Legislature(1997 - 1998)

03/18/1998 03:24 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
    HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                
                   March 18, 1998                                              
                     3:24 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                                                       
                                                                               
MEMBERS ABSENT                                                                 
                                                                               
Representative Gene Kubina                                                     
                                                                               
COMMITTEE CALENDAR                                                             
                                                                               
* HOUSE BILL NO. 417                                                           
"An Act relating to the unclaimed property of persons dying                    
intestate."                                                                    
                                                                               
     - HEARD AND HELD                                                          
                                                                               
* SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 349                                    
"An Act prohibiting the use of the title 'social worker' without a             
license; relating to social workers, licensure of social workers,              
and the Board of Clinical Social Work Examiners; and providing for             
an effective date."                                                            
                                                                               
     - HEARD AND HELD                                                          
                                                                               
* HOUSE BILL NO. 399                                                           
"An Act relating to an optional exemption from, and deferral of                
payment of, municipal taxes on deteriorated property, and defining             
'deteriorated property' for purposes of the exemption or deferral;             
and providing for an effective date."                                          
                                                                               
     - MOVED HB 399 OUT OF COMMITTEE                                           
                                                                               
(* First public hearing)                                                       
                                                                               
PREVIOUS ACTION                                                                
                                                                               
BILL: HB 417                                                                   
SHORT TITLE: UNCLAIMED INTESTATE PROPERTY                                      
SPONSOR(S): REPRESENTATIVES(S) DAVIS, Hodgins                                  
                                                                               
Jrn-Date    Jrn-Page           Action                                          
02/16/98      2332     (H)  READ THE FIRST TIME - REFERRAL(S)                  
02/16/98      2332     (H)  L&C                                                
03/18/98               (H)  L&C AT  3:15 PM CAPITOL 17                         
                                                                               
BILL: HB 349                                                                   
SHORT TITLE: REGULATION OF SOCIAL WORKERS                                      
SPONSOR(S): REPRESENTATIVES(S) JAMES, Kelly, Elton                             
                                                                               
Jrn-Date    Jrn-Page           Action                                          
01/23/98      2120     (H)  READ THE FIRST TIME - REFERRAL(S)                  

