Legislature(1997 - 1998)
03/04/1998 03:27 PM House L&C
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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
March 4, 1998
3:27 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery, Vice Chairman
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
Representative Tom Brice
Representative Gene Kubina
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
CONFIRMATION HEARING: COMMISSIONER OF DCED
Deborah B. Sedwick
- CONFIRMATION ADVANCED
PREVIOUS ACTION
No previous action to record
WITNESS REGISTER
DEBORAH B. SEDWICK, Commissioner-designee
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2500
ACTION NARRATIVE
TAPE 98-24, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:27 p.m. Members present
at the call to order were Representatives Rokeberg, Cowdery,
Hudson, Sanders, Ryan and Kubina. Representative Brice arrived at
3:30 p.m.
CONFIRMATION HEARING: COMMISSIONER OF DCED
Number 0045
CHAIRMAN ROKEBERG announced the committee would consider the
nomination of Deborah B. Sedwick as Commissioner of the Department
of Commerce and Economic Development. They would not vote on the
nomination but would pass it out of committee for the full
consideration of the House and Senate. (Ms. Sedwick's resume was
provided to the committee.)
Number 0106
DEBORAH SEDWICK, Commissioner-designee, Department of Commerce and
Economic Development (DCED), came forward to testify. She noted
she was delighted to be there with the committee and looked forward
to working with all of the members. She stated:
The Commerce Department is a generator of revenue to the
state directly through program receipts and indirectly
through business investment and economic expansion, as
you well know. Commerce is the only department whose
primary function is to advocate for business in Alaska.
And we do that with a budget that has shrunk over the
last couple of years by nearly 50 percent. Small
business is the backbone of Alaska and my department will
work closely with Alaska's ... small businesses to grow
our ... economy and create jobs for Alaskans. Because we
are a resource-based state we need to promote these
industries in a fiercely competitive global marketplace.
My job is about jobs, working with the private sector so
they have the business and regulatory climate to create
those jobs. The Knowles Administration has made economic
development a very high priority. Unfortunately, all of
our efforts could come to a stop. Under the current
House Bill 400, DCED and DCRA [Department of Community
and Regional Affairs] would be combined. It is similar
to what we looked at two years ago, and without savings,
and we believe it is very harmful to our smaller rural
communities, and it mixes our messages between what
Commerce and Economic Development does and what DCRA
does.
Number 0211
My philosophy about my job as commissioner is very hands-
on, while giving due respect to the professionals over which I am
responsible. As you know, I came in initially to combine
international trade, economic development and tourism. I have been
very involved in those areas and I feel like that is the economic
development driver, and I ... continue to be very involved in those
areas. I have a strong commitment to ensure that the good things
that have been started, such as outreach to the business community
to help "Alaskanize" jobs and encourage employers to hire welfare
recipients, will continue. I have many plans on how we can
continue this momentum. Everything we do is in partnership with
others, our private sector and our small businesses through Alaska,
you in the legislature, and the list goes on and on. It is my
desire to work closely with you on this committee to keep you
informed about our programs and our progress. I look forward to
the opportunities and challenges that lay ahead for all of us.
Number 0296
CHAIRMAN ROKEBERG opened the hearing up for questions.
Number 0345
REPRESENTATIVE BILL HUDSON stated he thought Commissioner-designee
Sedwick was an outstanding choice, noting he liked what she said
about small business. He said over the years he has been involved
in government, they have tried a number of times to develop some
advocacy for regulatory reform. He indicated he hasn't seen as
much of a commitment to working on the behalf of small business
coming from DCED as he would like to see. He asked for some
expression from Commissioner-designee Sedwick as to whether or not
she saw her role, not only in economic development, expansion of
business and attracting business to Alaska; but also in this
special advocacy for small business. He asked her if she had
followed that over the years and did she have a statement to
convince him she would be a strong advocate on behalf of small
business, noting he was now speaking about ADEC (ph) and some of
her sister agencies. He said he sees her and her role as sort of
business's advocate.
Number 0438
COMMISSIONER-DESIGNEE SEDWICK said she is very serious in her
comments about small business as the backbone of Alaska. She
referred to her private-sector background as a small businesswoman,
noting she believes that one, two or five jobs are very valuable
for most of the communities in Alaska because these communities are
small. For Alaska's bigger industries, she thinks it is important
to have a fair and reasonable regulatory climate so that Alaska's
industries know the rules are not going to be changed in midstream.
She commented, however, there are a lot of things outside what
state government can do in terms of what these companies do, giving
the examples of oil companies and major mining companies in Alaska.
Commissioner-designee Sedwick noted it is the regulatory climate,
adding, "And having - having them have access to us and Commerce
being the advocate for those businesses with ... our other sister
agencies." Although they are certainly respectful in the DCED to
the other departments, they recognize that sometimes their opinions
are a bit different in terms of how to go about the things they
need to do. She said she is certainly ready and willing to talk to
DCED's sister agencies when the DCED feels like the regulatory
climate needs to be examined or changed. She thinks that, by and
large, the kind of work they can do with small businesses in Alaska
is really what is going to make a difference in terms of their
community. She gave an example on the tourism side, noting that
even though tourism marketing is growing in Alaska on the whole, it
is mostly tied to the cruise ship industry and the people on the
road systems are having some difficulties. She said they looked at
this mid-year and realized they needed to make some changes.
Number 0589
COMMISSIONER-DESIGNEE SEDWICK complimented her group for
recognizing a problem, trying to aggressively examine that
situation and figure out what they can do. They went to the
communities in Southeast Alaska, people along the Alaska Marine
Highway System and along the road system. She noted there was,
therefore, a lot of private sector involvement - gathering funds,
making a real push in terms of the marketing of the Marine Highway
System and the road system - to disburse those dollars that come in
to Alaska to the communities. She said she thought they needed to
be aggressively looking on behalf of Alaska's small businesses
where ever they can. She thinks that it is going to be very
important to herself and her group to be out and about in the state
as much as possible. She indicated DCED is still working hard with
Governor's Marketing Alaska initiative, noting there was a small
business sector. She said they evaluated the small business
programs during the last year and are doing much better
coordination. She said they are currently working on a business
matrix so that a small businessperson could go access the Internet
and go directly to the his or her area of interest, which would
show, across department lines, what is available to help that
business person. Obviously, she said, there's a lot of work to do,
noting they are trying to cut down on the amount of paperwork and
forms people have to fill out. She stated she could certainly
commit to Representative Hudson that she and DCED would be very
aggressive in terms of Alaska's small business people.
Number 0724
REPRESENTATIVE HUDSON indicated Representative Jeannette James has
become very involved in this area of regulatory reform, noting it
has been an ongoing issue. He recommended Commissioner-designee
Sedwick make an early contact to Representative James to find out
Representative James' direction and how Commissioner-designee
Sedwick might be able to aggressively advocate with her.
Number 0765
REPRESENTATIVE JOHN COWDERY said he met Commissioner-designee
Sedwick last year, lunched with her once this year, and noted he
gone over to DCED she had been kind enough to brief them about the
whole department. He said they spent the major part of an
afternoon there. He stated he also thinks Commissioner-designee
Sedwick is a good choice and asked her how many layers of
management were there between her and the "front line."
