Legislature(1997 - 1998)

01/24/1997 03:05 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                          
                        January 24, 1997                                       
                           3:05 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Norman Rokeberg, Chairman                                      
 Representative John Cowdery                                                   
 Representative Bill Hudson                                                    
 Representative Jerry Sanders                                                  
 Representative Joe Ryan                                                       
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 Representative Eric Croft                                                     
 Representative Gene Kubina                                                    
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 OVERVIEW:  Department of Commerce & Economic                                  
            Development                                                        
                                                                               
 HOUSE BILL NO. 18                                                             
 *"An Act extending to certain partnerships and corporations the 10            
 percent procurement preference currently given to certain sole                
 proprietorships who are Alaska bidders and owned by persons with              
 disabilities."                                                                
                                                                               
      -  MOVED HB 18 OUT OF COMMITTEE                                          
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 18                                                                
 SHORT TITLE: STATE PROCUREMENT DISABILITY PREFERENCES                         
 SPONSOR(S): REPRESENTATIVE(S) JAMES                                           
                                                                               
 JRN-DATE      JRN-PG         ACTION                                           
 01/13/97        31    (H)   PREFILE RELEASED 1/3/97                           
 01/13/97        32    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/13/97        32    (H)   LABOR & COMMERCE, FINANCE                         
 01/24/97              (H)   L&C AT  3:00 PM CAPITOL 17                        
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 MARIANNE BURKE, Director                                                      
 Division of Insurance                                                         
 Department of Commerce & Economic                                             
   Development                                                                 
 P.O. Box 110805                                                               
 Juneau, Alaska  99811-0805                                                    
 Telephone:  (907) 465-2515                                                    
 POSITION STATEMENT:  Presented an overview of the                             
                      Division of Insurance                                    
                                                                               
 WILLIAM L. HENSLEY, Commissioner                                              
 Department of Commerce & Economic                                             
   Development                                                                 
 P.O. Box 110800                                                               
 Juneau, Alaska  99811-0800                                                    
 Telephone:  (907) 465-5442                                                    
 POSITION STATEMENT:  Presented an overview of the                             
                      Department of Commerce & Economic Development            
                                                                               
 CATHERINE REARDON, Director                                                   
 Division of Occupational Licensing                                            
 Department of Commerce & Economic                                             
   Development                                                                 
 P.O. Box 110806                                                               
 Juneau, Alaska  99811-0806                                                    
 Telephone:  (907) 465-2534                                                    
 POSITION STATEMENT:  Presented an overview of the                             
                      Division of Occupational Licensing                       
                                                                               
 JEANNETTE JAMES, Representative                                               
 Alaska State Legislature                                                      
 P.O. Box 56622                                                                
 Juneau, Alaska  99801-1182                                                    
 Telephone:  (907) 465-3743                                                    
 POSITION STATEMENT:  Testified on HB 18                                       
                                                                               
 DUGAN PETTY, Director                                                         
 Division of General Services                                                  
 Department of Administration                                                  
 P.O. Box 110210                                                               
 Juneau, Alaska  99811-0210                                                    
 Telephone:  (907) 465-2250                                                    
 POSITION STATEMENT:  Testified on HB 18                                       
                                                                               
 DUANE M. FRENCH, Director                                                     
 Division of Vocational Rehabilitation                                         
 Department of Education                                                       
 801 West Tenth Street, Suite 200                                              
 Juneau, Alaska  99801-1894                                                    
 Telephone:  (907) 465-2814                                                    
 POSITION STATEMENT:  Testified on HB 18                                       
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 97-2, SIDE A                                                             
 Number 001                                                                    
                                                                               
 CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce                  
 Standing Committee to order at 3:05 p.m.  Members present at the              
 call to order were Vice-Chairman Cowdery, Representatives Sanders,            
 Ryan and Hudson.                                                              
                                                                               
 Number 069                                                                    
                                                                               
 MARIANNE BURKE, Director, Division of Insurance, Department of                
 Commerce and Economic Development, came forward to testify.  She              
 stated that one of the most important activities which the division           
 will address this year is the implementation of the provisions of             
 the Kassebaum-Kennedy Act.  This Act has been widely publicized and           
 related legislation regarding the same will be brought before this            
 committee.  This Act is in response to long-standing complaints by            
 employees, especially those who felt as though they were trapped in           
 a job.  If some employees leave their jobs they lose medical                  
 coverage.  If someone in a family for example, has an on-going                
 medical problem and the employee takes a different job, the new               
 employer could exclude coverage for this family member under a pre-           
 exiting condition.                                                            
                                                                               