01/23/98 2120 (H) LABOR & COMMERCE 02/04/98 2223 (H) COSPONSOR(S): ELTON 03/04/98 2499 (H) SPONSOR SUBSTITUTE INTRODUCED - REFERRALS 03/04/98 2499 (H) LABOR & COMMERCE 03/18/98 (H) L&C AT 3:15 PM CAPITOL 17 BILL: HB 399 SHORT TITLE: EXEMPT/DEFERRAL DETERIORATED PROPTY TAX SPONSOR(S): REPRESENTATIVES(S) RYAN Jrn-Date Jrn-Page Action 02/12/98 2307 (H) READ THE FIRST TIME - REFERRAL(S) 02/12/98 2307 (H) LABOR & COMMERCE 03/18/98 (H) L&C AT 3:15 PM CAPITOL 17 WITNESS REGISTER REPRESENTATIVE GARY DAVIS Alaska State Legislature Capitol Building, Room 513 Juneau, Alaska 99801 Telephone: (907) 465-2693 POSITION STATEMENT: Sponsor of HB 417. SHIRLEY ARMSTRONG, Legislative Assistant to Chairman Rokeberg Alaska State Legislature Capitol Building, Room 24 Juneau, Alaska 99801 Telephone: (907) 465-4968 POSITION STATEMENT Provided information on HB 417; provided information on HB 399. RACHEL LEWIS, Administrator Unclaimed Property Section Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 465-5885 POSITION STATEMENT: Testified on HB 417. BOB BARTHOLOMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 465-2320 POSITION STATEMENT: Testified on HB 417. REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Sponsor of SSHB 349. CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2534 POSITION STATEMENT: Testified on SSHB 349, suggested amendments. EILEEN LALLY, Deputy Director Community Programs Hope Cottages, Incorporated 6508 Fairweather Place Anchorage, Alaska 99518 Telephone: (907) 561-5335 POSITION STATEMENT: Testified in support of SSHB 349. BETH SIRLES, Chair Department of Social Work University of Alaska Anchorage P.O. Box 633 Girdwood, Alaska 99587 Telephone: (907) 783-2238 POSITION STATEMENT: Testified in support of SSHB 349. CECILIA KLEINKAUF 2220 North Star Street, Unit 2 Anchorage, Alaska 99503 Telephone: (907) 274-7113 POSITION STATEMENT: Testified in support of SSHB 349. COLLEEN PATRICK RILEY 3400 Illiamna Avenue Anchorage, Alaska 99517 Telephone: (907) 269-7317 POSITION STATEMENT: Testified in support of SSHB 349. JOHN WATERS, President Board of Directors, Alaska Chapter National Association of Social Workers 1802 Evergreen Street Fairbanks, Alaska 99709 Telephone: (907) 458-0447 MARIANNE MILLS National Association of Social Workers 2806 John Street, Number 2 Juneau, Alaska 99801 Telephone: (907) 586-3204 POSITION STATEMENT: Testified in support of SSHB 349. ANGELA SALERNO, Executive Director Alaska Chapter National Association of Social Workers 318 Fourth Street Juneau, Alaska 99801 Telephone: (907) 586-4438 POSITION STATEMENT: Testified on SSHB 349. STEVE VAN SANT, State Assessor Division of Municipal and Regional Assistance Department of Community and Regional Affairs 333 West Fourth Avenue, Suite 220 Anchorage, Alaska 99501-2341 Telephone: (907) 269-4500 POSITION STATEMENT: Submitted statement with concerns about HB 399 which was read by Ms. Metcalfe-Helmar. KIM METCALFE-HELMAR, Special Assistant Office of the Commissioner Department of Community and Regional Affairs P.O. Box 112100 Juneau, Alaska 99811-2100 Telephone: (907) 465-4898 POSITION STATEMENT: Read Mr. Van Sant's statement and provided department position on HB 399. KEVIN RITCHIE, Executive Director Alaska Municipal League 217 Second Street, Suite 200 Juneau, Alaska 99801 Telephone: (907) 586-1325 POSITION STATEMENT: Testified on HB 399. ACTION NARRATIVE TAPE 98-31, SIDE A Number 0001 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce Standing Committee meeting to order at 3:24 p.m. Members present at the call to order were Representatives Rokeberg, Cowdery, Hudson, Sanders, Ryan and Brice. HB 417 - UNCLAIMED INTESTATE PROPERTY Number 0102 CHAIRMAN ROKEBERG announced the committee's first order of business was HB 417, "An Act relating to the unclaimed property of persons dying intestate." Number 0115 REPRESENTATIVE GARY DAVIS presented HB 417. The sponsor statement read: Under current law, when there are assets from an estate for which there was no will and there are no known heirs, the state has certain responsibilities and procedures for determining whether there are heirs to the estate. If no living heirs are located, the assets pass to the state. House Bill 417 provides that certain community organizations in the municipality in which the decedent last lived may apply for these assets if the state has had possession of them for a period of five years and no one has come forward to claim them. If no community organization applies for the assets, they become the property of the state. If only one organization applies, the Department of Revenue will give the estate to that organization. If there is more than one organization that qualifies and applies, they may agree to share the property. If the organizations do not agree to share, then the appropriate local government - either the city or borough - will identify the applicant that provides its services the most broadly throughout the municipality. In order to qualify, a community organization must be located in the city in which the decedent lived, or in the borough if the decedent didn't live in a city. It must also be a nonprofit corporation exempt from federal taxation, be operated exclusively to provide services promoting the well being of the residents of the municipality, and have been in existence for at least three years. Under HB 417, the state's only additional responsibility will be to publish a notice in the municipality in which the decedent lived stating that the decedent died intestate and that no heirs have been identified. It is the responsibility of the community organization to investigate whether it may be qualified to receive the estate and to apply for it. Generally, when an individual dies intestate with no heirs, the size of the estate is not large from the state's perspective. However, the funds from the estate could be used by a community organization to greatly benefit the community at large. House Bill 417 provides a mechanism by which these organizations can apply for an estate, without causing the state undue expense or administrative time. REPRESENTATIVE DAVIS stated HB 417 is apparently a new idea, noting they haven't found this in any other states. The property of value belonging to someone who dies without a will currently reverts by statute to the state and the state has procedures to dispose of the property. This bill would allow qualifying nonprofit organizations priority to accept the property of value of someone dying without a will in a municipality. He noted the legislation gave time frames to allow rightful heirs to come forward. The bill gives the qualifying process for organizations and establishes a "pecking order" determining which nonprofit would be the possible recipient. If there are two nonprofits, the bill indicates those two nonprofits could agree to split any of the assets. If there were more than two, the controlling municipality would establish the structure determining which nonprofit would receive the property. Representative Davis said that was the bill, noting the Department of Revenue (DOR) was present. Referring to Alaska's Uniform Unclaimed Property Act, Representative Davis stated, "It's title report of abandoned personal property and our legislation specifies that intestate property would follow - follow the procedures in statute as to the process that the state would need to go through to make sure that there are no heirs, and ... I believe it also determines the value of the property." Number 0399 REPRESENTATIVE JOHN COWDERY said the bill did not have a definition of nonprofit except "'community organization' means a person who is exempt from federal taxation ...." [page 2, beginning with line 29, "(3) "community organization" means a person who (A) is exempt from federal taxation under 26 U.S.C. 501(c)(3) (Internal Revenue Code); ..."] He asked about churches. REPRESENTATIVE JOE RYAN commented churches were 501(c)(3) organizations REPRESENTATIVE COWDERY said he knew that, but asked if that was the sponsor's intent. Number 0430 REPRESENTATIVE DAVIS said he would prefer to exclude churches if it was constitutionally provided, noting he had not really thought of it. REPRESENTATIVE COWDERY indicated he did not think the definition was clear enough and said if it is the sponsor's intent to exclude churches, they should say that in the bill. Number 0495 REPRESENTATIVE DAVIS referred to page 2; lines 29, 30 and 31, of the bill commenting he thinks if churches fall under that definition then they would be included. He said he didn't feel very strongly one way or another. Number 0523 REPRESENTATIVE TOM BRICE asked about property outside of a municipality. REPRESENTATIVE DAVIS indicated his intent was to have it specifically apply to property within organized municipalities, and other property would follow the current procedures. REPRESENTATIVE BRICE confirmed the property outside of municipalities would go back to the state. Number 0549 REPRESENTATIVE RYAN thanked Representative Davis for bringing this forward, noting he was not a fan of government ending up with the fruits of someone's life labors, no matter how small. He commented it looked like a pretty good bill to him and perhaps could have been made more inclusive. Number 0586 REPRESENTATIVE BILL HUDSON asked if very valuable property like land, real estate, things of that nature, of someone dying intestate would be included in this. He asked if there was a dollar value limitation. Number 0626 REPRESENTATIVE DAVIS replied there was no dollar value limitation at this time, and that had occurred to him today as he was reviewing the legislation. He had wondered if they needed to consider the situation of property valued in a couple of million dollars, for example. He noted he thought it would be highly unlikely that someone with that amount of assets would not have a will, but it could happen, and it would certainly be an opportunity for a nonprofit to recover some value. Number 0669 REPRESENTATIVE HUDSON confirmed the three-year nonprofit requirement was to halt opportunists. He asked if Representative Davis thought that was long enough. REPRESENTATIVE DAVIS answered in the affirmative, noting that number was negotiable. He added he wanted to give as much discretion as possible on details, although perhaps not limits, to the municipalities to create an ordinance addressing this. Number 0743 REPRESENTATIVE COWDERY asked how heirs who might be in the chain of entitlement by law would be addressed. REPRESENTATIVE DAVIS replied he wasn't sure and had not read the existing statutes, but indicated he would think there are procedures currently followed by the state for intestate property ensuring the legally necessary efforts to locate heirs have been made, including advertisements to the effect that someone has passed away and anyone who claims any of that person's estate has a certain time to come forward. Representative Davis indicated the DOR was here to testify and he believed a representative of the department could answer. REPRESENTATIVE COWDERY noted that was a concern of his. He commented he also believes it is possible in Alaska to receive a divorce without the knowledge and consent of one party if that party cannot be located. Number 0878 REPRESENTATIVE JERRY SANDERS asked what was the current ultimate disposition of this property. REPRESENTATIVE DAVIS replied it was his understanding, noting the department could correct him, that the property goes to the ownership of the state. If it is real property the state puts it up for sale, option, or whatever process is followed. He thinks other things like residences or facilities are treated the same way; there is a procedure for disposal and the state collects the money. REPRESENTATIVE SANDERS confirmed that the money went into the general fund. REPRESENTATIVE DAVIS said that was his understanding. REPRESENTATIVE SANDERS asked what Representative Davis's motivation was for the bill, commenting he's sure there probably aren't a lot of decedents claiming that the state is receiving their money. Number 0933 REPRESENTATIVE DAVIS said a former insurance agent of his, involved in some health care nonprofit organization Representative Davis was not familiar with, introduced the idea to him. Representative Davis indicated he thought it sounded like a good idea, referring to Representative Ryan's previous comments about the government receiving someone's life assets. He indicated the legislature provides some funding to nonprofit corporations which provide some social benefit to