Number 0814
COMMISSIONER-DESIGNEE SEDWICK indicated the sequence went herself,
Deputy Commissioner Jeff Bush, the division directors, then the
people in the front line. She stated, in reality, she thinks she
has worked very closely with her former divisions of tourism, trade
and development, and is now closely learning the other divisions
she did not previously have responsibility for.
Number 0854
REPRESENTATIVE COWDERY asked what the ratio was between managers
and the people who were actually doing the work.
Number 0873
COMMISSIONER-DESIGNEE SEDWICK used the Division of Tourism as an
example, noting there was a secretary; two or three people working
for tourism, trade and development, who were partially working for
tourism as well; the two professionals; and the director, Tom
Garret. She noted it would be five people, then Deputy
Commissioner Bush, then herself. She said the Division of Tourism
and the Division of Trade and Development are both very small,
stating they were DCED's advocacy marketing arm for Alaska. She
pointed to the economic development side, noting there was one
fisheries expert and two mining people, one in Southeast Alaska and
one in Fairbanks.
Number 0964
REPRESENTATIVE COWDERY he asked her if she knew what percentage of
her budget was spent on administration.
Number 0960
COMMISSIONER-DESIGNEE SEDWICK stated she did not know, but could
certainly find out.
Number 0964
REPRESENTATIVE COWDERY asked if she had performance or
accountability mechanisms in place in DCED.
Number 0979
COMMISSIONER-DESIGNEE SEDWICK replied she was not happy with the
current system, indicating they have been researching what their
counterparts in other states use over the last couple of years.
She indicated this is difficult to measure in economic development
and trade because things they have been involved in might not
happen until three or four years down the road. She also indicated
that many things happen as the result of the efforts of a group of
entities, mentioning in Anchorage it would be Anchorage Economic
Development Corporation, Anchorage International Airport, for
example. Commissioner-designee Sedwick said one of the things she
thinks happened this year was that DCED received funds from the
folding of the Alaska Center for International Business at the
University of Alaska Anchorage and she said DCED now has a research
arm in its shop. She said one of the three major functions of the
research arm is the internal evaluation of DCED's programs. By the
end of this fiscal year (FY), she stated DCED will have those
systems in place. She commented that for about 2 1/2 years DCED
has had a database which will allow them to track the activity of
tourism, trade and development, finding out if the kinds of things
they have been doing in Alaska and oversees were of benefit to the
people they were working with. She said she thinks they have made
headway, but said it is certainly something DCED would like to do
better, and is a personal priority of hers.
Number 1094
REPRESENTATIVE COWDERY commented that he had phoned Commissioner-
designee Sedwick that morning regarding HB 412 [HB 412 - Transfer
Railroad Land to Whittier]. He noted he called to ask if DCED's
tourism group had been involved, or was planning to be involved,
because there was going to be 1.5 million or more people visiting
that "facility" when the road was done, indicating the number of
cars would be 5,000 to 8,000 a day, mostly tourists. He indicated
they were trying to get facilities in Whittier to accommodate these
visitors. Representative Cowdery asked, "In your departments -- if
you've looked into this or the aspects or preparing for how you
could help this accommodate the tourism industry (indisc.) the
state."
Number 1178
COMMISSIONER-DESIGNEE SEDWICK replied that she and Mr. Garret have
both met with the Whittier people, and in terms of DCED's work with
them, they are meeting with the other communities and the other
people individually who have gone through something similar in the
last five years. She indicated she asked the Whittier people to
get in touch with communities like Seward and Valdez which have
been impacted heavily by cruise ships, et cetera, so that the
Whittier people could get an idea of what they might want to begin
with. She noted DCED would be meeting with the Whittier people
after the legislative session. She noted the Division of Tourism
lost its planner last year and she said she finds over and over
again that it is very difficult for them not to have that person.
She noted she had been speaking that morning with a Representative
about the Wrangell-St. Elias National Park and Preserve and the
number of people going there, noting that the Department of
Transportation and Public Facilities (DOT/PF) has done an
incredible amount of work on that, but she thinks the tourism
planner looks at those same issues in a very different light in
terms of the community as a whole. She said, in answer to
Representative Cowdery's question, that yes, DCED is working with
the Whittier people, and will continue to do what it can.
Number 1253
REPRESENTATIVE COWDERY asked Commissioner-designee Sedwick for her
position on HB 412, the issue raised in the House Transportation
Standing Committee that day, which would have worked out some
arrangement taking land from the Alaska Railroad Corporation (ARRC)
and giving it to the City of Whittier so that the city could put in
some facilities like restrooms and parking.
Number 1302
COMMISSIONER-DESIGNEE SEDWICK replied she would prefer not to
comment on the specifics since she had not seen the bill, but she
does think it is important that they work with the community.
Obviously there will be very big changes there, she knows that some
people are very happy about those changes and some people aren't.
She noted she is happy the road is going through; she thinks it is
an area of the country she would like to see be more accessible,
but she also thinks they need to be sensitive to the locals.
Number 1332
REPRESENTATIVE COWDERY commented that his concern was they don't
have the impact statements or anything there, indicating the road
will be open in 2000. He stated he is fearful there will be
another lawsuit to stop the project until they get some of those
questions answered, and said that was the reason for his call that
morning.
Number 1377
CHAIRMAN ROKEBERG commented that DCED has responsibility for a
number of independent agencies, one of which is nominally ARRC. He
asked, "I was going to ask you about how you perceive your
relationship as the department leader with these independent
agencies, many of which are quasi-(indisc.) in nature. And so how
do you perceive your ability to either influence and/or guide those
departments properly?"
Number 1425
COMMISSIONER-DESIGNEE SEDWICK stated she was on the boards of ARRC,
Alaska Industrial and Export Authority (AIDEA), Aerospace
Development Corporation (AADC), noting it was 16 or 19 boards and
commissions total. She indicated her place on ARRC's board is
designated in statute, and she is sitting on AIDEA's board because
she thinks it is a very serious responsibility for the commissioner
of DCED, although it is not specified in statute. She said she
also thinks AADC is very important, and Mr. Bush, her deputy
commissioner, is sitting on that board. She indicated it is
important to recognize that these entities have their own boards,
but it should be kept in mind that DCED is the marketing and
advocacy arm for Alaska and that she is going to "weigh in" on
issues important to Alaska. Commissioner-designee Sedwick used the
example of the Alaska Seafood Marketing Institute (ASMI); she feels
fish is a resource that belongs to everyone in the state of Alaska,
commenting, "And so as the main cheerleader for Alaska, those
resources belong to us." She said once the fish get out of the
water and go into private hands, they go all over the world but
they are still Alaska's natural resource. Therefore, she indicated
she is going to weigh in on issues which she thinks belong in the
public domain as it relates to natural resources. She commented
that in those areas such as Alaska Public Utilities Commission
(APUC), the executive director meets with DCED every week in their
directors' meetings, indicating she recognizes APUC has a board
which deals with its internal situation but that there might be
issues where APUC might come to the commissioner for final
determination or something similar. She noted DCED is available,
but she is not afraid to get out there and weigh in.
Number 1556
CHAIRMAN ROKEBERG confirmed that there were directors' meetings
where the directors of these independent agencies get together with
Commissioner-designee Sedwick's entire executive committee
(indisc.).
Number 1561
COMMISSIONER-DESIGNEE SEDWICK responded in the affirmative, noting
they met once a week and those entities were "at the table" with
them.