 MS. BURKE stated that the Kassebaum-Kennedy Act was the most far-             
 reaching health care legislation on the national level since                  
 medicare.  The state of Alaska will have two options for                      
 implementing the provisions of this federal legislation.  Alaska              
 can either take a proactive approach by amending existing statutes            
 to incorporate all the provisions of the Kassebaum-Kennedy Act or             
 do nothing.  In the latter event the federal agency, under the                
 Secretary of Health & Human Services, will enforce this Act on                
 Alaska.  Alaska's laws are more closely aligned with the federal              
 laws than many other states, but this is highly technical                     
 legislation with a very important time line.                                  
                                                                               
 MS. BURKE continued that the Governor or Chief Executive Officer of           
 each state must submit a plan of action to the Secretary of Health            
 & Human Services by April 1, 1997 or the assumption will be made              
 that a state accepts federal oversight.  Alaska must have                     
 legislation in progress, drafted, written, introduced, or however             
 the federal government chooses to define "in progress," which will            
 bring Alaska into compliance January 1, 1998.  The division is                
 presently working on drafts of this legislation.                              
                                                                               
 MS. BURKE stated that the division has enough answers from the                
 federal government to introduce legislation which will keep state             
 regulation in the state's hands, rather than default to the federal           
 government.  She added that this was a wonderful opportunity for              
 the citizens of Alaska.  Under this legislation, if an employee               
 chooses to leave their job to take another job, they will not be              
 forced to satisfy some period of time before they are covered by              
 insurance.   It's also an opportunity for the state of Alaska to              
 adopt the self-insured plan which would mean that an individual can           
 switch from an insured plan to a self-insured plan or visa versa.             
 This gives Alaskan citizens more options, as well as mobility, and            
 takes the economic decision out of the arena as to whether or not             
 an employee will lose coverage for themselves or their family.                
                                                                               
 MS. BURKE further stated that Senator Kelly would introduce an old            
 bill which basically does three different things.  It will bring              
 about efficiencies in existing regulations and get rid of barriers            
 which have been created.  (Ms. Burke did not specify which                    
 legislation she was referring to.)  For example, in Alaska                    
 presently, an insurance company from Germany cannot be admitted as            
 an insurer of surplus "lines" because in an obscure portion of a              
 statute it says that a certificate of solvency from their country             
 would be required.  Great Britain is the only country which issues            
 these.                                                                        
                                                                               
 MS. BURKE noted compliance problems with some Alaska statutes as a            
 result of welfare legislation passed last year.  There are other              
 provisions, none of which she felt would be controversial, but they           
 are very important to the efficient business of insurance and                 
 regulation in the state of Alaska, as well as to protect the buying           
 public when they deal with insurance companies.                               
                                                                               
 Number 614                                                                    
                                                                               
 CHAIRMAN ROKEBERG asked if a policy issue needed to be made in                
 relation to letting the federal government intercede or for Alaska            
 to take the initiative to institute the Kassebaum-Kennedy Act                 
 legislation themselves.                                                       
                                                                               
 MS. BURKE stated that they referred this to the administration for            
 a decision.  After having met with her counterparts of other states           
 she noted that there isn't a state in the nation that wants the               
 federal government to take over this program.  She felt safe in               
 saying that the administration will choose to maintain regulation             
 on the state level.                                                           
                                                                               
 CHAIRMAN ROKEBERG suggested a work session with the committee on              
 these various issues or to meet with Ms. Burke individually on this           
 legislation.                                                                  
                                                                               
 Number 702                                                                    
                                                                               
 REPRESENTATIVE JOHN COWDERY asked about a person, for example, who            
 has a job and is injured.  As a result of this injury the employee            
 is laid up for quite a while.  In the meantime, one of their                  
 children has a medical problem.  In Representative Cowdery's                  
 experience this child would not be covered.  He asked what has been           
 done in regards to this situation presently.                                  
                                                                               