municipalities, districts, and to the state as well. He stated, "So any opportunity to supplant additional dollars other than general fund dollars, which of course this would - would in essence be general fund dollars in - in itself." Representative Davis indicated that was his train of thought when the idea was presented to him. Number 1019 REPRESENTATIVE SANDERS noted he could see a lot of problems but stated he was not taking a stand on the bill at this point and wanted to hear the testimony. He stated, "By putting it through the state and us voting to give it to nonprofits, it removes it from the individual. Of course ... the individual's not in a position to complain about it, but still ... I can see where, like you say, people have ... spent all their life building something up, and perhaps they hate animals, and they certainly don't want their money going to the SPCA [Society for the Prevention of Cruelty to Animals] or perhaps they are atheists and over their dead body their money's gonna go to a church, which is exactly what's gonna happen here." Representative Sanders commented he was bringing up these questions, but not saying "no" to the bill. Number 1070 REPRESENTATIVE DAVIS stated those certainly are questions individuals might have, and there might be the same concerns under the current situation over the state's final distribution of an atheist's assets, for example. Number 1089 CHAIRMAN ROKEBERG asked if Representative Sanders was suggesting that if the chairman were to die intestate, part of his estate could go to the Sierra Club legal defense fund. REPRESENTATIVE SANDERS replied that was the way it sounded to him. REPRESENTATIVE RYAN commented it was a good reason to make a will. CHAIRMAN ROKEBERG suggested the mandated will bill. Number 1110 REPRESENTATIVE DAVIS said he was concerned about that several years before he even thought of being in the legislature. When he did get into the legislature he looked at some how or some way to mandate wills, so that they could eliminate or drastically reduce the amount of probate activity occurring in Alaska. Representative Davis noted he has not found that mechanism yet. REPRESENTATIVE SANDERS commented on that basis, he liked Representative Davis's bill. Number 1145 REPRESENTATIVE RYAN commented Alaska was about the only state which gave attorneys actual fees, not a percentage of the estate, for probate. He said the attorney had to present a bill with particulars, noting this was something Alaska has going for it that other jurisdictions did not. Number 1162 CHAIRMAN ROKEBERG stated, "You may take a question off the real estate examination about this (indisc.), but it still is there." He asked if any of these things were being repealed, or if "in the event of" was just being substituted if there was no taker. REPRESENTATIVE DAVIS indicated they were substituting. CHAIRMAN ROKEBERG confirmed that those statutes would remain and it would only be after the five-year period is (indisc.) that these new provisions would come into effect and be the disposition of the property. Number 1192 REPRESENTATIVE DAVIS noted that was somewhat confusing language, stating he understood it to be "within five years," transferred within five years. Number 1202 CHAIRMAN ROKEBERG referred to the relevant bill language on page 1; lines 6, 7 and 8; "except that, if the property is not claimed under AS 34.45.280 - 34.45.780 within five years after being paid or delivered to the state under AS, 34.45.320, the property shall be distributed as follows:". He asked what the sponsor's intention was there. Number 1212 REPRESENTATIVE DAVIS said "within five years" sounds fine, noting again he has not had lengthy discussions with the department on this question and was not completely sure he was reading that accurately. He noted he was not sure, indicating perhaps there might be transactions, research and investigations taking up to five years, or perhaps a legal requirement for a five-year period. Number 1252 CHAIRMAN ROKEBERG commented that the meaning of "within" concerned him, asking if Representative Davis had spoken about this with the bill drafter. The chairman suggested amending it to say "after", "not less than" or something similar, if Representative Davis did not look on that hostilely. He asked Representative Davis if that was his intention. REPRESENTATIVE DAVIS replied his intention was that it should be transferred within five years. CHAIRMAN ROKEBERG questioned the meaning, asking if it meant 4 years and 11 months. REPRESENTATIVE DAVIS said, "Two years, three years ..." REPRESENTATIVE SANDERS commented, "If it's not claimed within five years." SHIRLEY ARMSTRONG, Legislative Assistant to Representative Norman Rokeberg, stated, "Zero to five." Number 1284 CHAIRMAN ROKEBERG indicated a nonprofit could attempt to obtain this money within a limbo period, asking if that was correct. REPRESENTATIVE DAVIS replied that was his intent, but he was not sure if that was the way the bill is drafted or if that was the legal process currently in place. Number 1308 CHAIRMAN ROKEBERG indicated the committee could discuss it after hearing testimony from the DOR. Number 1329 RACHEL LEWIS, Administrator, Unclaimed Property Section, Income and Excise Audit Division, Department of Revenue, came forward to testify. She stated real and personal property are currently separated in Alaska Statutes; HB 417 would change it into one wording of "property" which could be difficult because the Department of Natural Resources (DNR) currently covered real property. She indicated this raised questions because the two types of property are handled in different ways. Ms. Lewis noted the legislation had no minimum amounts. For example, if $10 came in as intestate property, she asked if she would still need to advertise statewide. She said she also had a question about maximums, noting that had been mentioned. She stated intestate property was not identified as an unique property under AS 34.45, unclaimed property. Ms. Lewis said property comes in to the DOR as bank accounts, life insurance proceeds, but is not specifically identified as intestate property, and she stated, "So that identification factor as intestate property isn't something that we know, at the time that it comes to us, for the most part." Number 1423 MS. LEWIS continued, "Occasionally, and these are the only three times I've ever seen anything identified, a coroner's office will send us some property that they consider intestate property -- they've not been able to find anyone, the state has had to pay for the burial of the person, et cetera. A law firm has sent us property that they've done as much as they could to find the person who did have a will, but (indisc.) was left to their wife who predeceased them, and they didn't update their will, so they've not been able to find any heirs or beneficiaries on that one -- and then [the] only other would be if it came from the court system. But again, the property would have to be identified as intestate property because we don't have an investigator that would look to see, whatever name comes into us, if that person is alive or if the social security administration has 'em deceased or - or any of that kind of information. So, if the property came in and it was identified as intestate, I could put it into a program similar to this. Again, that would be personal property, it would be what we handle right now, and real property would throw a big wrench in - into our section. Department of Natural Resources probably would still be happy to handle real property." Ms. asked about the wording, "residing in at the time of death". She questioned, for example, if Anchorage would be entitled to the lifelong property of a person who had lived in Barrow all his or her life but who died in Anchorage where he or she was residing periodically to receive health care treatments. Number 1535 REPRESENTATIVE SANDERS confirmed Ms. Lewis did not feel the current procedure was broken and needed to be fixed. Number 1549 MS. LEWIS agreed. She also noted the state did not take ownership of property which comes in as unclaimed. That property stayed within the state in perpetuity for heirs or beneficiaries. She said there was an escheat law in 1986 that allowed seven years to make a claim then the state took ownership, but the Uniform Unclaimed Property Act took away that physical escheatment of property from anybody who had unclaimed property, so that property would be available for any heir or beneficiary forever. Number 1580 CHAIRMAN ROKEBERG questioned the disposition of any type of chattel, asking whether it was converted into cash or stored. MS. LEWIS replied that the only property they received was tangible property from safe deposit boxes and there was language allowing the department to auction those items off. She indicated that the items could be auctioned off after a year, noting it takes a year for the items to reach them and a year for them to advertise, so that an auction could be held the following year. However, she said an auction has never been held because they have never received enough property to cover the costs of an auction. CHAIRMAN ROKEBERG confirmed that if someone died intestate the contents of his or her safety deposit box would revert to the DOR for keeping in perpetuity; real property would be handled by the DNR and the escheat law was still in effect for seven years. Chairman Rokeberg commented, "So this is not just a 'help your local organization deal out,' it changes the entire escheat statute of the state of Alaska." Number 1645 REPRESENTATIVE RYAN confirmed that the contents of safety boxes coming under the Unclaimed Property Section's jurisdiction were inventoried. He asked if the contents were then just held onto forever. MS. LEWIS said they would eventually hold an auction when they ran out of storage space. REPRESENTATIVE RYAN posed a hypothetical situation, asking if an automobile would be left to depreciate to zero value or if it would it be converted to liquid assets. Number 1670 MS. LEWIS said she would need another example, noting most of the items have to fit in a safety deposit box. She suggested a pocket watch, gold nuggets or silver bars. REPRESENTATIVE RYAN said he was asking about something that would depreciate in value if kept, a soft good with a useful life. He asked, "Do we just set on it and hold it till it's of no value or wait for the upswing till (indisc.) collectors' value?" Number 1696 MS. LEWIS indicated the department does not play the market with stocks or any of those kinds of items that come into the Unclaimed Property Section from safety deposit boxes. She indicated that when they have enough items they can have an auction so the cost of the auction does not exceed the value of the items being sold. She noted Mr. Bartholomew might need to elaborate. Ms. Lewis noted not very much property comes in from safe deposit boxes. Number 1737 REPRESENTATIVE COWDERY said she mentioned real property had to be under DNR, but, he said, "Doesn't this bill on the first section state, 'Deliver to the state,' and both - both departments are in ..." MS. LEWIS said that was what scared her, the bill put them together. REPRESENTATIVE COWDERY said all departments had been put together, and he asked if he was correct in his reading that it would go to the appropriate department. MS. LEWIS replied, "It says repealed and reenacted, so it takes away part 1 and part 2 ...." Number 1747 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division, Department of Revenue, came forward to testify. To Representative Cowdery's question, Mr. Bartholomew said he thought it came to the state but then would be administered under Title 34, unclaimed property in DOR. He said DNR currently administers the real property that department receives under a different statute. He indicated HB 417 put both real and personal property under Title 34, so that the process currently used for personal property would be followed. Mr. Bartholomew stated he thought, as Ms. Lewis spoke to, that there were more steps in the process when dealing with real property. Regarding that, there was a fiscal note from the Income and Excise Audit Division of DOR asking for a position "out five years." He commented he wanted to clarify one other thing, indicating the previously discussed line 6 of the bill gave the original owner or any heirs five year to claim the property, it would remain untouched for five years, and a nonprofit would not be able to apply for it until after five