Number 1568
CHAIRMAN ROKEBERG commented that Commissioner-designee Sedwick, due
to the uniqueness of her position, had an extraordinary opportunity
to provide some leadership between what the community of Whittier
needs in terms of its tourism development, on one hand, and ARRC,
which holds the land in question, on the other hand. He noted this
is in Representative Kubina's district and said he is sure the
minority leader would want to follow up on that with Commissioner-
designee Sedwick. Chairman Rokeberg stated she was uniquely
situated to solve some of these major problems in a very rapid
manner, noting this was a "golden opportunity" for her.
Number 1604
REPRESENTATIVE JOE RYAN congratulated Commissioner-designee
Sedwick, noting he and the Governor absolutely agree on one thing.
He said he thinks she is a marvelous choice for the job, indicating
he had worked with her while she was the assistant commissioner of
DCED and was working with international trade. He stated she has
his confidence. He commented that legislators, being elected and
representing a certain amount of people, work within an
organization but still have a lot of autonomy to do and say what
they choose. He said that she, on the other hand, works for an
elected official who sets a policy for the state, indicating that
the Administration's side was a lot different from the
legislature's in these board meetings. He asked if she had much
autonomy to move a board in the direction she thought was best for
it, or did she basically try to follow in the direction of the
Governor's plans.
Number 1650
COMMISSIONER-DESIGNEE SEDWICK gave the example of the AIDEA board,
indicating she has been on that board for most of her 2 1/2 year
tenure with DCED, commenting that she has only been to one ARRC
board meeting and that was about a month previously. Commissioner-
designee Sedwick stated she does not remember talking specifically
to the Governor about any issues. She said she and the Governor
are very much in sync, from a philosophy standpoint, in terms of
business and their opinions about business, noting she feels she
has a lot of autonomy and authority to do what she thinks is right.
She recognizes that Governor Knowles is her boss, and guesses that
if she was concerned about an issue she might discuss it with him,
but has not been in that position in the last 2 1/2 years. She
indicated the issues concerning AIDEA have been fairly
straightforward. Commissioner-designee Sedwick said she would not
hesitate to forcefully express her opinion if she disagreed with
the Governor, and she thinks he expects her to weigh in on issues
where they disagree; he wants to hear what DCED's issues are from
DCED's perspective, but she noted he has been a small businessman
and she thinks their philosophies are very similar as it relates
these issues.
Number 1736
REPRESENTATIVE RYAN commented that he and Representative Cowdery
took a business trip that year to the Pacific Rim, noting he thinks
they filled her in on this when she was running the "Division of
International Trade." As an issue of protocol, he said, they were
treated extraordinarily well for "visiting firemen" and he
commented on the prestige attached in other countries to elected
officials. He noted DCED's office of international trade has in-
country people hired to represent the state of Alaska and he
commented that this office used to be under the Office of the
Governor. Representative Ryan said being under the governor's
office, or representing the governor per se, would possibly give
these people much more ability to reach more influential people.
He asked for her feelings as commissioner on restructuring this
office so it did represent the governor's office so the
representatives would be able to represent the governor of Alaska
rather than the commissioner of DCED, indicating these
representatives would benefit from that protocol.
Number 1814
COMMISSIONER-DESIGNEE SEDWICK replied that she understood the
office of international trade to have been more protocol-and
policy-driven when it was under the Office of the Governor than
today, where she said it is much more business-driven and driven by
the state's private sector in terms of what the private sector
wants to do. She said that makes more sense to her from a business
standpoint. Also, she said she has spent the last 2 1/2 years
combining tourism, trade and development; she thinks it is working
very well and that it is really important to have those advocacy
and marketing arms together, noting it is a combined group in every
sense of the word. When they go overseas they don't think about
trade and at some other time about economic development and
tourism, it's all "at the table" at the same time. She stated she
thinks it works very well and she would like it to stay the same.
She indicated she certainly respected Representative Cowdery's and
Ryan's thoughts about the departmental location of the office of
international trade and development, and stated she appreciated the
dialog. Commissioner-designee Sedwick commented that if changes
were to be made in the future, she feels like the right people
would be at the table together making that decision, as opposed to
what was happening with HB 400.
Number 1885
COMMISSIONER-DESIGNEE SEDWICK related that when she came to her
job, the program manager on the trade side told her having the
Office of the Governor on his business cards did give the cachet
Representative Ryan and Representative Cowdery said was important.
She said her response to the program manager was to tell him to put
the Office of the Governor on his card. She noted they work very
closely with the governor's office on a regular basis and she did
not think it was inappropriate for that extra cachet to be there,
so the cards for DCED's trade people have said "Office of the
Governor." She said, however, in terms of management and
structure, she thinks having the office in DCED is wonderful. She
noted, again, that she was grateful for the kind of dialog which is
inclusive of the department because it was really valuable that if
changes were made they craft them together, indicating the people
in DCED feel like they are in the trenches, and she said she values
the fact that they are talking about these issues more than she can
tell them.
Number 1940
REPRESENTATIVE RYAN stated, "You can't make a silk purse out of a
sow's ear but you can dress up an old dog." He said that cachet is
of a great deal of importance in the Far East, stating, "Perception
is everything, and people are very cognizant of the fact of what
power structure you fall under, you represent the governor ... it
opens a lot more doors than otherwise," and he indicated he
approved of Commissioner-designee Sedwick's solution to this
situation.
Number 1970
CHAIRMAN ROKEBERG noted Representative Cowdery's and Ryan's trip
referred to was personally paid for by the Representatives, not the
state of Alaska.
Number 1976
REPRESENTATIVE GENE KUBINA stated he was encouraged to hear the
positive comments about one of the Governor's actions, and he
appreciated hearing that bipartisan support for DCED. He indicated
DCED has a number of boards that are very important to Alaska.
Representative Kubina commented on a fish symposium in Anchorage
that had occurred the previous week, mentioning an interesting
newspaper article he had read. He related that a Norwegian speaker
at the symposium had been applauded, although Representative Kubina
indicated Norway was almost Alaska's sworn enemy in this area and
has taken a lot of Alaska's market share. He related the people
applauded this speaker because he told the audience that Alaska
wasn't doing what it needed to do; the speaker commented that
Norway had probably spent something over $4 million this year to
market its fish while Alaska was declining in its marketing
ability. Representative Kubina said Alaska was doing the same
thing in its tourism marketing budget, commenting that the majority
of the legislature was elected on cutting the budget, and he
indicated that those of them who think they should be spending
money in other places don't have the votes to carry. He asked
Commissioner-designee Sedwick how she dealt with the challenge and
how did they "get back on top" with the declining budgets,
indicating he assumes she would like to spend more money in both of
those marketing areas.
Number 2053
COMMISSIONER-DESIGNEE SEDWICK replied she said it was very
difficult for her to understand. She recognized that the
legislature feels like it has responsibilities. She noted she
feels like DCED is the seed planters and she equates seed planters
with her college education: she assumed by spending that money and
becoming better educated that her opportunities in life would be
far greater. She thinks they are just seeing "the edge of the
sword" in terms of not spending the money needed for seafood
marketing and tourism, commenting on the discussion of the work
needed in Whittier. Commissioner-designee Sedwick stated the
Governor's philosophy about doing development, doing right, is very
important, and she thinks they all agree that is what they want to
do. She said one reason she is in this job is because she would
like her children who are in college and graduate school to come
back to Alaska, indicating she doesn't think the same opportunities
exist for them that existed for her when she came back from
college. She stated they have to balance creating an environment
they are still happy with, yet allowing development so that there
will be jobs for others.
