since it doesn't appear to
be the policy of the insurance industry to do this, he would like
to just put an additional barrier to prevent that from happening.
As you get more and more information there will be a tendency for
this type of situation to happen more often. He said he doesn't
want people to feel that they shouldn't get genetic tests for fear
of their insurance policies will go up. Representative Davies said
he wants this information in a positive sense in that people can
get tests where it is appropriate and use that in preventative
maintenance.
REPRESENTATIVE DAVIES referred to a publication entitled, "Science
and Engineering Ethics" and explained they sent out 917
questionnaires to people who may be at risk. They had 455
respondents who asserted that they had experienced genetic
discrimination and 437 said they had not. If you looked at those
further, it may be that some of those would not be legitimate
claims, but there were 455 respondents who felt they had been
discriminated against solely on the basis of asymptomatic genetic
disorder. Representative Davies pointed out there was an article
recently in the Juneau newspaper that indicated that there are 11
states that have some sort of law that relates to this topic.
REPRESENTATIVE DAVIES referred to a speech by Harold Varmus (Sp.?)
given at Kansas State University on February 5, 1996, and said Mr.
Varmus indicates that he gave the speech as director of the
National Institute of Health. Representative Davies read, "To make
any further progress, we have an immediate political issue to
resolve. We must insist that all states and the federal government
pass laws to protect our citizens from abuses of genetic
information. Recently, the Equal Employment Opportunity Commission
ruled that the Americans for Disability Act prevents job
discrimination based on genetic information. This will help, but
strong laws that guarantee the privacy of genetic information, the
protection from reprisals by insurance companies will be essential.
And currently only a few states, Kansas not among them, have such
laws. Provisions in Senator Castlebaum's proposed health insurance
(indisc.) are enlightening in this respect." Representative Davies
said he would answer questions.
CHAIRMAN KOTT asked if there were questions of Representative
Davies. Hearing none, he asked if there were further witnesses.
There being none, Chairman Kott closed public testimony.
Number 828
REPRESENTATIVE KIM ELTON moved to pass HB 407, Version C, dated
4/16/96, out of committee with individual recommendations and the
attached zero fiscal note.
CHAIRMAN KOTT asked if there was an objection. Hearing none, CSHB
407(L&C) was moved out of the House Labor and Commerce Committee.
HB 345 - PENSION INVESTMENT BOARD PROCUREMENTS
Number 954
CHAIRMAN KOTT announced the next order of business would be HB 345,
"An Act relating to the procurement of investment and brokerage
services by the Alaska State Pension Investment Board."
TIM VOLWILER was first to testify on HB 345. He indicated he
didn't know what version of the bill the committee was addressing.
CHAIRMAN KOTT informed Mr. Volwiler the committee was addressing
Version K, Labor and Commerce, dated 04/10/96.
MR. VOLWILER informed the committee he anticipates retiring through
the teacher's retirement system (TRS) in about ten years. He said
he has expressed his reservations about the bill previously. Mr.
Volwiler said this is a defined benefit system for retirees, so as
an individual, he anticipates receiving the same amount of money
regardless of what happens to the pension funds. However, if the
pension funds are used, in his view, inappropriately for economic
development within the state and the investments perform poorly,
then every municipality and the state is going to have to make up
the difference in those earnings which didn't happen because it was
used for local investments that may have been more risky. Mr.
Volwiler said he doesn't like seeing any requirements put on the
Pension Investment Board. He said he believes the board is
operating fine by itself. Mr. Volwiler said he doesn't know what
is meant by materially sacrificing competency or performance. He
referred to the risk and expected yield and said he thinks it is
hard to predict what the risk of an investment is going to be and
what the yield is going to be.
MR. VOLWILER referred to AAA municipal bonds and said if you want
to buy 50, he doesn't think it is appropriate in the state of
Alaska. He stated he would buy one bond from every state and that
is diversification. Mr. Volwiler explained he doesn't want to see
the legislature use this as a shadow, (AIDEA). If those
investments are earning less, it will be the taxpayers of the
municipalities and the state who are going to pay the difference.