 MS. BURKE responded that she thought Representative Cowdery                   
 referred to the provision of the Comprehensive Omnibus Budget                 
 Reform Act (COBRA) which allows a person to continue their                    
 coverage.  Children have this right under an employee who was                 
 previously covered by a policy, they have the right of continual              
 coverage by payment of the premium themselves.                                
                                                                               
 REPRESENTATIVE COWDERY said he understood this, but used the                  
 example of someone who is in a body cast for two years.  It may be            
 difficult for them to pay this premium.                                       
                                                                               
 MS. BURKE said this situation is not addressed in the Kassebaum-              
 Kennedy Act at all.                                                           
                                                                               
 Number 830                                                                    
                                                                               
 REPRESENTATIVE BILL HUDSON asked if there was a cost analysis                 
 attached to this legislation.                                                 
                                                                               
 MS. BURKE answered that the ability to assess potential cost is               
 beyond the data which they have access to since self-insured plans            
 are exempt by federal law from any reporting or regulation by the             
 division.  There have been numerous studies done on the national              
 level on the impact of this legislation.  The impact is considered            
 to be minimal in relation to an individual who is not covered                 
 through the employer, but if they are going to, they would fall               
 back to a high risk group.  The costs don't go away, they just get            
 shifted.  The state, as a purchaser of insurance, receives its                
 portion of the allocated cost of the high risk group.  The state              
 would absorb a portion as any other employer would.                           
                                                                               
 Number 920                                                                    
                                                                               
 REPRESENTATIVE HUDSON noted that there would probably be additional           
 state costs for the implementation of the Kassebaum-Kennedy Act,              
 but he clarified again that Ms. Burke could not presently assess              
 this cost.                                                                    
                                                                               
 MS. BURKE answered yes, but she added that the state may be paying            
 these costs already whether through medicaid because the individual           
 is unable to pay.                                                             
                                                                               
 Number 950                                                                    
                                                                               
 REPRESENTATIVE HUDSON stated that this would be an interesting                
 examination of the whole issue of portability and prior injuries              
 related to insurance coverage, etc.                                           
                                                                               
 Number 1002                                                                   
                                                                               
 COMMISSIONER WILLIAM HENSLEY, Commissioner, Department of Commerce            
 & Economic Development came forward to present an overview of the             
 department.  He noted that this department was relatively small,              
 but very diverse.  There are under 400 employees in this department           
 and they perform functions such as corporate licensing services for           
 businesses, professions and corporations.  They insure the                    
 financial solvency of the state's financial institutions.  They               
 also regulate, through the Alaska Public Utilities Commission                 
 (APUC), utilities and they also provide service loans to commercial           
 fisherman, as well as to non-profit hatcheries.  They work with               
 marketing of tourism and seafood.  They also promote and finance              
 economic development in a broad variety of sectors through various            
 institutions.                                                                 
                                                                               
 COMMISSIONER HENSLEY continued that in the budget overview                    
 distributed to the committee was an organizational chart on page 19           
 to show how the department is structured.  From a budgetary                   
 standpoint their operating budget requested for 1998 is $60.8                 
 million and of that amount $23 million is non-general fund money              
 and consists mainly of corporate and endowment funds, also federal            
 funds and loan receipts.  Twenty six million dollars is designated            
 in other program receipts from fees for service.  The general                 
 fund's unrestricted request is $11.7 million which shows that the             
 department has about one-half of one percent of its unrestricted              
 general fund as the total state general fund request.                         
                                                                               
 COMMISSIONER HENSLEY noted that the pie chart on page 16 indicates            
 the overall state general fund monies which are literally a sliver            
 of this funding.  One other instructive graph which shows what's              
 been happening in the department since fiscal year 1990 is that its           
 general fund unrestricted request has gone down at a 45 degree                
 angle and its program receipts have grown, yet in the course of all           
 this time its unrestricted revenue for the state treasury has                 
 continued to grow.  These revenues come into the state from                   
 activities generated within the department.                                   
                                                                               