Number 2132
COMMISSIONER-DESIGNEE SEDWICK indicated there was a problem with
eliminating some of the budgets which would help Alaska's economy
grow in the long run, commenting that it was already starting to be
seen with tourism. She noted Princess Cruises and Holland America
Line spent $25 million dollars last year, which, she said, is why
the cruise industry is growing, and if the numbers for these
companies are down, the companies can just spend more money. She
said spending more money wasn't the only answer, but because Alaska
was facing global competition, she stated, "If we don't market our
fish, if we don't market Alaska as a destination, in two or three
years -- I mean we all travel outside and see not only are - are
states and countries advertising, but we see cities and regions
advertising." She said she understands the legislature's job is
very difficult, but she feels like, as the seed planters, the money
DCED spends will come back over time. She indicated DCED also
needs the money to be able to have the planners for tourism so that
DCED can look at, and be involved in, some of these areas in
advance. She said it is not enough that DOT/PF, for example, is
going forward with Whittier. She said they have a responsibility
to the community and the state as a whole, so it is difficult and
challenging.
Number 2188
REPRESENTATIVE KUBINA commented he just hoped that Commissioner-
designee Sedwick, as commissioner, has the credibility with the
body so that she can help guide them where they need to go.
Number 2203
CHAIRMAN ROKEBERG commented that the Division of Insurance was
under Commissioner-designee Sedwick's auspices, noting the
committee dealt with a lot of insurance legislation. He said there
have been a number of health insurance bills in the last three or
four years which he believes have impacted, or could impact, the
availability of health insurance for the individual and small
businessperson in Alaska. Chairman Rokeberg commented that this is
because most Alaskans' health insurance is currently provided
through either self-insurance plans such as the state of Alaska's,
and/or large corporate group plans or union plans which include
devices such as the preferred provider option (PPO) style of
insurance underwriting, with what he would call modified managed
care principles, et cetera. He indicated the committee has heard
testimony stating that insurance legislation moving through the
committee covers as few as 30 to 35 percent of Alaskans in terms of
health insurance because of the self-insurance provisions of ERISA
(Employee Retirement and Income Security Act). He said, therefore,
it is his personal policy for this committee to do everything
possible to encourage the entry of underwriters into the state of
Alaska and not discourage them. He asked Commissioner-designee
Sedwick if she had any comments on the availability of health
insurance, and the relationship of DCED and the Division of
Insurance.
Number 2266
COMMISSIONER-DESIGNEE SEDWICK stated she did not feel qualified to
answer that question at this point, but she agreed it was a
problem. She indicated insurance is one of the major problems she
hears about on a regular basis from small business people, and she
thinks that ties with DCED really focusing on the small
businessperson. She stated she has a great deal of confidence in
Marianne Burke, the director of the Division of Insurance, who she
said agrees that this is an issue to be examined. She indicated
she would need to get back to the chairman with a response to that
specific question.
Number 2298
CHAIRMAN ROKEBERG noted his question was more rhetorical and
instructive than anything else. Mentioning independent agencies,
he noted she has been on AIDEA's board for the last couple of
years. He commented he had written a letter this January to Randy
Simmons, AIDEA's executive director, with some concerns he had
about AIDEA's policies and activities in the last few years. One
question to Mr. Simmons was, "Does the agency policy for not
allowing an equity extraction by a business limit loan
underwriting?" He said Mr. Simmons responded, "Equity extraction
is allowed if the purpose of the extraction is for funds going back
into the primary business and will enhance economic development and
job creation. We believe this policy adds flexibility to the loan
underwriting process." Chairman Rokeberg commented that this was
"all well and good" but he indicated it has been brought to his
attention by individuals in the banking industry, particularly in
the commercial areas of the state, that AIDEA has not allowed some
of those equity extractions. He clarified that he meant use of
funds for down payment for business expansion. He noted this
seemed to be at cross purposes, commenting, "If you have to expand,
you need to ... purchase an asset - for example, real property -
which would be the security for the loan and if you're not allowed
to use some of your assets to make a down payment, how on earth are
you supposed to make a deal unless AIDEA's got a 100 percent loan
program, which I don't think they do?" He asked Commissioner-
designee Sedwick if she had any comments or if she was familiar
with this particular issue.
Number 2369
COMMISSIONER-DESIGNEE SEDWICK said she guessed she would have to
know more of the details specifically.
Number 2375
CHAIRMAN ROKEBERG commented it was a policy thing in terms of the
equity extraction. He asked if this issue had come up during her
tenure on the board.
COMMISSIONER-DESIGNEE SEDWICK said she had not dealt with it.
Number 2380
CHAIRMAN ROKEBERG said he was also concerned about the loan
production, noting according to his information, he thought only 12
loans had been underwritten in 1997, He said Mr. Simmons responded
was that there had been 25 loans totaling $48 million. Chairman
Rokeberg noted he was glad to hear this because he had been
concerned that the loan portion of the asset portfolio of AIDEA is
seemingly shrinking, stating, "And therefore we need to place more
loans to generate the income, if you will, our quasi-public net
profit issue -- annual amount of - of net to the corporation, so
it's available for expenditure and reinvestment by the corporation
and also to provide an additional dividend to the general fund
now." He asked Commissioner-designee Sedwick if there had been any
changes in the marketplace and/or from AIDEA policy in the last
year or so that could influence the number or the style of loan
underwriting in the state.
Number 2423
COMMISSIONER-DESIGNEE SEDWICK stated she thought some of the
lending institutions have been a little more active, noting the
loans come through the local lenders. She added also that as they
mature as an entity, they are now going back to those lenders,
examining ways they have done business in the past and looking at
how they can do better, and work more closely with those lenders.
She stated there are some things currently "in the works" the board
has been discussing as a result of the workgroup formed with the
lenders.
Number 2472
CHAIRMAN ROKEBERG said, "Now Commissioner, I'd like (indisc.) you
to ... [TESTIMONY INTERRUPTED BY TAPE CHANGE]
TAPE 98-24, SIDE B
Number 0001
CHAIRMAN ROKEBERG continued, "... what you see as, or what would -
what would be the obstacle between merging the economic development
activities in your current department and the Department of
Community and Regional Affairs?" He said it seems to him there is
a certain amount of duplication, or more frankly, noting he did not
think he had truly adequate knowledge, he thinks DCRA takes a whole
different approach and he said its definitions of economic
development are certainly different from DCED's. He commented he
thought DCRA was actually "missing the boat," indicating he thought
those functions should be merged because DCED has more expertise
and also a different attitude. He said he had asked the
commissioner of DCRA for an example of economic development in Bush
Alaska and the commissioner told him it was like building a teen
center in Kotzebue. Chairman Rokeberg commented that that was not
economic development by his definition. The chairman also noted
substantial funds are funneled through DCRA, including federal
funds, and he indicated it seemed to him that it would be a much
more efficient, better use of assets if the economic development
function was in one department of state government.