He stated he is strongly opposed to HB 345.
Number 1055
WILLIE ANDERSON, NEA - Alaska, was next to address HB 345. He
stated he testified against the earlier version of the bill. Mr.
Anderson said he appreciates the work the staff to the House Labor
and Commerce Committee did to try to mitigate some of the
opposition to the bill earlier. He said the bill still needs a lot
of work. Mr. Anderson referred to the top of page 2 of the bill,
"The board shall (10) increase the board's utilization of brokerage
and investment services provided by in-state business," and said
the problem with that is the need to increase. When does this
increase? He asked if it means that you have one brokerage firm
this year, so you must have two next year and three the next year.
He referred to testimony given on the bill the previous Wednesday
where it was stated that there was only five brokerage firms in the
state that deal with any level of quantity like this pension
investment addresses. He stated that is a major concern to NEA -
Alaska and they still oppose the bill. Additionally, when you look
at item (11), based on risk level and expected yield, potentially
you could have the total investment of the pension fund invested in
the state of Alaska if you have an expected yield of 10 or 12
percent and it is equal to other diversified yields. Once again,
this is guess work, you can't guarantee any precise yield. The
company puts forth their perspectives and you take your best guess
on it. The potential is the entire pension fund could be invested
in the state of Alaska using these standards and it isn't very wise
investment strategy from their perspective. It is NEA - Alaska's
belief that the bill is unnecessary as the Investment Board
currently has the authority to make decisions about which firm to
and which investments to use. He continued to give testimony
against the bill.
Number 1346
CHAIRMAN KOTT said Section 11 basically says that the board should
invest funds in the state if, in fact, the risk level and expected
yield is either equal to or more favorable than alternative
investment opportunities. He said if we had AAA bonds in New York
and AAA bonds that were available in Alaska, with 6 percent yield
in the New York bond and 6 1/4 yield in the Alaska bond, which
would be the best bond to invest in that would contribute to the
pension fund?
MR. ANDERSON said under those circumstances, the Alaska bond would
be the best yield to invest in because it causes economic growth to
the state and it gives a better yield for the pension fund. If it
is expected that all the bond investments should be in Alaska as
opposed to diversifying around the country, that could be a major
problem. If it is a municipal bond, there is a level of security
in that, but if it is corporate bond, there is less security in
that and it could have a higher yield but you wouldn't want to put
all your bond investment in that corporate bond in the state of
Alaska.
Number 1432
REPRESENTATIVE ELTON said he agrees with Mr. Anderson's response.
He also pointed out the board currently has the ability to do that
now. It would be smart to diversify in the bond markets.
CHAIRMAN KOTT said he wouldn't believe that the members of the
board who are charged with fiduciary responsibility would put all
that money in one nest egg in the state of Alaska.
REPRESENTATIVE ELTON said with the word "shall" on page 2, line 2,
there could be some that could make the argument that it is not a
permissive word and "shall" says that you shall do that.
CHAIRMAN KOTT said considering the portfolio we're talking about,
he doesn't think anyone in Alaska could offer a bond that would be
equal in yield and risk.
Number 1520
REPRESENTATIVE ROKEBERG said we should do things to encourage
investment in the state; however, he does have problems with the
bill as it is currently written.
Number 1614
JIM SIMEROTH, President, Kenai Peninsula Education Association,
testified via teleconference. He stated there are about 700 people
who are a little nervous about this bill. Some of them fear it is
a possible raid on their pension funds. He noted he didn't have
the most current version of the bill and requested it be faxed to
him. Mr. Simeroth said there is a lot of concern and there seems
to be a bit of micromanaging of the Pension Investment Board and
that creates real concern. It has already been expressed that the
Pension Investment Board could, if they so choose, make Alaska
investments. He said that is appropriate, but it should be left up
to the board to utilize those services that they deem are most
appropriate in-state or out of state. Mr. Simeroth referred to
requisite skills that are required and said he doesn't know what
those would be. Again, that seems to be part of what the board
would be addressing when they decide where the investments are
going. There is concern that this might evolve into something
where politically the decisions are made where pension investments
are going to be. In addition, some people are concerned that if
we're looking for a high rate of return, the risk goes up. We have
a pension fund that currently operates very well and he doesn't see
the need for tampering with it.