years. He thought the rules on real property were different. Mr. Bartholomew said there would not be a fiscal note if the division did not have to deal with real property, but he indicated the position they have requested in year five would be involved with the business of transferring title and disposing of real property which would begin occurring in year five. Number 1834 REPRESENTATIVE COWDERY asked how taxes that might be accruing on real estate over that five-year period would be handled, if real estate was involved. Number 1849 MR. BARTHOLOMEW indicated he thought that currently if property taxes were not being paid the city had a claim against the estate, and the taxes would have to be satisfied or the lien taken care of before anyone could receive that property. REPRESENTATIVE COWDERY indicated he was referring to situations where the value was more than the taxes owed but there were outstanding taxes, giving the example of property worth $100,000 with $10,000 or $20,000 in outstanding taxes. He said he knew nothing was exempt from taxes in this situation. MR. BARTHOLOMEW said, "And I think before you could get clear title to it ..." Number 1883 REPRESENTATIVE COWDERY asked, "Before the state could get clear title or anyone?" MR. BARTHOLOMEW said, "Right. That ... you'd have to pay off the debt, so it'd be part of any settlement, ... if the state was gonna sell that property, or transfer that property to a nonprofit. And maybe Representative Ryan might know, ... I would think you'd have to satisfy the - the tax debt before ... a nonprofit could obtain real title ...." Number 1903 REPRESENTATIVE RYAN said, "(Indisc.) title reverts to the state, the state cannot be taxed by a subdivision so there wouldn't be anything for that period of time that the state held ownership of the property. Number 1911 CHAIRMAN ROKEBERG noted the committee had two other bills on the meeting calendar. Number 1915 REPRESENTATIVE DAVIS said he appreciated the questions and the review. He stated he thought it would be more of an administrative nightmare to have DOR handle real property disposition, indicating this could be solved simply by including the DNR statutes so that DNR would be handling any real property transactions. Regarding the question about the minimums, Representative Davis stated HB 417 referred to AS 34.45.280 to AS 34.45.780 which contained a $100 minimum, and it would be their intent to keep that minimum as it already stood in statute. Representative Davis said they would work on amendments to clarify any confusion about where the residency would be and acceptable possible recipients of the proceeds. He stated they recognized that this afternoon in reviewing the legislation and asking questions. Representative Davis indicated they had received communication from the department that morning and had not had time to completely address those concerns. He said they would certainly examine all the concerns raised by Mr. Bartholomew and Ms. Lewis, working with the department and reporting back to the committee. Number 1998 CHAIRMAN ROKEBERG confirmed that communication had not been in written form. The chairman suggested the clarity on the five-year period be very clear when the bill was reviewed, "not less than or whatever ...." Number 2013 REPRESENTATIVE DAVIS said he thought Mr. Bartholomew clarified that. CHAIRMAN ROKEBERG noted the committee had a different interpretation from Legislative Legal and Research Services. Number 2020 REPRESENTATIVE DAVIS said it was also completely opposite of his intention, stating, "'cause it would be, if it's not claimed by any possible heirs within five years, so it would not be available for distribution before five years." Number 2030 CHAIRMAN ROKEBERG stated HB 417 would be held for further action. SSHB 349 - REGULATION OF SOCIAL WORKERS Number 2042 CHAIRMAN ROKEBERG announced the committee's next order of business was SSHB 349, "An Act prohibiting the use of the title 'social worker' without a license; relating to social workers, licensure of social workers, and the Board of Clinical Social Work Examiners; and providing for an effective date." Number 2063 REPRESENTATIVE JEANNETTE JAMES came forward to present SSHB 349. She thanked the chairman for having such a prompt hearing on the bill, stating she has never worked so hard on any piece of legislation trying to orchestrate all the various interests. She said she finally realized she needed a sponsor substitute to include the amendments but there are still a few more. The sponsor statement reads: HB 349: Act prohibiting the use of the title 'social worker' without a license; relating to social workers and to the Board of Clinical Social Work Examiners; and providing for an effective date. There are some key points on "Multi-level" licensure for Social Workers in Alaska. First, it requires the State of Alaska to recognize social work as a profession, and social workers as professionals. The licensure of professional social workers will protect the health, safety and welfare of Alaskans through the effective control and regulation of persons using the title of social worker. This bill will prohibit the use of the title "social worker" for those who do not have a license, while maintaining what is in current law that a person must be licensed as a clinical social worker to practice clinical social work. As stated in the backup, this bill amends the current statute by adding two additional levels of professional social work licensure. Currently available in Alaska is the following: 1. Licensed Clinical Social Worker (LCSW), which requires a Master's of Social Work Degree (MSW) or doctorate, and two years of supervised experience. This proposed legislation would add the following: (1) a Licensed Master's Social Worker (LMSW), which requires a MSW, and (2) a Licensed Bachelor's Social Worker (LBSW), which requires a Bachelor's of Social Work degree (BSW). This legislation establishes the minimum qualifications for each level of social work licensure, and requires that those practicing as professionals in the state of Alaska hold a license. The bill also defines the duties of the Board of Social Work Examiners; identifies those individuals who are exempt from social work licensure in Alaska; establishes the grounds on which the Board of Social Work Examiners can impose disciplinary sanctions on a licensee. HB 349 provides for an exemption from social work licensure, or optional licensing for individuals employed under the title of "social worker" but who lack the educational requirements. At the same time it is designed to protect all people in Alaska by ensuring the most positive, professional influence and direction possible for vulnerable children and adults. Social Work licensure will promote professional social work practices by setting educational and ethical standards for professional social workers, and by offering consumers a legal recourse against unethical or damaging social work services. We must consider the responsibility of social workers to have a healthy positive influence on their clients. I am sponsoring this legislation because of my growing concern about the quality of care provided for the people of Alaska. As well, the State of Alaska has the goal and the responsibility to provide the best care possible. This legislation, I believe, will help us to achieve that goal. REPRESENTATIVE JAMES emphasized at the beginning of her reading of the sponsor statement that HB 349 is an Act prohibiting the use of the title "social worker" without a license, but not the practice of social work. After reading the statement, she re-stressed her concern about people dealing with vulnerable children and adults, making decisions affecting people for the rest of their lives. She said she wants to be absolutely sure that these practitioners are qualified to make those decisions, and if they have the opportunity to make mistakes, there is some recourse for those people affected by errors. She commented it has been difficult to coordinate the various interests throughout the various agencies and practitioners; they tried very hard to get a balanced piece of legislation. Representative James noted Ms. Angela Salerno, Executive Director, Alaska Chapter, National Association of Social Workers (NASW), had worked very hard with her on this legislation and asked that any technical questions about the inner workings of the bill be directed toward Ms. Salerno. Number 2255 REPRESENTATIVE COWDERY said in the Division of Family and Youth Services (DFYS), Department of Health and Social Services (H&SS), "social worker" is used as a job title. He asked if that was a union description, noting he has been told "social worker" is described in the union's contract. Number 2269 REPRESENTATIVE JAMES said other witnesses might correct her, but she indicated she thought the drafting of the titles came from administration by the state, and that the union, if it has interest in these titles, received the titles from the state, not the other way around. She reiterated this legislation does not seek practice protection, only title protection at this point. She commented that practice protection could be pursued if title protection works well. She said practice protection really should be the goal, stating, "Because if you're doing anything called a social worker, or doing anything that isn't even called a social worker which is really social work, that's another area where we should have the consumer protection." Number 2305 REPRESENTATIVE RYAN said his only problem with SSHB 349 is the exemption, Section 08.95.911, on page 10, relating the great personal effort and personal expense he went to to receive the necessary training and certifications in his fields as an aircraft mechanic and licensed airline transport pilot. He indicated grandfathering in people without the required educational background didn't seem professional or fair to those people who had made the effort and put in the work to attain the required education, and he asked how that was justified. Section 08.95.911. of the bill reads: Section 08.95.911. Exemption. (a) Notwithstanding AS 08.95.100(b)(1), a person who, on June 30, 2000, was employed or providing services under the title "social worker" may, without obtaining a license under this chapter, continue to use the title "social worker" while the person is employed by the same employer or, if self- employed, while providing the same scope of services, as on June 30, 2000. (b) The exemption under (a) of this section does not authorize use of the title "social worker" outside the context of the person's employment or self-employment, as applicable. (c) For purposes of this section, a person who is employed by (1) the federal government is not considered to have changed employers if the person begins employment with a different agency of the federal government; (2) the state is not considered to have changed employers if the person begins employment with a different agency of the state; (3) a municipality is not considered to have changed employers if the person begins employment with a different agency of the municipality. Number 2361 REPRESENTATIVE JAMES agreed with Representative Ryan, but said the reality of the issue is that people who are working for the state fall into different categories: some do not have the educational requirements, some have degrees in other fields, and some do have the proper degree and would qualify for licensure. She commented that the job security provision and union contracts were also a concern, noting the union would be perfectly happy if the state could provide education to bring these people up to the requested level, but she said that is not a possibility. She stated, therefore, there has to be a transition period as far as having people out there qualified to do the work. There is probably a current shortage of licensed social workers or those who qualify, and the department has been working with the university to set up specific types of classes, et cetera, so that those who are able can bring up their skills. She indicated that someone who has been doing social work in a department for ten or more years without having the educational requirements probably has some level of skill, but, because of financial limitations, would not be able to take off from work to go to school. She said that was the reality and a concession that had to be made in order to get started on this program, noting that was her best explanation. Representative James also commented