Number 0064
COMMISSIONER-DESIGNEE SEDWICK indicated she thought the missions of
the two departments were very different and that both missions were
valid. She stated DCED is economic development for the state as a
whole. She noted they all want to consolidate where they can,
cutting costs so that they're more efficient, but she said the
consolidation just takes two entities and brings them together
without looking at programs. She indicated that if they were going
to consolidate, there were programs that they were just not going
to be able to do the way the consolidation was currently written,
noting, "There's the elimination of a commissioner, a deputy
commissioner ..."
Number 0103
CHAIRMAN ROKEBERG stated his question was posited without going
into HB 400, and he asked her if she could restrict her comments to
any potential merger between the functions of economic development
in those two departments on a stand-alone basis. He stated,
"Whether it's something you would want to do, or be more efficient
at doing it or - or how those two functions blend or should be
separated, that's the issue I'm getting without talking about the
larger issue."
Number 0124
COMMISSIONER-DESIGNEE SEDWICK indicated she had really focused on
DCED in the past couple of years and is not familiar with all of
DCRA's programs, but she would certainly welcome the bipartisan
effort examining these two departments, noting she doesn't see the
overlap in terms of programs at this point. She said, for example,
even though the ARDORs (Alaska Regional Development Organizations)
belong to DCRA, DCED works very closely with the ARDORs. She
thinks the ARDORs' emphasis on the rural areas, the local people
and the capacity building that goes on in the rural areas, is
really valuable for DCED, because DCED knows, she said, "What we
hope to have happen ... and what potentially could happen, but we
also need to know that the capacity is there in the rural areas for
that to happen, because it's got to come from both directions, or
probably nothing is going to happen." Therefore, she thinks the
economic development programs that potentially could be merged are
very different in scope at this point. She said she would hope
that in a merger "the players would be sitting at the table
together looking at programs." She stated she does not see how
they can merge and do everything they are currently doing; if that
is what is going to happen, she thinks they have to make some of
those tough decisions in terms of programs, and she would like to
be able to do it together.
Number 0196
REPRESENTATIVE COWDERY said he thought DCED's deputy commissioner,
Jeff Bush, had testified very strongly against a merger bill before
the committee. Representative Cowdery noted the price of oil was
down about $6 a barrel, commenting that there were going to be some
budget cuts, and he indicated a group of legislators thought a
merger might be the best way to save some money without impacting
DCED's programs as much. He said if there was a merger, could she
be commissioner of the new department; did she think she was
capable of doing that and working out any possible problems in that
area.
Number 0239
COMMISSIONER-DESIGNEE SEDWICK replied that if the merger was
completed as currently written, she did not know how she could do
that job; she did not know how one person could do that job. She
noted the deputy commissioner would be eliminated, stating she
thought that meant there would be one commissioner and one deputy
commissioner. She asked if there was one special assistant in that
configuration.
REPRESENTATIVE COWDERY indicated he did not know.
CHAIRMAN ROKEBERG commented that the committee had not reached that
point in the testimony and did not know any more than she did.
Number 0259
COMMISSIONER-DESIGNEE SEDWICK said she thought it would be very
difficult, and most critically, she thinks it would really dilute
what DCED wants to do. She commented that DCED has many various
serious things to accomplish in the next couple of years in the
areas of international trade, tourism, seafood and minerals. She
stated, "We need to let the world know that we're open for business
and we have these areas that are worth pursuing, and I think we've
come a long way in the last couple of years, and I think to dilute
that at this point ... would be very detrimental, because, again,
I think we're the seed planters." She said, on a personal level,
she thinks they have divided up the state for a lot of different
reasons, mentioning the Venetie case and the subsistence issue.
She noted she had heard so many comments in the last year or two
about Natives and whites, rural and urban, stating they haven't had
those conversations in a very long time and she thinks a lot of
people are feeling disenfranchised. She stated, "I feel like, in
answer to your question, Representative Cowdery, I think it would
be darn near impossible. I know that the savings aren't there and
I think that's what ... you were alluding to, that there are a
substantial amount of savings, a million dollars within the
commissioner's office -- I'm the highest paid commissioner -- I'm
the highest paid employee in Commerce and I'm making $84,000 a
year, I can guarantee you that there's not a million dollars in
savings there. But I - I also understand the issue at hand in
terms of crafting a budget, and I feel like ... having the players
... sit down is where those savings are going to be realized,
without compromising the programs that DCRA has and Commerce has
that we all recognize are important."
Number 0344
REPRESENTATIVE COWDERY indicated that the total cost to the state
for Commissioner-designee Sedwick's position was more than $84,000
per year.
Number 0350
COMMISSIONER-DESIGNEE SEDWICK replied she thought it was $110,000,
noting that still did not get them to $1 million in her department,
in her commissioner's office.
Number 0358
REPRESENTATIVE COWDERY, returning to the budget situation,
indicated her suggestions would be very helpful when the
legislature came to the budget decisions. He asked her what they
should cut in lieu of merging, noting that would probably come up
and she should be prepared to answer. Representative Cowdery
indicated Commissioner-designee Sedwick had been with DCED a couple
of years, and asked if he was correct in thinking that about 12
people had left trade and tourism in the last year or so.
Number 0410
COMMISSIONER-DESIGNEE SEDWICK replied that, on the trade side,
there were 3 people, and there had been a 100 percent turnover in
the past 12 months. She said the manager of the trade program, as
well as the two trade specialists, changed in the last year.
Number 0427
REPRESENTATIVE COWDERY confirmed that only three people had left,
not a dozen or so.
Number 0430
COMMISSIONER-DESIGNEE SEDWICK said, in terms of the total program,
she did not think there had been 12 but she did not know the exact
number. She noted they have lost people through the budget every
year since she took over tourism, trade and development, in each of
those areas but she did not think the number was 12.
Number 0446
REPRESENTATIVE COWDERY asked why those people left, questioning
whether it was for greener pastures or because of morale problems.
Number 0454
COMMISSIONER-DESIGNEE SEDWICK said she thought it was a combination
of many things. She noted morale was low, referring to an effort
the previous year to balance budget in which every job but one was
cut out of the budget, although she indicated the jobs were
restored. Mentioning her almost three years in state government,
she said she thinks it is very difficult for professionals doing a
very good job to face the potential disappearance of that job, even
though what they are doing is very valuable. Commissioner-designee
Sedwick also noted circumstances were very different when she first
came to that job. She said Max Hodel was the director of the
Office of International Trade and Development, and he was overseas;
she indicated the staff was basically operating independently on a
day to day basis and the role of acting program manager was being
rotated between people. She said then she came in and made these
big wholesale changes. She broke down the walls, put the budget
units together, wanted people to be communicating well, and she
said there was some internal agreement between these three people,
indicating she thought the people in question left because of a
combination of all of those things. She said the manager left for
California for personal reasons, and the other two people retired.
Commissioner-designee Sedwick stated she was very sorry to lose all
three of them because they were incredibly talented, she thinks
they did a great deal for the program and brought it a long way,
but she said she thinks it was inevitable, noting sometimes change
is inevitable. This is a new day and time, they have to deal with
budget realities, and now it is time for her to grow a new program
under her management.
Number 0555
REPRESENTATIVE COWDERY asked her if she thought she had replaced
some of the people who left.
Number 0560
COMMISSIONER-DESIGNEE SEDWICK replied they had replaced two of the
three and there would be one more person.
Number 0564
REPRESENTATIVE COWDERY asked if the replacements were as qualified
as the originals.