Number 1826
CHAIRMAN KOTT indicated there were no further witnesses to testify.
He then closed the public hearing. He announced the bill would be
held until the following Monday.
HB 416 - OMNIBUS STATE FEES & COST ASSESSMENTS
CHAIRMAN KOTT announced the committee would hear HB 416 "An Act
relating to fees or assessment of costs for certain services
provided by state government, including hearing costs related to
the real estate surety fund; fees for authorization to operate a
postsecondary educational institution or for an agent's permit to
perform services for a postsecondary educational institution;
administrative fees for self-insurers in workers' compensation;
business license fees; fees for activities related to coastal zone
management, training relating to emergency management response,
regulation of pesticides and broadcast chemicals, and subdivision
plans for sewage waste disposal or treatment; and providing for an
effective date," introduced by the Governor. Chairman Kott noted
there was a proposed committee substitute. He also informed the
committee there is a Senate version of the Governor's fee bill in
the Senate Rules Committee.
Number 1894
GEORGE DOZIER, Legislative Assistant to Representative Pete Kott
Alaska State Legislature, came forward to testify. He informed the
committee that the proposed CS inserts into HB 416 several pages of
material addressing vehicle registration fees and, accordingly, the
title is changed in the proposed CS. Mr. Dozier explained the CS
proposes across the board a $5 increase in motor vehicle
registration fees. At the same time, it revokes the $10 penalty,
which currently exists in law, for registration at motor vehicle
offices. It rewards individuals that mail in their registration by
deducting $5 from the registration fees. This is anticipated to
generate approximately $700,000. The proposed CS has intent or
purpose language contained in Section 1 which says, "The
legislature intends to annually appropriate at least $700,000 of
the amount the state receives from motor vehicle registration fees
to the Department of Public Safety for state troopers. He said
that concludes his summary.
Number 1971
CHAIRMAN KOTT explained the CS essentially increases, across the
board, registration fees which still is substantially below other
states on the average. It repeals the $10 in-person charge that is
currently in place. He said it is his understanding the Division
of Motor Vehicles is the only division that charges for in-person
contact. The $5 increase in registration fees would be reduced if,
in fact, the person were to send their registration in through the
mail. In essence, there would be no increase whatsoever. The
anticipated revenue, based on this approach, would be about
$700,000. It is the intent of the sponsor that the money that is
generated would be used to support an increase of troopers on the
street.
Number 2021
REPRESENTATIVE ROKEBERG questioned whether the legislature just
passed a Senate bill that made it biannual and it also spoke to the
same fees.
CHAIRMAN KOTT said there was a Senate bill that was passed. He
said depending on whether or not the Senate bill is signed into
law, this will would....
REPRESENTATIVE ROKEBERG questioned whether or not HB 416 should be
amended to reflect the bill that was just passed.
Number 2071
JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles
Department of Public Safety, informed the committee the Senate bill
has been transmitted back to the Senate for concurrence. If the
Senate concurs, it will go to the Governor for signature. The
Department of Public Safety and the Administration supports that
bill and also HB 416. Ms. Hensley said as far as how that will
work with the biannual registration and increasing the fees, she
couldn't tell the committee the technicalities whether HB 416 would
override the Senate bill since this HB 416 would pass at a later
date, or whether just the fee structure would increase the
registration biannually by $10 and then give a biannual break of
$10.
Number 2116
REPRESENTATIVE PORTER said to make it all work, he thinks HB 416
should be amended to coincide with the biannual scheme. He said
there could be a conflict.
MS. HENSLEY said that is correct.
CHAIRMAN KOTT said language could be adopted that would basically
reflect that biannual registration would then increase the fee
twofold.
MS. HENSLEY asked the committee to keep in mind that the biannual
registration bill reduces the registration fee by $2 per vehicle if
they register for the two year period. She pointed out the fee for
rental cars is not reduced and will still be an annual registration
fee.