they had worked very hard to get a zero fiscal note for this legislation and she thought they had made all necessary concessions, but had received a fiscal note that day for $25,000 from the Division of Occupational Licensing. Number 2439 CHAIRMAN ROKEBERG invited Representative James to join the committee at the table. He requested a brief explanation of the fiscal note from Ms. Reardon. Number 2460 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development (DCED), came forward to testify. She noted employees from the division staff the Board of Clinical Social Work Examiners which would be taking on the additional licensing responsibility for these two other social worker levels. She said the explanation is on the second page of the fiscal note; the division asks for a half-time licensing examiner [$20,300] and $4,700 for ..." [TESTIMONY INTERRUPTED BY TAPE CHANGE] [From page 2 of division's fiscal note: Contractual Services, $4,700. "This funding covers communication costs, public noticing, printing, advertising and legal services to establish new regulations."] TAPE 98-31, SIDE B Number 0001 MS. REARDON continued, "... a brief explanation right below that, which does indicate that occupational licensing programs are required to cover fees to cover their costs so this would not be an additional contribution to the budget balancing problem." She added that there are currently 253 LCSWs. One licensing examiner staffs the board dealing with those social workers and also staffs the boards of Marital and Family Therapy, Psychologist and Psychological Associate Examiners, State Physical Therapy and Occupational Therapy Board, and State Athletic Commission. This examiner estimates 20 to 30 percent of her time is currently being spent with social work. Ms. Reardon stated she is concerned that if she adds to this examiner's workload, the responsibility for the State Physical Therapy and Occupational Therapy Board would have to be removed in order for this examiner to deal with the 250 applicants the division estimates will be seeking licensure at these other levels in the coming two years. Ms. Reardon commented she has found in preparing fiscal notes that it is not possible to ask for a quarter of a person, stating, "You either ask for no new staff and say, 'I can absorb the function,' or you need to have half. There's nothing in between." She indicated that sometimes there are functions which take more staff work, causing problems, but perhaps not reaching the threshold of half a position, and she noted she had been somewhat in that place in this situation. Ms. Reardon stated the other factor is that the licensing examiners keep time sheets and bill the programs for time actually spent. If half an examiner is not spent, particularly in later years after the program is "up and going," social work would not continue to be billed for that time. She also noted she hasn't asked for any new investigative or enforcement resources, and it is possible that if there are more complaints because there are more social work licensees, some of the existing investigators would spend more time with social work and that would show up in the social work fees. Number 0113 REPRESENTATIVE RYAN commented he was not putting this particular question on Ms. Reardon, noting he intended to speak with the commissioners in the budget subcommittee. He referred to a legislative audit done on DCED last year, which brought forth that the department had attributed certain department costs to the Division of Occupational Licensing. He said this was a nice way of getting some extra money because the division "charges whatever the traffic bears and if you incur a cost then you just increase the fee, so there's a little bit of legerdemain that allows the Department of Commerce to perhaps have a little more money for discretion or to offset some of their - their costs on your division, and therefore, have extra budget fund." He asked what there was to insure them that something similar would not happen with this program, that it would increase to 1 1/2 to 2 people, therefore driving the cost up to not only these licensees, but perhaps all of the licensees. Representative Ryan said he understands there were a lot of fees this year because of a lawsuit which went awry involving an airline pilot or something. He stated, "(Indisc.) great increase in license fees this year, many rumors running around (indisc.) cost, but ...." Number 0162 MS. REARDON assured Representative Ryan that did not have to do with anything outside the division's licensee areas, and had nothing to do with aviation as the division does not license in those areas. If the division has an additional half-time employee and that person is used on some occupations in the division, she agreed that someone will get billed for it. She said there will be $25,000 in additional fees charged to someone in the division's world of 35,000 licensees, noting it would not all necessarily go to the social workers if it turns out and additional half person is not necessary. Ms. Reardon indicated that person's time would be billed to the programs actually receiving that time and those programs would see fee increases. Referring to the issue brought up in the legislative audit, which she said she thought had also been had began to be addressed with the commissioner in her confirmation hearing [House Labor and Commerce Standing Committee, March 4, 1998], Ms. Reardon stated there are costs in the Division of Administrative Services and the commissioner's office that are assessed to the Division of Occupational Licensing. The department's position is that these are reasonable costs associated with having a Division of Occupational Licensing, and licensing occupations. She noted costs, for example, in the Division of Administrative Services of having, she stated, "A personnel and a fiscal and a - a units, and that they do handle matters connected with bills from Occupational Licensing or - or people that we hire, and that the oversight from the commissioner's office is also a cost of regulating professions, that if the division didn't exist and we weren't regulating professions, then these activities would not have to be engaged in by the commissioner's office. But as you said there - there are other opportunities probably to discuss this, (indisc.) probably want to discuss it in greater detail." REPRESENTATIVE RYAN stated, "We're just want to be assure that, you know, won't (indisc.--rest of sentence)." Number 0259 CHAIRMAN ROKEBERG asked the management cost, personnel time required, and number of people covered currently for this occupational license. MS. REARDON replied there are currently 253 people at the clinical social worker level, the only level the division licenses. She said, in terms of direct staff, there is one range 12 licensing examiner spending an estimated 20 to 30 percent of her time handling this program, in addition to the other programs Ms. Reardon mentioned. She noted there is also part of a range 18 investigator who handles complaints related to the other behavioral health programs: psychology, and marital and family therapy, as well as dentists and optometrists. CHAIRMAN ROKEBERG asked the amount of the current biennial fee. MS. REARDON replied $410. Number 0312 CHAIRMAN ROKEBERG noted the stand-in teleconference monitor, Randy Lorenz, an intern in Chairman Rokeberg's office and for the House Labor and Commerce Standing Committee, is studying for a degree in social work at the University of Alaska Anchorage and therefore Chairman Rokeberg's office has a keen interest in SSHB 349. Number 0350 EILEEN LALLY, Deputy Director, Community Programs, Hope Cottages, Incorporated, testified next via teleconference from Anchorage in support of SSHB 349. She stated she has been a professional social worker since 1970; coming to Alaska in 1973 and teaching at the University of Alaska Anchorage (UAA) and the University of Alaska Fairbanks (UAF). She noted she had recently taken a sojourn to New Mexico State University in Las Cruces. She is a LCSW, and has worked with child protection and developmental disabilities in a variety of areas with children and families. Speaking in support of SSHB 349, she noted she has struggled for multi-level licensing for well over 20 years. Ms. Lally stated she has served on the board of directors for the NASW at two different times, once before there was any licensing for social workers. She said, unfortunately, during both of those times that board of directors had to hear sanctions brought to NASW by community members who had been egregiously treated by social workers. Ms. Lally stated the problem has not been solved by licensing only at the LCSW level. She indicated really the only policing action the NASW could take then and currently is, if the offender is an NASW member, the organization can exclude that person from membership in the professional organization. Ms. Lally said that is not very effective for consumer protection in terms of malpractice and ethical issues, and that is the main reason she asks the committee to pass this bill, so that the public will have some other recourse as they do now with LCSWs. She noted there were also other reasons she believes SSHB 349 should be passed. Number 0468 BETH SIRLES, Chair, Department of Social Work, University of Alaska Anchorage, testified next via teleconference from Anchorage. She provided background on bachelor's and master's level social workers for the committee's understanding. There are two accredited bachelor degree social work programs in Alaska, at UAA and UAF. The University of Alaska Anchorage also has a master's level social work program which is in the final stages of achieving accreditation, graduating its first master's level social workers in 1997. Both the Anchorage and Fairbanks campuses are working very closely with DFYS to create educational opportunities for DFYS social workers. She pointed out that professional education serves some very significant functions, one of which is screening for readiness to assume responsibility in a very complex field. She indicated social workers deal on a daily basis with vulnerable children and adults; specifically with child abuse and neglect, domestic and family violence, substance abuse, poverty and many other social problems. Professional education provides supervised experience working with very complex problems. At the bachelor's level, a social worker is trained in interviewing skills, case management, crisis intervention, advocacy, problem solving; and entry-level skills in working with individuals, families and groups. Bachelor's level social workers have learned about human development, understand public policy, and have been very carefully supervised in learning the code of ethics which teaches what is and is not appropriate conduct for social workers working with clients. The bachelor's level prepares people for entry-level social work practice. Ms. Sirles stated there is also very close supervision and training in the code of ethics at the master's level, but master's level training prepares people for advanced practice in a variety of arenas; primarily in administration, program development and evaluation, community organization, et cetera. A person with a master's degree in social work is ready to work autonomously, and to supervise entry-level practitioners. She noted both are very important degrees; she said they support this bill because they believe strongly that someone without the education should not be practicing social work. Number 0620 CECILIA KLEINKAUF testified next via teleconference from Anchorage in support of SSHB 349. She stated she had been in Alaska since 1969 and has been practicing social work in one capacity or another for all of that time. She noted she is a lawyer by profession as well as a social worker. Ms. Kleinkauf stated she was on UAA's faculty for many years, helping start UAA's baccalaureate social work program and helping the program receive national accreditation. For many years, as the committee has heard, they've been trying to get public recognition for the social work profession. She indicated they want social work recognized as a profession, but more importantly, they want the clients who receive services from social workers to have two assurances: 1) The person providing services has had certain training and education, has passed examinations, and been supervised adequately. This allows the consumers of services to have some assurances the provider has the necessary knowledge, and ethical base the consumer can trust. 