Number 0567
COMMISSIONER-DESIGNEE SEDWICK responded that the replacements were
qualified in a lot of ways, indicating she thinks it is always
tough to lose someone who is smart, working hard and who has a lot
of institutional knowledge specifically about Alaska issues. She
stated, "The people that we have hired, I think are smart and
hardworking, and although not as knowledgeable because they haven't
been in ... the department and the division, bring those same kind
of skills that those other people had, that, frankly, when they
started, I'm sure, didn't have those skills either." She commented
that, while she was very sorry to lose those other people, she is
very happy with the people they have found, noting she feels like
it is an opportunity for them to move forward.
Number 0602
REPRESENTATIVE COWDERY commented that she had been the director of
the trade and development section and had recently taken over as
commissioner. He asked her if she thought, before she became the
commissioner, that DCED had been running in good shape, and did she
plan to do anything differently in her tenure from the two previous
years.
Number 0635
COMMISSIONER-DESIGNEE SEDWICK answered in the affirmative,
commenting she thought every commissioner put his or her own stamp
on a department and she planned to do that as well. She indicated
she previously mentioned she was a hands-on person and stated she
planned to be very involved in tourism, trade and development. She
said, "I believe that our business advocacy arm has very good
directors and it's my responsibility to make sure the world knows
that these departments are running well, but I think that the ...
marketing and the advocacy arm is really what Commerce is all
about." She gave the example of a current project, noting it is
the kind of thing she hopes to do in the future. She called it
"marketing Alaska through the permanent fund," although she said
that would not be the formal name because "it would scare everyone
to death." Commissioner-designee Sedwick indicated the project was
an attempt to use the stock Alaska owns in many different companies
as way to gain access to those companies. She said this would get
them "in the door" with opportunities to talk to major mining
companies, oil service field companies, et cetera; she indicated
these are the companies doing business in Alaska that the state
would like to see increase their business, and the companies
outside Alaska who need to be doing business in the state, and she
said she thinks the state needs to be leveraging that.
Number 0700
COMMISSIONER-DESIGNEE SEDWICK also noted Alaska owns hundreds of
apartment complexes all over the country and they need to do some
marketing, using the example of the welcome bags these complexes
put out. She stated it might be as simple initially as a vacation
planner with a can of salmon, indicating she did not know what it
would lead to. She noted the state also owns many interests in
many major malls through out the country, naming Tysons Corner
Center as a well-known example. She indicated DCED is currently
working with managers in those malls to discuss leveraging the
dollars they have for Alaska promotions. She said they are also
discussing potentially going across the country from mall to mall,
stating, "It may be that Eddie Bauer, for example, is in each of
these major malls, so maybe we think about an Alaska promotion with
them using the kinds of things that we have." She noted she thinks
the permanent fund is a good example of that, and obviously she
wants to be very sensitive. She said the permanent fund liked the
idea, the permanent fund's board liked it, and a memorandum of
understanding was now being done. She indicated the purpose of
this memorandum of understanding was so that the permanent fund was
convinced DCED understood the sanctity of the permanent fund. She
noted DCED certainly does not want the citizens of Alaska to be
uncomfortable or to think the department is doing anything
inappropriate. Commissioner-designee Sedwick stated, "We need to
leverage to our advantage in terms of marketing Alaska, so those
are the kinds of things I'd like to get involved in and that's one
of the things that we're pursuing." She noted that is the area she
is particularly interested in, as well as small businesses across
the state.
Number 0784
REPRESENTATIVE COWDERY, commenting that he was shifting directions,
said that he has always been interested in international trade, and
a few years ago he visited the Taiwanese office. He met Ms. Lu
Chin (ph) and he thought she was very good.
COMMISSIONER-DESIGNEE SEDWICK suggested the name Ida Yao.
Number 0806
REPRESENTATIVE COWDERY stated the person he was referring to was
before Ms. Yao, noting they had the opportunity and pleasure to
meet Ms. Yao on their last trip. He said he found Ms. Yao very
knowledgeable and very well-received in the business community.
When they said they wanted to do something, Ms. Yao knew exactly
who to put them in contact with, and he said she has been very
responsive to questions that they have sent. He indicated that the
state is receiving all of this for approximately $75,000 a year
without extra charges for office space, facsimile machines, et
cetera; he thinks it is a great deal. He said Ms. Yao does a great
job and whoever chose her made an good choice. He asked
Commissioner-designee Sedwick if she had considered doing something
similar in Japan and Korea, noting it was something that would be
discussed. He indicated he was asking Commissioner-designee
Sedwick if she had considered contracting out for that type of
arrangement or agreement if things had to be done in budget areas.
Number 0883
COMMISSIONER-DESIGNEE SEDWICK said she took credit for hiring Ms.
Yao, stating it was one of the first things she did when she "came
on board," so she is glad Representative Cowdery is delighted. She
said they think Ms. Yao is "swell" in DCED as well. She indicated
that if DCED opened offices in the future, the department would
clearly use independent contractors. Commenting on the financial
situation in Japan and Korea, Alaska's current top trading
partners, she indicated she thinks it is very important Alaska
maintains those relationships and continues to grow those markets,
while it looks at the opportunities in the emerging markets of
countries like Taiwan and the People's Republic of China. She
noted those markets are very important to them and DCED realizes it
can do more with less in an independent contractor situation.
Commissioner-designee Sedwick said that because Japan and Korea are
Alaska's top trading partners at about $2 billion a year, because
these countries are having financial difficulties, and because they
are Alaska's economic drivers in terms of oil exports, she thinks
they need to be very careful in the next 12 months with those
programs. She said the Alaska Seafood Marketing Institute (ASMI)
currently has representation in Japan, Taiwan and China, noting
ASMI has not been able to have representatives in those countries
before because of its federal program. She said that because of
this, DCED will be looking at ways ASMI can do some of the things
DCED has done in the area of fisheries to improve efficiencies,
noting there would be changes this year in the programs. However,
Commissioner-designee Sedwick indicated she is very worried about
those markets and maintaining Alaska's export market to those
countries.
Number 0980
COMMISSIONER-DESIGNEE SEDWICK also commented that DCED has an EDA
(economic development agency) grant, and is working with CDQs
(community development quotas) and the ARDORs in rural Alaska in
the area of fisheries. She indicated they are trying to identify
fish species, the times of year those species are available, and,
from Alaska's overseas markets, researching whether or not there
are markets for those fish. She said DCED is hoping to have some
things developed there, which she thinks is pretty exciting. She
said she thinks this is really the first year of the full workings
of tourism, trade and development with most of the "bugs" worked
out. She added, however, she thinks it is an evolving program,
with everyone working together for the common good, and she thinks
they are going to have big changes, providing those markets don't
continue to deteriorate. Commissioner-designee Sedwick related
that just last week they had a "fresh and live mission" consisting
of seven importers and the chef of the Seoul Hilton visiting from
Korea. She said the Koreans only like king crab, but St. Paul
Island CDQ provided opilio, snow, crab which she indicated the chef
at the Anchorage Hilton Hotel prepared and the visiting Koreans
fell in love with. She noted the visitors also traveled to Kenai,
Homer and Kodiak. Commissioner-designee Sedwick said she had
commented earlier that DCED does not do anything by itself and she
noted Korean Air, Anchorage Economic Development Corporation, the
communities of Anchorage, Homer, Kodiak and Kenai all played a role
in this visit. She said DCED believes it was a very successful
mission, and even though the Korean market is currently soft
because of what's going on in that country's economy, DCED
recognizes there are 65 to 70 Korean Air cargo flights a week, and
it would be very helpful if they can create or grow some of those
markets.