 COMMISSIONER HENSLEY stated that the department more than pays its            
 way.  He noted a few changes which the department plans to present            
 including a $200,000 increase in tourism marketing for enhanced               
 television advertizing which will be matched by $66,000 of industry           
 contributions.  This will enable the tourism council to increase              
 television advertizing from 9 weeks to 14 weeks which will generate           
 72 million "gross impressions" to the American public.  The                   
 department feels as though this is an important addition in view of           
 the tremendous competition for tourism around the country.  Also,             
 the Division of Trade and Development budget is being reduced by              
 $82,700 through the elimination of one Minerals Development                   
 Specialist in Juneau.  Furthermore, there is one Minerals                     
 Development Specialist in Fairbanks.  This means they will also               
 have a Development Specialist in Fisheries, one in Forest Products            
 and one in Minerals Development.                                              
                                                                               
 COMMISSIONER HENSLEY continued that in the film office they                   
 eliminated one Development Specialist position for $157,000 leaving           
 $14,000 in travel and $50,000 in contractual services for the film            
 program.  It is not the intent to stop promoting this area.  The              
 tourism staff will assume responsibilities and the activities which           
 they will engage in are trade publication advertizing,                        
 participating in some film location expositions, hosting some in-             
 state location scouts and some product development trips for                  
 producers.  When the department receive calls for location                    
 assistance from outside production companies they pass these on to            
 local destination marketing organizations much as they do with tour           
 operator calls which they receive.                                            
                                                                               
 COMMISSIONER HENSLEY noted that several of the department's                   
 entities are up for sunsetting.  The licensing boards which are up            
 for extensions this session are:  architects, engineers and land              
 surveyors; barbers and hairdressers; physical and occupational                
 therapists; dental; accountancy; and veterinary.  Also, the                   
 department's been informed that the budget and audit committee will           
 sponsor the extension legislation.  Some legislative revisions may            
 be based on audit findings.                                                   
                                                                               
 COMMISSIONER HENSLEY stated that the license fees have been lowered           
 for over 15,000 license holders this year.  During fiscal year 1996           
 the number of occupational licenses increased by over 4,000 for a             
 total of 35,402 in the state.  This fall the division has also                
 implemented welfare reform in the licensing area with provisions              
 requiring license denial if applicants are behind on child support.           
                                                                               
                                                                               
 COMMISSIONER HENSLEY added that the governor has submitted an                 
 executive order to transfer the Division of Measurement Standards             
 from the Department of Commerce and Economic Development to the               
 Department of Transportation and Public Facilities.  This division            
 operates the commercial vehicle weigh stations, the oversize and              
 overweight permits and it also monitors commercial weighing and               
 measuring devices.  This transfer, which would become effective               
 July 1, would consolidate the state's commercial vehicle safety               
 programs under one agency.                                                    
                                                                               
 COMMISSIONER HENSLEY continued that the governor, himself and other           
 members of the cabinet have carried a strong message to the                   
 business community not only within the state, but also outside the            
 state that Alaska is open and ready for business.  They have                  
 visited with a variety of corporate leaders throughout the country            
 and overseas to solicit investment in Alaska.  Two years ago he had           
 the good fortune to be part of the change in direction in dealing             
 with the oil industry.  They felt it was important to sit down face           
 to face in order to talk about the future of the oil industry, to             
 see what the oil companies plans were and what the state could do             
 to assist maintaining production and exploration in Alaska.  It's             
 been very productive and exciting especially since the smaller                
 companies are interested in exploration in Alaska.  Furthermore, as           
 part of these visits the department tried to cross the industry               
 sectors as much as possible.                                                  
                                                                               
 COMMISSIONER HENSLEY cited a visit with the RTZ Corporation in                
 London, a world-wide mining company.  He also cited a visit with              
 P&O, the parent of the Princess Tours Company.  In both visits,               
 Alaska was an important part of this company's business.  He                  
 mentioned a trip to Houston to visit a small coil tubing company              
 that provided a substantial amount of tubing that was used in                 
 Alaska, which cut the cost of doing business on the North Slope.              
 He hoped that someday it would be practical to have a plant like              
 this in Alaska.  Furthermore, he addressed the concept of Work                
 Star, which is related to welfare reform.  He explained by fiscal             
 year 1999, 10,000 welfare recipients need to engage in productive             
 work.  This will be a major challenge to the state.  Therefore, the           
 business community needs to work with the state.  Work star would             
 encourage businesses to assist the state by offering technical                
 assistance, work shops and financial assistance through partial               
 employee payments to help businesses achieve the standards set by             
 the welfare reform initiative.                                                
                                                                               