2) Without licensing two levels, the client served by a provider with a baccalaureate degree in social work, or a provider under the master's degree in social work, has no place to go to actually get a grievance addressed. She said they believe all social workers should be licensed because consumers of social work services need a place where their grievances can be heard if inadequate or harmful services are received from someone practicing under the title social worker. Number 0700 MS. KLEINKAUF indicated that is one the benefits of licensure; the establishment of a board that can hear, review and investigate complaints and issue sanctions against a professional in any profession who is not practicing adequately. Since 1988 LCSWs have been licensed in Alaska, but she said probably four times as many people in Alaska receive services from baccalaureate level and master's level social workers, stating, "Who have not, because licensing does not exist now for those two levels, have not been able to be assured of those two requirements: both for someone who is assured of meeting standards and someone who is subject to review and possible sanctions by a board of examiners and a licensing board." For those reasons as well as many others, she said they would like to urge very swift passage of SSHB 349. She thanked the committee for hearing the bill so soon, also thanking Representative James for her hard work and support for what is needed as the problems of abused and neglected children in Alaska are grappled with, as well as the other clients served by social workers including the mentally ill and senior citizens. Number 0767 CHAIRMAN ROKEBERG indicated he had questions about the Class B misdemeanor penalty provided in the bill for the title misuse, noting it seemed to be a relatively draconian penalty in terms of licensure law. He referred to other sanctions and advisory groups, asking about a commission. Number 0793 MS. KLEINKAUF replied that the new licensees at the baccalaureate and master's level would be licensed by the existing Board of Clinical Social Work Examiners, whose functions are expanded under this bill to issue those licenses as well as hear any complaints about those new licensee groups, as the board currently does for LCSWs. The licensees are responsible to that entity for their standards of practice, and for review and sanctions should clients complain about services. Number 0866 COLLEEN PATRICK RILEY testified next via teleconference from Anchorage in support of SSHB 349. She noted she is a lifelong Alaska resident and has been employed as social worker for the past 25 years. She works in both nonprofit agencies with children and families, and for the state of Alaska as a mental health clinician for both the Division of Mental Health and Developmental Disabilities, H&SS, and the Department of Corrections. She was chair of the NASW licensing committee at the time the 1988 licensure for LCSWs passed, and has served on the NASW board. She has been a member of the Board of Clinical Social Work Examiners since 1990 and is currently the board's chair. She is quite familiar with the deficits in the current licensing statutes for LCSWs and she believes this bill corrects those, as well as expands and extends consumer protection to the citizens of Alaska. In reality, thousands of consumers in Alaska are served by social workers and are currently not really protected from that service. As chair of the current board, she said they have had social workers who have had sex with clients and have lost or surrendered their licenses, but have still been able to continue practicing because there is currently no practice protection for clinical social work. She stated this bill, as she understands it, affords practice and title protection to LCSWS, and title protection to bachelor's and master's level social workers. She believes those are critically important points in providing consumer protection, stating the board itself fully supports like multi-level licensure including the BSW, MSW and LCSW levels, with any additions or amendments recommended by the Division of Occupational Licensing. Number 0971 REPRESENTATIVE HUDSON asked if this would have any effect on payment through Medicaid or Medicare, for example. Number 0983 MS. PATRICK RILEY replied it was her understanding it would not, noting Ms. Reardon might have other comments. She indicated she thinks Medicaid currently has certain provisions for allowed providers, and she knows that already certain individuals who could be exempt under licensing statute have elected to become licensed because, in nonprofit agencies in particular, they favor having licensed individuals provide that service. She noted licensure is, in fact, an advantage. Number 1044 JOHN WATERS, President, Board of Directors, Alaska Chapter, National Association of Social Workers; licensed clinical social worker, testified next via teleconference from Fairbanks in support of SSHB 349. Mr. Waters spoke from a prepared statement: I am speaking in support of HB 349. I'm a Licensed Clinical Social Worker and the current President of the Board of Directors of the National Association of Social Workers, Alaska Chapter. Our organization has a membership of over 470 Alaskan social workers. I'm also employed as the social worker at the Fairbanks Pioneers' Home and I'm supervisor of Adult Protective Services for the Northern Region. I believe passage of this legislation will help our elders receive the highest quality professional social work services possible. Often in protective services, when a report of harm is received a person is at significant risk because of abuse or neglect. These persons are the most vulnerable Alaskans and deserve the services of well-trained and skilled social workers. When family members seek assistance for a loved one in danger they need to know the social worker they call on is someone who is knowledgeable and competent to guide them through some very difficult life decisions. Positive aspects of this bill include that licensed social workers will be held accountable to well- established professional social work practice standards. These standards are found in a social work code of ethics that was established first in 1955 and extensively revised in 1996. To protect consumers, licensing regulations provide a system to investigate and address complaints against social workers. And also, licensed social workers will have continuing education requirements to maintain [and] enhance their professional skills. I applaud Representative Jeannette James, the sponsor of this bill, for her understanding of, and commitment to, adequately trained and regulated Alaskan social workers. And I also thank you, Representative Rokeberg for allowing this bill to be heard so quickly in your committee. Number 1171 MARIANNE MILLS, National Association of Social Workers, came forward to testify next in support of SSHB 349. She stated she is a professional social worker working in the private sector with senior citizens. Ms. Mills spoke from a prepared statement: I'm here today to please urge you to support House Bill 349, Representative James' bill to license and limit the title "social worker" to those who are properly trained. This bill will protect Alaskans; those who receive services as well as those who want to see their money invested wisely. At the current time the term "social worker" is used, not to refer to a professional with a degree in social work, but as a job title. The actions or failure to act by a social worker often have significant effects on the health and mental health of both individual clients and their families. Regulation by licensing will hold social workers accountable to one of the most comprehensive code of ethics in the helping professions. In light of concerns regarding Alaska's fiscal gap, it is essential that money spent on services be used effectively to assist people in providing for themselves and to protect those at risk of harm. An effective way to monitor our investment in social services is to require the hiring of qualified social work personnel. House Bill 349 will enforce standards for social work practice and allow Alaskans to raise charges of malpractice and complaints of improper conduct. On behalf of all Alaskans, potential recipients of social work services, I thank you for your consideration of my request. Number 1262 REPRESENTATIVE HUDSON restated his previous question, "Will this bill increase the opportunity for people of your profession and people who would fall under this professional [designation] to have access to Medicaid or Medicare, or other funds that they do not have access to at the present time? That is, will this give us an advantage of placing more of these professionals into the line for Medicaid or Medicare, for example?" MS. MILLS replied she did not know the answer to that question, but confirmed raising the standards would not be a disadvantage. Number 1305 REPRESENTATIVE RYAN stated, "I'm not really sure if I can answer that question, but I think our agency -- we got our people licensed as clinical social workers so they could fall under the Medicaid -- I think that was one of the requirements. I'm not sure what a master's level would do." Number 1321 CHAIRMAN ROKEBERG acknowledged Representative Ryan's comments, stating he sees a clear case of "insurance creep" in this bill, indicating this would need to be considered by the committee. He asked Ms. Reardon if she had anything else to offer. Number 1341 MS. REARDON stated she had some items written in amendment form she viewed as minor and technical in nature, which she distributed to the committee. These recommended amendments from the Division of Occupational Licensing read: [Note: capitalization and punctuation per amendment copy] Amendment 1 Delete page 2, lines 18-20 Amendment 2 Page 7, following line 14, Insert (d) The board may refuse to grant a license to any applicant for the same reasons that it may impose disciplinary sanctions under AS 08.95.050. Amendment 3 delete page 7, lines 23-24 Amendment 4 Page 8, line 3, following "suspended", insert or surrendered in lieu of disciplinary action Page 8, line 24 same as above Amendment 5 page 10, following line 2, insert (c) As used in this section "health care or mental health professional" means "practitioner of the healing arts" as defined in AS 47.17.290(13) Page 10, following line 11, insert As used in this section "health care or mental health professional" means "practitioner of the healing arts" as defined in AS 47.17.290(13) Number 1374 REPRESENTATIVE JAMES said she was unable to comment on these proposed amendments because she had just seen them a few moments ago. CHAIRMAN ROKEBERG asked Ms. Reardon to explain the amendments. Number 1387 MS. REARDON stated most were items she had gone over very briefly a few days previously with the sponsor's aide, but had not been typed up in amendment form at that time. Regarding the division's amendment 1, she stated the Department of Law had commented the lines being amended there had been repealed with HB 265 [HB 265 - Reports & Records of & to State Agencies], reducing the number of reports state agencies are required to make. She noted HB 265 had passed relatively recently and was, she thought, currently in the Governor's hands. The division's amendment 2 was suggested by the Department of Law to augment the Board of Clinical Social Work Examiners' ability to reject applicants it did not feel comfortable with. She commented she thought this was a relatively innocuous change, but has found the NASW may not want in included. Ms. Reardon said it is not really important to her, stating that it is just whether the legislature would like to have that option for denial of license. Number 1482 CHAIRMAN ROKEBERG referred to page 2, line 21, of the bill, noting it seems to him that they have deleted the duties of the board by deleting "imposing disciplinary sanctions." He asked if he had missed something and was the division adding that back. Number 1505 MS. REARDON said amendment 2 was on page 7, following line 14, where the qualifications for licensure are discussed. This amendment would allow the board to reject an applicant for the same reasons it may discipline someone. She indicated the list of disciplinary sanctions occurs on pages 3 and 4 of the bill, beginning with line 19. The division's proposed amendment 3 was also supplied by the Department of Law. It