Number 1083
REPRESENTATIVE COWDERY indicated he had been told that the Korean
consul general had some problems with DCED or with trade,
mentioning that possibly the Korean president was going to be in
Alaska in the near future. Representative Cowdery indicated he
heard the Koreans did not want DCED to be involved in this visit,
which was distressing, and he suggested that perhaps Commissioner-
designee Sedwick could contact the consul general about this.
Number 1136
COMMISSIONER-DESIGNEE SEDWICK thanked Representative Cowdery,
stating it was news to her. She said she talks to Consul General
Cha on a fairly regular basis; she would find out what was going on
and let Representative Cowdery know.
Number 1147
REPRESENTATIVE COWDERY said he appreciated that. He noted he
thought she would make an excellent commissioner. He said that
even though he said he didn't like her answer regarding the merge,
he still has confidence she could take a hold of it and make it
work, noting, if she inherited that, he hoped she would stay with
the department and not move on to other things.
Number 1175
COMMISSIONER-DESIGNEE SEDWICK said she appreciated his confidence
and would look forward to working with him not only in the House
Labor and Commerce Standing Committee, but also in his position as
chair of the House Special Committee on International Trade and
Tourism ["world trade committee" misstated on tape].
Number 1183
REPRESENTATIVE COWDERY said he had asked Commissioner Irwin of DCRA
the same question the other day, noting that Commissioner Irwin had
said he would not be interested in staying. Representative Cowdery
indicated his impression was that the commissioner was not
interested in taking a salary cut. Representative Cowdery
indicated he thought she could handle the job.
Number 1205
COMMISSIONER-DESIGNEE SEDWICK responded that if someone had told
her 2 1/2 years ago that she would have been in state government
that would have been a surprise, and finding herself before this
committee as a commissioner nominee surprises her as well.
Number 1246
CHAIRMAN ROKEBERG asked Commissioner-designee Sedwick, for the
record, how long she had lived in Alaska.
COMMISSIONER-DESIGNEE SEDWICK said almost 51 years.
CHAIRMAN ROKEBERG asked her if she was born in Alaska.
COMMISSIONER-DESIGNEE SEDWICK replied she had been born in
Anchorage and was proud of that. She noted her father had been
born in Fairbanks.
Number 1283
REPRESENTATIVE RYAN mentioned there was an entire shelf full of
bound reports at DCRA of community development block grants which
were put out for business plans, feasibility studies, et cetera.
He commented that millions of dollars were spent and a lot of
consultants made a lot of money, but these rural communities never
went anywhere with those business plans and feasibility studies,
indicating he thought DCED would have probably spent that money
better. Representative Ryan related that in 1985 he went to the
Epcott Center with his young daughter, indicating he saw exhibits
at a huge pavilion there representing many different countries. He
said he was most struck by the People's Republic of China,
indicating they went into a 360 degree theater showing a scenic
movie and then were taken into a restaurant staffed with educated
Chinese nationals speaking impeccable English. He commented that
the food was magnificent, and it was an experience. He noted he
had thought to himself, "Why doesn't the state of Alaska have a
venue there with our crab and our salmon? We could make a fortune
just selling the stuff in a restaurant and giving that exposure --
a huge theater like that with all the mountains of Alaska and the
lakes and the rivers and so forth -- why are we remiss?" He said
he has talked to a couple of governors since that time, noting he
felt they didn't seem to see the opportunity; he commented, "And
I've tried to get some interest in that here." He said this was a
venue he found exceeding attractive for someone in the tourism
business. He thought 80,000-some people a day had been going
through there back at that time, and he said he thought it couldn't
really be that expensive compared to a lot of the money they have
thrown away on various projects. He indicated he wanted to hear
her thoughts on that, if and when the price [of oil] ever went back
up and there was some extra revenue.
Number 1435
COMMISSIONER-DESIGNEE SEDWICK stated she was game for anything that
exposes Alaska to the rest of the world, and she thinks they need
to be as creative about that as possible. She said it is hard for
her to imagine doing anything like that in the current financial
climate, simply because she wonders, as she looks around the table
at staff meetings, who is not going to be there. She said she
knows there will be two or three fewer people in terms of each of
those disciplines. However, she thinks that they have to continue
to leverage where the opportunity exists, which she said is why
leveraging the permanent fund is a good idea. She commented she is
hoping for $75,000 to run the Taiwanese program because she knows
there's a lot of potential there, and she wants the $300,000 to
continue to run the Japanese program, noting Japan brings $1.5
billion into Alaska a year. She said she is really focused on
those kinds of things, indicating she knows it is important to
think bigger but it is difficult for her to do that at this time.
Number 1521
REPRESENTATIVE JERRY SANDERS commented Commissioner-designee
Sedwick was his first choice too.
Number 1563
CHAIRMAN ROKEBERG stated his next question would probably be the
most interesting question of the entire afternoon. He asked
Commissioner-designee Sedwick if she was aware that the Governor,
through his personnel at the Department of Revenue, was
promulgating and drafting regulations to raise taxes on businesses
in the state of Alaska. Chairman Rokeberg clarified, "These
regulations are the implementation of the results of a recent
Alaska Supreme Court case of the USG (ph) bulk shipping company
versus the Department of Revenue, which overturned a heretofore
accounting and tax procedure under the Alaska net income tax law
[Alaska Net Income Tax Act] which did not allow international
shipping companies, including water vessels, aircraft, and the like
from under the Internal Revenue Code. We're not sure exactly what
the scope of this is, but I think this would be the most disastrous
hit on business in the state, if this were allowed to be received,
so this committee going to be taking that up. I just wanted to
know if you were aware of this, this is a recent case and I
wouldn't be surprised if you weren't even aware of it ...."
Number 1663
COMMISSIONER-DESIGNEE SEDWICK replied she had not been aware of it
but would check it out.
Number 1670
CHAIRMAN ROKEBERG said he hoped she did and that she carried the
message this committee and this legislature were not interested in
new taxes on business in the state, particularly as it relates to:
1) the air cargo industry going through Anchorage International
Airport and other airports in the state; and 2) the importation of
consumer goods to the people of Alaska in putting an additional
burden on those shippers coming into the state. He noted that is
a particularly troublesome side. He commended Commissioner-
designee Sedwick to look into that, checking with the Department of
Revenue and the attorney general. Additionally, he referred to the
October 3, 1997 audit report of Legislative Budget and Audit
Committee relating to what is called the "division indirect pool
expenditures for the occupational licensing costs in the state of
Alaska." He said the audit made a number of recommendations to
DCED and the Division of Occupational Licensing, quoting from page
(indisc.) of the report, "The cost charge to the OccLicensing
[Division of Occupational Licensing] from the commissioner's office
appeared to be a disproportion allocation since not all Department
of Commerce and Economic Development divisions are required to
participate in funding services from the commissioner's office."