Number 2143
REPRESENTATIVE ELTON said he would imagine the fiscal note would
change.
Number 2178
REPRESENTATIVE ROKEBERG made a motion to adopt CSHB 416, Version 9-
GH2024\F, Cook, 4/19/96.
CHAIRMAN KOTT said there is a motion to adopt CSHB 416, 4/19/96,
Version F. He asked if there was an objection. Hearing none the
CS was before the committee.
Number 2208
NANCY SLAGLE, Director, Division of Budget Review, Office of
Management and Budget, Office of the Governor, came before the
committee. She explained she has a spreadsheet that will explain
what the different sections of the State Affairs version of the
bill does. Ms. Slagle referred to the first section and said it
allows them to access the real estate surety fund to charge all the
hearing costs. It simplifies the whole process. It is also a cost
savings to the general fund.
MS. SLAGLE referred to the Section 2 and said it relates to the
Postsecondary Education Commission. She said it allows the
commission to charge postsecondary education private institutions
for the processing of their applications to operate. This hasn't
ben done in the past and basically what has happened is the Student
Loan Corporation has basically covered the cost of the processing
of those applications. This gives the ability to charge on a
sliding scale based on tuition revenues the institutions would
receive. The charges would be anywhere from $200 to $2,500
depending on the amount of revenues they receive.
MS. SLAGLE said the third section allows the Human Rights
Commission to charge for items they provide in the way of education
and training information materials. This would be a small amount,
but with the tightening of budgets they have, their ability to
provide this information has reduced substantially. This will give
them the ability to make those charges.
MS. SLAGLE explained the fourth section relates to the Department
of Labor. It gives them the ability to require self insured
employers to pay a 4 percent fee for the cost of processing
disputed claims with the Workers' Compensation Board. The State
Affairs Committee amended this section so that political
subdivisions would be exempt from this requirement. The fee would
cover the costs of processing and hearing claim disputes.
MS. SLAGLE informed the committee members Section 5 deals with the
Department of Natural Resources and is a fee for evaluating for
auditing applications of exploration credits for mine development.
She said they also have an amendment that goes hand in hand with
their streamlining bill to simplify the processing of exploration
credits for mine development. She said this is the fee portion of
it.
MS. SLAGLE referred to the sixth section which relates to the
Department of Transportation and Public Facilities and said it
allows the charging for the use of state marine and harbor
facilities. The concern is mostly in the area of municipalities
being required to charge fees to cover the costs of maintaining
these facilities. There tended to be....[END OF TAPE]
TAPE 96-38, SIDE B
Number 0014
MS. SLAGLE explained Section 7 relates to the Department of
Commerce and Economic Development. It changes the statutory
setting of the business license fees. In the past those have been
$25 per year and this would increase it to $75 every two years.
Ms. Slagle said this hasn't been changed since statehood and is a
revenue generator for the state.
Number 038
REPRESENTATIVE ROKEBERG asked if the only reason the fees are being
raised is because it is revenue generating.
MS. SLAGLE indicated that is correct.
REPRESENTATIVE ROKEBERG said as a business license holder, he isn't
too happy about that.
MS. SLAGLE pointed out it is an increase of $12.50 per year and is
the first increase since statehood.
Number 077
MS. SLAGLE explained Section 8 relates to the Division of
Governmental Coordination. This would allow them to charge fees
for federal consistency determinations under the Alaska Coastal
Management Program. Currently, they basically have a process of
providing a consolidated approach to reviewing permits. She said
this would allow them to collect additional fees from industry to
help in their processing to speed this permit review process along.
Currently, they have no ability to do that and it requires
statutory changes. Ms. Slagle said it is her understanding that
the industry is supportive of this so they can get a quicker
response from the state.
MS. SLAGLE explained Section 9 allows the Department of Military
and Veterans Affairs to charge fees for providing emergency
management response training. Currently, they have the ability to
charge for providing training for oil spill related types of
response, but not for general emergency management response. This
would expand their statutory authority so that they could provide
the other types of response. This would cover basically just the
travel and facility rental that's necessary to do training.
