Legislature(1995 - 1996)

04/19/1996 03:15 PM L&C

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

Document Name Date/Time Subjects