would delete lines 23 and 24 on page 7, "(3) has not failed the examination for a license to practice clinical social work in this state;". The reasoning for this deletion is that the new lines 25 and 26 on page 7 require all the applicants to pass the examination. She explained that previous to this bill it was licensing by credentials and that language had been in there to prevent people from failing the test in Alaska, getting licensed in another state and coming back to the state to get in that way. The division's amendment 4 on page 8, lines 3 and 24, goes back to grounds for denying a license, suggesting the insertion of "or surrendered in lieu of disciplinary action" after "suspended" in the bill's current language which reads on line 3, "(6) has not had a license to practice clinical social work revoked or suspended in this state or another jurisdiction;" and on line 24, "(6) has not had a license to practice social work or to use the title "social worker" revoked or suspended in this state or another jurisdiction;". She noted sometimes in other states people will turn in their licenses instead of getting it disciplined and we might not want to have those people come here either. Number 1668 MS. REARDON referred to the division's amendment 5, deferring to legislative drafters. She stated the Department of Law felt that health care or mental health professional might need to be defined and wasn't defined in the bill. The terms are used in the confidentiality of communication and immunity sections; she said there is a reference to information that is given or obtained from health care or mental health professionals "and yet that they weren't defined as what they are" so the suggestion is just to say it is the same list of professionals already found in the bill as practitioner of the healing arts, found on page 12, beginning line 6, which reads: * Sec. 25. AS 47.17.290(13) is amended to read: (13) "practitioner of the healing arts" includes chiropractors, mental health counselors, social workers, dental hygienists, dentists, health aides, nurses, nurse practitioners, occupational therapists, occupational therapy assistants, optometrists, osteopaths, naturopaths, physical therapists, physical therapy assistants, physicians, physician's assistants, psychiatrists, psychologists, psychological associates, audiologists licensed under AS 08.11, hearing aid dealers licensed under AS 08.55, marital and family therapists licensed under AS 08.63, religious healing practitioners, acupuncturists, and surgeons; MS. REARDON commented this includes all the people they would want to consider health care and mental health professionals, and by saying it is that same list they would have a definition in case there is any question about who or who doesn't count. REPRESENTATIVE RYAN commented it is an ever expanding list. CHAIRMAN ROKEBERG disagreed. MS. REARDON noted she had had an additional amendment 6 which she was convinced out of. Number 1767 REPRESENTATIVE HUDSON confirmed this was HB 349's first hearing in the committee. He asked if the chairman wished to consider the amendments. CHAIRMAN ROKEBERG deferred to the sponsor's and staff's ability to sort the amendments out. Number 1813 REPRESENTATIVE JAMES stated there was another proposed amendment, which read: Page 4, line 17 before "engaged": Insert "while practicing clinical social work" The language to be amended begins on page 4, line 17, of SSHB 349 and currently reads: (11) engaged in sexual contact with a person during the time period that the person was a client or within two years after termination of the licensee's professional relationship with the client. REPRESENTATIVE JAMES stated, "That was a real difficult (indisc.- noise) -- the sexual contact issue was very difficult, and we put it in and took it out, and put it in and took it out over the period of time. ... That is a very important part of the requirements to have a license, and it's in the ethics of the licensure, so, it's already protected without putting it in the bill, and so I'm comfortable with taking it out and there are some interests in taking it out of the bill and so I have no problem with that. And what I would suggest, Mr. Chairman, if I might, is that what I would like to see go through you as the chairman, if you might, and staff, to go through these amendments and if you wish to come back with a CS [committee substitute] I wouldn't have any problem with that." Number 1881 CHAIRMAN ROKEBERG indicated it might be more expeditious if the sponsor provided the proposed committee substitute. He commented there is one major question in his mind concerning Sections 24 and 25, relating to the definition of a social worker as a practitioner of the healing arts and the proposed amendments. Chairman Rokeberg stated that, unless she could convince him otherwise, he is adamantly opposed to those sections. His reason, as he indicated earlier, is "insurance creep," the problems of health insurance in Alaska, and the "whole global issue of it." He said he is not sure why they are even getting into that there and he was assured previously that is not the bill's intention, noting he doesn't consider social workers practitioners of healing arts "for terms of insurance purposes." Section 24, page 11, beginning line 21, reads: [Note: bracketed, capitalized text is being deleted; Section 25 was shown above] *Sec. 24. AS 47.17.020(a) is amended to read: (a) The following persons who, in the performance of their occupational duties, have reasonable cause to suspect that a child has suffered from harm as a result of child abuse or neglect shall immediately report the harm to the nearest office of the department: (1) practitioners of the healing arts; (2) school teachers and school administrative staff members of public and private schools; (3) [SOCIAL WORKERS; (4)] peace officers[,] and officers of the Department of Corrections; (4) [(5)] administrative officers of institutions; (5) [(6)] child care providers; (6) [(7)] paid employees of domestic violence and sexual assault programs, and crisis intervention and prevention programs as defined in AS 18.66.990; (7) [(8)] paid employees of an organization that provides counseling or treatment to individuals seeking to control their use of drugs or alcohol. Number 2001 ANGELA SALERNO, Executive Director, Alaska Chapter, National Association of Social Workers, came forward to testify next. She stated this provision's inclusion is not about insurance at all; it is about some of the duties or responsibilities of practitioners of the healing arts, and came as a request from the LCSW licensing board. Those individuals who are practitioners of the healing arts are able, without parental permission, to send a child for a medical exam or x-ray, or to take a picture of a child. She explained the thinking was that is certainly what a DFYS social worker and a professional social worker should be doing, and that is why they are trying to make the change. Referring to Section 24, she noted "social worker" is being removed from the list of mandatory reporters of child abuse in order to avoid redundancy because practitioners of the healing arts are mandatory reporters. She note she does not believe "practitioner of the healing arts" is a term associated with insurance but she could be wrong. She reiterated that certainly was not their intent. REPRESENTATIVE JAMES commented it was a whole different statute. CHAIRMAN ROKEBERG said he knew, but commented this committee was the "gatekeeper." Number 2120 MS. SALERNO said a division representative was present and might be able to more definitively answer the chairman's question. CHAIRMAN ROKEBERG suggested this be taken up when the bill was brought back before the committee, indicating SSHB 349 would be held, and said he was not convinced at this juncture "if that's the reason, if a ... [DFYS] social worker is to refer a child for some medical treatment, I still am not sure I am convinced that's an appropriate reason to change their definition ...." He stated the committee would open-minded on this, but he referred to several current bills "attempting to add themselves as a profession to the list of people who qualify for reimbursement by medical insurance carriers, ... and that is, I view as a very negative thing to the consumers of the state of Alaska because of the chilling effect it has on insurance companies underwriting business and providing for insurance for the people of the state of Alaska." Number 2200 MS. SALERNO reiterated that certainly was not their intent. Number 2207 CHAIRMAN ROKEBERG indicated that was his reason for pointing it out and why he looks with a jaundiced eye upon things of this nature that could be interpreted as insurance creep. He indicated he wished the committee to be convinced otherwise. Chairman Rokeberg asked if there were any further questions of Representative James or Ms. Salerno. There being none, he stated SSHB 349 would be held for further consideration. Number 2258 CHAIRMAN ROKEBERG called a three-minute at ease at 4:55 p.m. The committee came back to order at 4:57 p.m. [THE TAPE WAS CHANGED DURING THE AT EASE] TAPE 98-32, SIDE A Number 0001 HB 399 - EXEMPT/DEFERRAL DETERIORATED PROPTY TAX Number 0005 CHAIRMAN ROKEBERG announced the committee's next order of business was HB 399, "An Act relating to an optional exemption from, and deferral of payment of, municipal taxes on deteriorated property, and defining 'deteriorated property' for purposes of the exemption or deferral; and providing for an effective date." Number 0021 REPRESENTATIVE RYAN, the bill sponsor, presented HB 399. He noted it was a four-paragraph bill which would add a tool to Title 29, indicating that the states of West Virginia, Missouri, Arizona, Florida, and New York have done the same thing. He said it basically "puts another tool in the box" of a municipality; it is an option, nothing requires the municipality to do anything. Representative Ryan noted this is related to deteriorated property, indicating this type of property was found quite a bit in the Lower 48 because of rent control. He said owners could not maintain buildings so they took the rent, letting the buildings deteriorate until completely unserviceable, and then walked away. He gave the example of Detroit, Michigan, noting the whole downtown area had blocks and blocks of shells of buildings that were once good apartment and office buildings, commenting that it looked like Berlin after World War II. He indicated municipal governments have added a tax incentive to encourage people to renovate these types of buildings, making the structures useful again. If the building was torn down, the resulting lot lacking any improvements might generate $50 or $60 in property taxes annually, but if the building was renovated, the improvements would be there, and the property value increased substantially. The taxes and assessments would then correspondingly go up. Number 0189 REPRESENTATIVE RYAN indicated the governing body receives revenue, the neighborhood improves, and so forth; and the structure of the arrangement would be entirely up to the municipality. The governing body would have to pass an ordinance and would be acting somewhat like a banker. The property owner would come in saying, "Here's what I'd like to do, and here's what I need." The governing body would then reach an agreement with the property owner. He noted there would be a great deal of latitude; it could be done up to five years and could be renewed under conditions established by ordinance. Representative Ryan indicated there was really not a downside because nobody would be required to do anything, it would just be a tool allowing the governing body the latitude to improve the community. He commented about the large amount of information in the bill packet, referring to a "chiding" from the chairman that perhaps he had not had his staff work hard enough in the past. Representative Ryan noted there were plenty of examples from other jurisdictions where this had been done, letters of support, and a resolution in favor from the Municipality of Anchorage assembly. The sponsor statement read: The intent of this bill is to authorize local municipalities to provide for tax exemption for improvements to deteriorated real property. The concept is based on other states' local economic revitalization tax programs. Local municipalities will have the flexibility of allowing renovations of real property in order to increase the value of that real property, for