MS. SLAGLE said the next section, Section 10, allows the Department
of Environmental Conservation to charge for pesticide and broadcast
chemical use and for review of subdivision plans for sewage waste
disposal or treatment facilities. The amount charged for the
pesticide and broadcast chemical use would basically be charged to
chemical manufacturers located in the Lower 48 which produces the
chemicals such as Dow, etc.
Number 188
REPRESENTATIVE ROKEBERG said, "The changes in the fund appears to
be any hearing that's held, the way the language reads to me, could
be reimbursed from the fund. Then there is language down here, `If
a party that's aggrieved is found not to have a meritorious
action,' are they liable for collection of money or what?"
Number 180
CATHERINE REARDON, Director, Central Office, Division of
Occupational Licensing, Department of Commerce and Economic
Development, explained the proposed change in the bill is to allow
all hearing costs to be billed to the surety fund so they don't
have to wait to find out whether they were meritorious or not
before making that billing. If a claim is found to be meritorious,
the claim is paid out of the fund and then they attempt to recover
the payment from the licensee who was responsible for the injury.
REPRESENTATIVE ROKEBERG referred to page 2, line 16, "or from other
parties under AS 08.88.490," and asked who that would be.
MS. REARDON said she isn't certain. She said that often times
there are several licensees who are being charged in the same
activity. She said that is current language and she said she would
check on that.
REPRESENTATIVE ROKEBERG said the issue is before any surety bond
monies were paid, they were only paid upon an award. He asked if
that is the difference here.
MS. REARDON explained this does not change the pay out of awards.
It simply changes the billing of the hearing costs. Currently, the
costs of paying the hearing officer and any associated attorney
general costs were being paid by real estate licensees out of their
general fund program receipts operating budget, then if the injured
party was successful in their claim, the actual claim was being
paid out of the surety fund. All that will happen is the actual
cost to the division of holding the hearing will be billed to the
surety fund up front.
REPRESENTATIVE ROKEBERG said the realty license fees were just
raised substantially and now they're going to remove that burden
from their general fund license fee and it will go to the fund for
the reimbursement for all the costs, including attorney general's
fees for the hearings. Representative Rokeberg asked Ms. Reardon
when the new license fees were calculated, was this new policy
change taken into consideration?
MS. REARDON explained they didn't because they are in a "chicken
and the egg" kind of situation. If they billed the fees assuming
that the legislature is going to change the law and it doesn't
happen, they won't have enough in the surety fund. If they wait to
try and get the legal change until they set their fees, there won't
be a way to get them in sync. However, if it turns out that
they've over collected in the general fund program receipt part of
the Real Estate Commission, they will end up lowering fees
subsequently or perhaps they will be able to spend more money on
the Real Estate Commission out of the general fund. There is no
way to get the two activities in sync.
Number 348
REPRESENTATIVE ROKEBERG asked where this recommendation came from.
MS. REARDON explained the Real Estate Commission endorsed it and
voted on the record to support it. She said it was a proposal that
come from her and she asked Real Estate Commission and they agreed.
She said they have for a long time wanted to be able to know how
much is being spent on hearings and to have those hearings billed
to the surety fund. It was the difficulty of having to wait to see
if the injured person prevailed or not that kept the division from
successfully transferring those costs.
REPRESENTATIVE ROKEBERG questioned what the maximum statutory level
of the surety fund.
MS. REARDON explained the maximum is $500,000. When it goes above
$500,000, the money lapses into the general fund of the state. If
it goes below $250, then no money can be spent on educational
purposes. She noted it is currently very close to $500,000.
Number 423
REPRESENTATIVE ROKEBERG referred to page 8, line 6, and moved to
delete "$75" and reinsert "$50".
REPRESENTATIVE ELTON objected.
Number 450
A roll call vote was taken. Representatives Porter, Elton and Kott
voted against the amendment. Representative Rokeberg voted in
favor of the amendment. So the amendment failed.
Number 490
CHAIRMAN KOTT said the committee has lost a quorum so the bill
would be held over. He then closed the public hearing on the bill.