Number 1771
CHAIRMAN ROKEBERG said the report goes to say, however, "Occlicense
has 20 percent of the department's ["apartment" stated on tape]
full-time positions but they are assessed 28 percent of the
commissioner's allocable costs." He said the report continued to
say that in the indirect cost pool there were some questions
relating to the attendance at conferences and training sessions.
He indicated the report didn't question whether those costs were
appropriate but whether they should have been in the indirect cost
pool or should have been allocated to direct costs. Chairman
Rokeberg informed the committee that there was also a legislative
budget audit on the Real Estate Commission, which he indicated had
not been completed. He stated, "Specifically ... between the Real
Estate Commission's licensing fees which went up substantially this
year and the surety fund. And because the questioned use of some
of the personnel costs in the commission that are - are actually
taken out of the surety fund to cover some of the overhead costs
there and how all that works," noting he and Representative Ryan
also have a bill on that which is currently pending that audit. He
asked Commissioner-designee Sedwick, "Were you aware of any of
these problems that related to the allocation of costs from the
commissioner's office to the OccLicensing people and how that
works?"
Number 1856
COMMISSIONER-DESIGNEE SEDWICK replied she knew that the audit was
done. She said, "It's my understanding that one person that was
dealing with the floaters which ... we weren't aware of the - the
percentage of expense that was being used, and that has been
corrected, and it's my understanding that that was the
recommendation of the audit and we certainly don't disagree with
that."
Number 1887
CHAIRMAN ROKEBERG stated, "There was over $100,000 in FY 96-97 that
... went into the indirect cost pool that was allocated out to ...
all the OccLicensing, and then ... including that, if I'm not
mistaken, there was about $70,000 (indisc.) hearing officers which
were unallocated charges to agencies outside Occupational Licensing
that might have got in the pool or weren't properly allocated or
something like that," noting they didn't need to get into the
specifics right then. However, he indicated the committee was the
"gatekeeper of all the occupational boards and commissions and so
forth" and so this was something the committee was very sensitive
to because it heard a lot of criticism when fees for licenses
increased. He said it was something she needed to be very aware
of, noting he thought the Division of Occupational Licensing
probably directly affects more citizens in Alaska on a one-on-one
basis than any other segment of her department.
Number 1960
COMMISSIONER-DESIGNEE SEDWICK stated she agreed with him and she
thinks DCED recognizes the validity of the audit and is making
those recommended changes.
Number 1979
REPRESENTATIVE RYAN said this same topic would be discussed in the
budget subcommittee, stating, "The structure is such as it's very
tempting inasmuch as there's no upper limit on (indisc.--other
noise) and leave a pool of money and/or pick-up some additional
expense that wasn't budgeted for by sliding it over to Occupational
Licensing who can just raise their fees to - to handle that, is too
tempting, perhaps, to -- in times of budget crunches and so forth,
and we want to ... look at that carefully and - and perhaps remove
that temptation somewhere or (indisc.) some kind of constraints
around it so it can't happen again."
Number 2032
COMMISSIONER-DESIGNEE SEDWICK stated it was certainly DCED's intent
to do the right thing. She noted she doesn't have all the details,
and said, "What I would like to be able to do is understand it more
fully myself and then come back to you."
Number 2049
REPRESENTATIVE RYAN indicated they would discuss it.
Number 2052
CHAIRMAN ROKEBERG noted he would just remind Representative Ryan
that the state statutes require each occupational license to be
self-sufficient, and, therefore, there is not a lot they can do
about cutting the budget in there unless they want to make some
structural changes.
Number 2072
REPRESENTATIVE RYAN noted he was going to have to leave for another
committee meeting.
Number 2079
CHAIRMAN ROKEBERG indicated the meeting was close to adjournment.
He said he understood that before the session began there was a
plan afoot attempting to work with the private sector of the
tourism business, reorganizing the tourism part of DCED, and
working with a more private sector-oriented type plan. He asked
her what the status of that situation was.
Number 2122
COMMISSIONER-DESIGNEE SEDWICK stated the Alaska Visitors
Association (AVA) has been working for months on a plan, noting
both the Division of Tourism and the Alaska Tourism Marketing
Council (ATMC) have given the AVA advice over that period of time
but it is AVA's plan. She indicated she has not come out with any
official approval or disapproval because there is a lot of
dissension within the local communities about this plan. She
congratulated the AVA for all of its hard work and effort, and she
indicated the plan is certainly a topic for discussion. She
indicated, as the plan relates to these two areas in DCED, she
thinks they need to take a look at the Division of Tourism and
ATMC, noting ATMC quasi-private status, to make sure that there is
no overlap or duplication and whether their mission is legitimate
in 1998 with remaining funding. She said she really wants to find
out more from the local communities about their feelings for this
plan, noting she does have some concern about its funding from the
private sector, and how that would work. She said she also feels
like Alaska has a responsibility as a state to do some tourism
marketing and "be at that table." She referred to the previous
discussion about the communities on the road system and the Marine
Highway System who feel the impact of these tourism dollars. She
said she didn't think anybody was going to market those areas if
they didn't, stating, "So I feel like the state, as part of their
total marketing efforts, has a responsibility to be at the table."
Number 2253
REPRESENTATIVE TOM BRICE said that was the only question he had
wanted to ask. He asked Commissioner-designee Sedwick if there was
any reason why they should not support her for commissioner.
Number 2268
COMMISSIONER-DESIGNEE SEDWICK indicated she did not think there
were any reasons.
Number 2275
REPRESENTATIVE COWDERY indicated he would like to know at some
point how much DCED spent on travel in the last year, broken down
into in-state, Lower 48, and international. He also commented that
he first returned there seemed to be some adversarial relations
with groups like the World Trade Center Alaska. He noted that had
changed, hopefully, he said, because of Commissioner-designee
Sedwick. He indicated the World Trade Center Alaska seemed to be
working quite well and he hoped she would continue a good
relationship.
Number 2357
COMMISSIONER-DESIGNEE SEDWICK indicated she thinks they have all
worked hard attempting to get the major trading partners together
and getting along, noting it was an effort by all three entities.
She said the United States Department of Commerce's Alaska Export
Assistance Center has been moved in with DCED, so DCED is co-
locating with a federal agency, and she said that over time she
would like to co-locate with the World Trade Center Alaska as well.
She said housing the "three legs of the stool of international
trade" together would be the best thing and she is hoping it will
happen, noting it depends on whether the World Trade Center Alaska
builds their (indisc.) building. She commented, "We're not married
yet but we're working closely together and we've come a long way
and it's only going to get better."
Number 2437
CHAIRMAN ROKEBERG asked if there were further questions of
Commissioner-designee Sedwick. Hearing no response from the
committee, he noted there were many more questions but the
committee was running out of time. He said he had one comment
before there was a motion, stating, "You indicated that the
Governor was your boss, but I'd only ..." [TESTIMONY INTERRUPTED BY
TAPE CHANGE]
TAPE 98-25, SIDE A
Number 0001
CHAIRMAN ROKEBERG continued, "... Representative Cowdery."
Number 0009
REPRESENTATIVE COWDERY stated the committee had reviewed the
qualifications of the commissioner. He made a motion to move the
name forward for consideration of the full body.
Number 0036
CHAIRMAN ROKEBERG stated he believed any signature of this paper
did not reflect any intent of the members to vote for or against
the individual (indisc.). There being no objections to the motion,
it was so ordered.
ADJOURNMENT
Number 0060
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 5:05 p.m.
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