tax purposes. Number 0331 REPRESENTATIVE COWDERY mentioned a locked-up, pink building in downtown Anchorage in relation to this legislation, noting he assumed taxes were currently being paid on it. REPRESENTATIVE RYAN commented he thought the estate of McKay (ph) and Sullivan (ph) was. REPRESENTATIVE COWDERY said he thought Sullivan (ph) had bought the property, and he asked if HB 399 would encourage that development if "they were encourageable." Number 0372 REPRESENTATIVE RYAN answered that, correspondingly, the "L" Street Towers, just next to 501 "L" Street, was an exact duplicate of the McKay (ph) building. REPRESENTATIVE COWDERY indicated he was in Anchorage when both buildings were built, and during the 1964 earthquake. Number 0387 REPRESENTATIVE RYAN stated that then the building should be structurally sound. He said, according to some information he had received, someone from the state of New Jersey bought the building for $25,000 from the bank in Seattle and surreptitiously removed the asbestos, which, he said, was now in the borough landfill. He indicated the building was now a much more attractive renovation prospect and would be a prime example of how a deteriorated property could be brought back into use. He noted there were a number of options - it could be an office building, condos, et cetera. It would produce an income and would certainly beautify the neighborhood. Representative Ryan said he thinks the municipality owns a couple of adjacent lots so that property would also increase in value. Number 0466 REPRESENTATIVE HUDSON said he was assuming the current statutes precluded this from happening. Number 0477 REPRESENTATIVE RYAN referred to Title 29, Section 45.050, optional exemptions and exclusions, indicating he been unable to find a exemption relating to "private property." He reiterated that this would be an option, nobody would have to do anything. REPRESENTATIVE HUDSON indicated he liked the legislation. Number 0541 CHAIRMAN ROKEBERG confirmed that there were no teleconferenced witnesses for HB 399. He asked Representative Ryan if this bill had been a request from the Municipality of Anchorage, or where it had come from. Number 0577 REPRESENTATIVE RYAN indicated it had been suggested by an individual in Anchorage, noting he had examined it and did not see where it could hurt anyone. Number 0588 CHAIRMAN ROKEBERG confirmed it had not been on the Municipality of Anchorage's list of priorities. Number 0595 REPRESENTATIVE RYAN commented that Representative Hudson's district, Juneau, would be prime for something like this since a lot of the housing had been constructed in the 1920s. Number 0605 CHAIRMAN ROKEBERG confirmed that HB 399 would provide the moratorium for real property taxes so those monies could be redirected to upgrading the properties and things of that nature, indicating he was familiar with the McKay (ph) building. REPRESENTATIVE COWDERY mentioned the "L" Street apartments. CHAIRMAN ROKEBERG noted that, questioning what the other building had been called. He commented it had formerly housed Channel 2, and that he had gone to dances there in high school. SHIRLEY ARMSTRONG, Legislative Assistant to Representative Norman Rokeberg, noted it was the McKinley (ph) building. Number 0654 CHAIRMAN ROKEBERG commented that the "rebar" and (indisc.) steel in the very heavy concrete might be in jeopardy because damage from the 1964 earthquake had not been repaired. Number 0666 REPRESENTATIVE COWDERY commented he had been in that building within the last five years and it was not structurally sound. REPRESENTATIVE HUDSON confirmed Representative Cowdery was referring to the McKay (ph) building. REPRESENTATIVE COWDERY answered in the affirmative. Number 0706 CHAIRMAN ROKEBERG stated to the committee that Steve Van Sant had signed up to testify on HB 399 via teleconference but was no longer on-line. Chairman Rokeberg asked Representative Ryan if he had spoken with the state assessor about this. REPRESENTATIVE RYAN's reply was indiscernible. Number 0747 STEVE VAN SANT, State Assessor, Division of Municipal and Regional Assistance, Department of Community and Regional Affairs (DCRA) signed up to testify via teleconference from Anchorage on HB 399 but had to leave before the bill was heard. KIM METCALFE-HELMAR, Special Assistant, Office of the Commissioner, Department of Community and Regional Affairs, came forward to testify. She stated she would read Mr. Van Sant's testimony into the record, and would be happy to forward any questions to him. Mr. Van Sant's statement read: HB 399 would allow municipalities to exempt or defer, in whole or in part, property taxes on the value of deteriorated property for a period of up to five years and allow renewal after the initial period. "Deteriorated property" has three definitions under the proposed legislation; 1) property that's been the subject of an order by a government agency requiring the property to be vacated, condemned or demolished by reason of non-compliance with laws, ordinances or regulations. Under existing law, property is to be valued at its full and true value, which is synonymous with the term "market value." If a property is suffering from the condition described in Section 1, the assessed value should also be reflective of that condition under existing law. In other words, the value, if carried on the assessment roll, should be minimal. The second definition: 2) property on which a structure or other improvement not less than 15 years of age has undergone substantial rehabilitation, renovation, or replacement, subject to conditions prescribed in the ordinance; This subsection appears to offer an exemption for property over 15 years old which has been renovated or replaced. No definition is given for what constitutes a renovation or substantial rehabilitation, however, it appears that someone remodeling a home could qualify under this exemption. The exemption also appears to be an after the fact exemption in that it is given after the condition of deterioration has been removed. This exemption will place additional tax burdens on other taxpayers for the revenue lost due to the property's renovation, even though it is receiving the same services. The last definition: 3) property located in a deteriorating or deteriorated area with boundaries that have been determined by the municipality. This subsection does not define the term, "deteriorating or deteriorated area", but could exempt property within that area. This could have the effect of exempting property which may not be deteriorated as defined in the previous two definitions, but may just happen to be in the area. Again, this shifts the tax burden to other taxpayers who are receiving the same municipal services as the affected property. Number 0906 MS. METCALFE-HELMAR noted the next subject of Mr. Van Sant's testimony had been brought up in the committee's questioning. Under existing statutes a municipality may exempt the increase of property taxes if the increase is directly attributable to new maintenance, repair or renovation, AS 29.45.050(f). And a municipality may exempt certain "economic development" property within the jurisdiction, AS 29.45.050(m). These statutes allow an exemption for which renovation action has taken place rather than the proposed bill which could conceivably allow an owner to sit on the property without any action for up to five years. Based on the fact that municipalities already have the exemption authority mentioned above, there is a question of whether or not this proposed legislation is necessary. If the legislature finds that it is, indeed, necessary, I ["Mr. Van Sant" stated by Ms. Metcalfe-Helmar on tape] would recommend that the property tax deferral be made available rather than the exemption. The deferral would assure the municipality of ultimately receiving the taxes on the property even if the property owner chose not to continue with renovation plans. With today's dwindling revenues, local municipalities need all the help they can get. A deferral of taxes would not be a total loss of these revenues. Number 0990 CHAIRMAN ROKEBERG confirmed that the committee had obtained a copy of the testimony. Number 1013 KEVIN RITCHIE, Executive Director, Alaska Municipal League, came forward to testify. He thanked the sponsor for bringing the bill forward and the spirit in which the bill was offered, noting it was offered as a voluntary property tax ordinance. He said the Alaska Municipal League policy statement says that generally voluntary property tax exemptions are acceptable, because they give the local people and community the option to decide. He said the exemption provided in HB 399 goes a bit farther than that by kind of providing an open framework so that the local community would have a lot of discretion to design something which would be most acceptable for that community. Referring to the economic development property tax exemption, he noted Juneau, for example, crafted a five-year progressive property tax exemption for construction of export industry capability. He said a downtown fish processor and a local brewery expanded, and were exempted 100 percent of their property tax increase on the new construction for five years and then that progressively decreased over a period of five years, but gave them the chance to get their feet on the ground. He said it was possible these companies might not have expanded without that incentive, or that at least they were much more eager to do so. Number 1104 REPRESENTATIVE HUDSON confirmed the Alaska Municipal League supported HB 399. MR. RITCHIE answered in the affirmative. Number 1113 REPRESENTATIVE RYAN stated he appreciated Mr. Van Sant's testimony, noting, however, that Mr. Van Sant presented a lot of suppositions. Representative Ryan brought the committee's attention to the first line of the bill, "A municipality may by ordinance partially or totally". If the municipality wants to "cut a deal," it has to answer to its voters for any loss of revenue for whatever kind of deal made; nothing at all would be mandated by this legislation. If a municipality chose to enter into something and it turned out to be a bad deal resulting in a property increase, he is sure the municipality would hear about it. He said they hear a lot of testimony from environmental organizations telling them the sky is falling because something could, or would, or perhaps might happen. He said so far he hasn't burned up from the hole in the ozone layer in 61 1/2 years and might survive another few years without doing so. Number 1190 MS. METCALFE-HELMAR noted that DCRA does not oppose HB 399; Mr. Van Sant simply wanted to point out concerns he had with the legislation. Number 1199 MR. RITCHIE commented that his reading of the bill leads him to believe the flexibility is there, as Representative Ryan stated, for a municipality to address all of those concerns. Number 1210 CHAIRMAN ROKEBERG stated he had been approached by the Municipality of Anchorage to introduce some bills. He commented that one was "Priority of Liens for Building Abatement and Demolitions," which would give a lien priority for dangerous buildings. Another one was "Real Property Tax Collection of Contaminated Property" which exempted the municipalities from taking title on (indisc.) foreclosures on contaminated properties, noting currently the state was exempt but the municipalities were not necessarily. Chairman Rokeberg asked if Representative Ryan would be interested in "tacking them on" to HB 399. Number 1265 REPRESENTATIVE RYAN stated HB 399 was a fairly simple bill, indicating he would like to transmit it to the Senate as soon as possible to see if it met with agreement there. He noted adding something else complicated the issue. Number 1276 CHAIRMAN ROKEBERG commented that they were in the same genre of municipal-type tax bills and that was his reason for bringing it up. He confirmed Representative Ryan's preference would be to keep it simple. REPRESENTATIVE RYAN answered in the affirmative, noting for the time being at least. Number 1293 REPRESENTATIVE HUDSON made a motion to move HB 399 out of the House Labor and Commerce Standing Committee with individual recommendations and the attached zero fiscal note, asking unanimous consent. Number 1309 CHAIRMAN ROKEBERG asked if there were any objections. Hearing none, he stated HB 399 was so moved. ADJOURNMENT Number 1314 CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing Committee meeting at 5:18 p.m.

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