HB 549 - LIMITED LIABILITY PARTNERSHIPS
Number 520
CHAIRMAN KOTT announced the committee would hear HB 549 "An Act
relating to partnerships; and providing for an effective date,"
sponsored by the House Judiciary Committee by request. He asked if
there was anyone to testify.
Number 548
BILL EZELL, Accounting Firm of Deloitte and Touche, Limited
Liability Partnership (LLP), testified via teleconference in
support of HB 459. He explained 41 states, along with the District
of Columbia and Guam, have passed limited liability of partnership
legislation. Remaining states, like Alaska, are considering
similar legislation this year. The proposed Alaska LLP statute is
consistent to the LLP legislation passed in other states.
(Indisc.) a former organization wished to operate is one of the
most important decisions an individual starting a new business or
continuing an existing will make, providing reasonable protection
for our owners' personal assets, considering tax implications and
finding an organization form that compliments the culture of the
organization for all important factors. For many businesses,
particularly small businesses, an LLP will be a good choice to meet
these objectives. Mr. Ezell explained an LLP is a form of general
partnership. It is not related to a limited partnership in with
only the general partner has unlimited liability. (Indisc.) a
newly formed partnership can elect to register as an LLP. An LLP
is also taxed in the same manner as a general partnership. In a
tradition general partnership, all of the partners are personally
liable for all the obligations of partnership and for damages
caused by the action of any other partner acting in the scope of
partnership business. The distinction for an LLP is that a partner
would not be personally liable for those partnership obligation who
are acting out of negligence, wrongful acts, wrongful admission and
so forth, committed by another partner of the partnership. In
other words, a partner remains fully liable for his or her own
personal action, but not to the extent of their personal assets for
the actions of other partners. The partnership itself remains
fully liable to the extent of its assets, capital and insurance for
the obligations of the partnership. Generally, other forms of
organization, which are already available in Alaska, provide far
greater protection of the personal assets of their owners. A
shareholder in a general corporation, professional corporation or
limited liability corporation has exposure only to the extent of
his or her own stock investment from obligations arising out of the
actions of other owners. These forms of organization can be
expensive to establish and complex to maintain, particularly for
small businesses. An LLP, by contrast, is inexpensive to organize
and not complex to maintain. It also allows the owners to continue
to operate as partners rather than individual owners. Such a
distinction is often important to professional service firms such
as attorneys, accountants, architects and engineers, where all the
owners are typically active in the business.
MR. EZELL explained in speaking on behalf of the six largest
accounting firms and limited liability partnerships, they are
interested in having consistent protection for all of the partners
no matter where they live and work in the United States, that these
protections would only be (indisc.) bankruptcy of a firm. He noted
they have also found in states where LLP has been enacted that many
small professional service firms have chosen this new form of
organization. He urged that the committee pass HB 549.
Number 764
CHAIRMAN KOTT closed the public hearing. He announced the bill
would be held over.
HB 363 - INTEREST ON MORTGAGE ESCROW ACCTS
Number 775
CHAIRMAN KOTT brought HB 363, "An Act requiring banks to pay
interest on money in reserve accounts held in connection with
mortgage loans," sponsored by Representative Bunde, before the
House Labor and Commerce Committee.
Number 795
PATTI SWENSON, Legislative Assistant to Representative Con Bunde,
Alaska State Legislature, came forward to give the sponsor
statement for HB 363. She indicated she would address CSHB
363(STA). This bill requires the banks to pay 3 percent interest
on any money held in an escrow account in the amount above the Real
Estate Settlement Procedures Act (RESPA) limit. The interest will
be computed monthly. Consumers may elect to have the interest
credited to the mortgage principal or paid directly to them.
Yearly, information about each escrow account shall be given to the
borrower. The information shall include the cost to administer the
account, the amount of money in the account at the end of each
month, the amount of interest earned on the account each month and
a schedule of payments made by the bank from the account. Ms.
Swenson explained escrow accounts are profitable for banks. The
accounts are also good services for individuals and municipalities.
However, mortgagors used deserve to have an accurate accounting of
their money as well as an amount of interest paid to them for the
use of their money. She urged support for the bill.