 COMMISSIONER HENSLEY continued that the department was also working           
 on a project called Marketing Alaska.  Industries were broken down            
 into sectors including both the private and public.  Each sector              
 came up with ideas on how to improve the economy with built-in                
 periodic updates.  According to the periodic updates, a more                  
 conservative initiative approach was taken in some cases.  This was           
 especially true for the seafood sector.  He stated there was a huge           
 potential for Alaska in several of the companies.                             
                                                                               
 COMMISSIONER HENSLEY cited Sakhalin Island in Russia as a strong              
 potential for investment opportunities.  The department intended to           
 work closely with those companies interested in this investment.              
 The governor also intended to visit this area in the near future.             
 Another area of interest for this program he noted was the Alaska             
 Seafood Center in Anchorage.                                                  
                                                                               
 COMMISSIONER HENSLEY added that the governor also created a sub-              
 cabinet to deal with the salmon industry last spring.  A meeting              
 was established in Juneau on January 27, 28 and 29, 1997 to                   
 establish some ideas to present to the legislature.  Furthermore,             
 the department had been providing staff to establish a business               
 plan for the timber industry in Southeast Alaska including                    
 coordinating the state's response to the closure of the Ketchikan             
 Pulp Mill.  Commissioner Hensley stated he would be happy to answer           
 any questions that the committee members might have.                          
                                                                               
 Number 1995                                                                   
                                                                               
 REPRESENTATIVE ROKEBERG thanked the commissioner for his testimony.           
 He asked Commissioner Hensley to respond to the issue addressed in            
 the Governor's State of the State speech regarding the five point             
 plan for economic development.  There was a pioneer incentive                 
 mentioned.  He asked if the department would be providing any                 
 legislation surrounding that issue.                                           
                                                                               
 Number 2012                                                                   
                                                                               
 COMMISSIONER HENSLEY replied, "yes."  The department initially was            
 focusing on the air service between Asia and Alaska.  The                     
 Department of Revenue was leading the effort to draft legislation,            
 however.  The Commerce and Economic Development Department was also           
 concentrating on a more generic piece of legislation that was                 
 practical.                                                                    
                                                                               
 Number 2052                                                                   
                                                                               
 REPRESENTATIVE COWDERY asked Commissioner Hensley how many                    
 employees were in the department?                                             
                                                                               
 COMMISSIONER HENSLEY replied, "390 employees."                                
                                                                               
 Number 2062                                                                   
                                                                               
 REPRESENTATIVE COWDERY asked Commissioner Hensley if the number of            
 employees would decline after the weight and measure transfer?                
                                                                               
 Number 2068                                                                   
                                                                               
 COMMISSIONER HENSLEY replied the department would be reduced by 45            
 people.                                                                       
                                                                               
 Number 2079                                                                   
                                                                               
 REPRESENTATIVE COWDERY asked Commissioner Hensley if a lobbyist had           
 been hired to help the state regarding the Sakhalin Island project?           
                                                                               
 Number 2085                                                                   
                                                                               
 COMMISSIONER HENSLEY replied there was an existing organization               
 called the American Business Center that was established on site              
 already.  It was the intention of the department to engage in a               
 small business contract with them to provide data and contacts.               
 It was economically very reasonable for them to do this.                      
                                                                               
 REPRESENTATIVE COWDERY asked if there would be a conflict of                  
 interest if this organization was involved in other interests of              
 competition.                                                                  
                                                                               
 COMMISSIONER HENSLEY said that this wasn't their understanding and            
 it was the organization's responsibility to facilitate for any                
 business, particularly for oil field service work at Sakhalin                 
 Island.                                                                       
                                                                               
 Number 2150                                                                   
                                                                               
 REPRESENTATIVE HUDSON said he had been asked by the local area                
 Kensington miners how they could find such good timing to eliminate           
 the one and only major contact they have with the mining industry             
 (in reference to the elimination of a Minerals Development                    
 Specialist position).  Kensington is trying to open up a mine and             
 generate 400 jobs.  If the department wants to save $82,000 he said           
 he would suggest other places to save it.  He felt that this was              
 short sighted since they're on the cutting edge of opening this               
 mine.  He asked for the Commissioner to seriously think about this.           
                                                                               