Number 897
LUCILLE STIETZ, National Bank of Alaska (NBA), was next to testify.
She said they have a couple of recommendations from the Credit
Union League, the Alaska Bankers Association and the Mortgage
Bankers Association. She noted she believes the committee has also
received a number of letters laying out their reasoning. Ms.
Stietz explained NBA is opposed to CSHB 363(STA) and they don't
feel it is necessary because the federal government's passage of
RESPA in 1995, has basically limited the amount the mortgage
servicers can hold in customer's accounts. It hasn't been tested
yet, but she believes most of the lenders have already switched
over to aggregate accounting. Ms. Stietz said the bill, as it is
currently written, would limit the charge of interest on escrows to
banks. It does not cover credit unions, mortgage companies and
other lenders. Banks are only one small part of the total mortgage
picture, so it's an unlevel playing field. Ms. Stietz pointed out
that Bank of America and Key Bank have recently moved their
mortgage loan servicing operations outside of the state. She said
when you mandate additional costs to be added to servicings for one
type of an institution and not for another, there will be a
tendency to speak on a level playing field and that could adversely
affect jobs in Alaska. She said she would be happy to answer
questions the committee may have.
MS. SWENSON noted that banks are defined in statute as all of those
institutions. "Bank" is used as a generic word. So the playing
field Ms. Stietz was talking about is more even than she thinks.
Number 1038
STEVE CONN, Executive Director, Alaska Public Interest Research
Group (APIRG), testified via teleconference from Anchorage, in
support of HB 363. He said his organization represents consumers
statewide. Speaking on behalf of many people who have escrow
accounts and who are obliged to pay fees for every aspect of the
usage of the services of financial institutions. He said, "We
believe that the real level of playing field should be between
(indisc.) financial institutions and mortgage institutions and
ourselves." Mr. Conn said nothing in this world is for free and
neither should the money that is kept in escrow, as is required by
the institutions and contracts, be used by those institutions for
free. He said APIRG welcomes this bill. It offers a modest return
for money held in escrow and it offer an opportunity to receive a
clear accounting of escrow accounts. He urged support for the
bill.
Number 1126
LISA BELL, Senior Vice President and Chief Operating Officer
Alaska Federal Savings Bank, came before the committee. She
explained Alaska Federal Savings Bank is the only federally
chartered savings bank in Alaska, headquartered in Juneau, and has
five branches serving four Southeast Alaska communities. Ms. Bell
said she is testifying on behalf of Alaska Federal Savings Bank and
the Alaska Bankers Association in opposition to HB 363. At first
glance the bill would appear to be a good idea and good pro-
consumer legislation. She said she thinks the committee would
find, on closer inspection, that it is actually quite burdensome to
banks and of little benefit to the borrowers. Alaska Federal
Savings Bank, like other Alaskan banks that do servicing in state,
finds that the key word really is service. She said they need to
be able to provide face-to-face opportunities for Alaskans to meet
with bankers to talk about local economic issues and other types of
conditions that may affect their loans or their abilities to repay
their loans. That is important to customers; they like to be able
to walk in and talk to somebody. She said the banks need to be
able to maintain that service. Ms. Bell said she feels that
passage of the bill would really hinder the ability to offer that
service. She said her bank prepared a profitability analysis of
their Servicing Department in September of 1995, and they found it
to be marginally profitable - enough to allow them to continue.
Anything that would tip the balance, would probably force them to
sell off servicing. That would mean that servicing might go out of
state. The amount of interest that someone is likely to earn over
a year on an average escrow balance, it is probably quite small.
You may be talking about $25 or $30. It obviously depends on how
much is being held in an account. The average amount of money
wouldn't be very much. She indicated there would be red tape that
both the customer and the banks would go through because there are
Internal Revenue Service reporting responsibilities. The customer
would have to pay interest. Ms. Bell continued to give testimony
against HB 363 and urged the committee not to move the bill.
CHAIRMAN KOTT closed the public hearing. He announced the
committee would hold the bill.
ADJOURNMENT
CHAIRMAN KOTT adjourned the House Labor and Commerce Committee
meeting at 4:35 p.m.
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