                                                                               
 COMMISSIONER HENSLEY said he had a soft spot in his heart for                 
 mining since he had tried at one time to get a mining operation off           
 the ground up north.  The department has spent a fair amount of               
 time interacting with the mining industry this past year.  They are           
 trying to respond to the administration's effort to scale down the            
 budgets, but still be able to do the job.  Mining is a growth area            
 and they have high hopes for a wide range of mining opportunities             
 in the mill right now.                                                        
                                                                               
 Number 2232                                                                   
                                                                               
 CATHERINE REARDON, Director, Division of Occupational Licensing,              
 Department of Commerce and Economic Development, made a statement             
 from the gallery.  She stated that she would assist with licensing            
 type legislation this session and offered to talk with any of the             
 representatives at any time about concerns, etc.  Ms. Reardon said            
 that the representatives would probably hear about occupational               
 licensing frequently this session because of the large number of              
 licenses it regulates.  She also noted that the division's annual             
 report was out which lists the 35 programs under their auspice.               
                                                                               
 HB - 18 STATE PROCUREMENT DISABILITY PREFERENCES                            
                                                                               
 Number 2406                                                                   
                                                                               
 REPRESENTATIVE JEANNETTE JAMES came forward to present testimony on           
 HB 18.  She stated that current law for the disabled gives them a             
 preference as an entity.  When this original legislation was                  
 written there was a provision which required qualifying disabled              
 people to operate as sole proprietors.  She guessed that the                  
 drafters never visualized that two or more disabled people would              
 want to do business together.  What this current legislation does             
 is to allow 100 percent disabled corporations and partnerships to             
 be eligible for disabled preferences.                                         
                                                                               
 TAPE 97-2, SIDE B                                                             
                                                                               
 Number 000                                                                    
                                                                               
 REPRESENTATIVE JAMES stated that the administration does support              
 this bill.  It has a zero fiscal note and she offered to answer any           
 questions.                                                                    
 Number 046                                                                    
                                                                               
 REPRESENTATIVE COWDERY referred to the zero fiscal note and noted             
 that if they do allow a preference wouldn't this mean an expense to           
 the state.                                                                    
                                                                               
 REPRESENTATIVE JAMES noted that a fiscal note is required when                
 additional costs would have been included initially or not covered            
 already in some other existing way.  She suspected that this                  
 wouldn't cause an additional charge to allow these people into the            
 system.  When the original preference was given a fiscal note was             
 already included.                                                             
                                                                               
 Number 097                                                                    
                                                                               
 REPRESENTATIVE HUDSON referenced a letter in the bill packet dated            
 April 10, 1995 from Ms. Bannister and asked if all legal problems             
 had been cleared up in this final draft.                                      
                                                                               
 REPRESENTATIVE JAMES responded affirmatively.                                 
                                                                               
 Number 131                                                                    
                                                                               
 CHAIRMAN ROKEBERG interjected that the letter which Representative            
 Hudson noted had referred to an entire global issue of six months             
 as a matter of residence.  He believed that legislative counsel               
 referred to this in the context of the entire statute, not                    
 particularly this provision brought forward by Representative                 
 James.  Ms. Bannister took the liberty of bringing this up as a               
 potential constitutional issue as it relates to the six months                
 issue and the equal protection clause.  It was a letter drafted to            
 put the bill sponsor on notice that there could be potential                  
 ramifications of the statute, but not certainly Representative                
 James' requested amendment to this statute itself.                            
                                                                               
 REPRESENTATIVE SANDERS asked about the fiscal note issue.  He added           
 that there is an extra cost to the state when a contract is let               
 under this legislation.  "If you pay an extra 10 percent for a                
 contract that's an extra expense to the state, right?"  If the                
 legislation is broadened so that other individuals get this                   
 preference then there will be a bigger expense, even if this was              
 factored into the previous legislation.                                       
                                                                               
 Number 228                                                                    
                                                                               
 REPRESENTATIVE JAMES responded that when the original bill went               
 through with a preference and they visualized what the potential              
 was for severally disabled people who might be in business and                
 qualify, more people have not been added to this list.  What has              
 been added is a different way of doing business.  She's not sure              
 what the previous fiscal note was, but because of the known numbers           
 of disabled individuals who might be in business within Alaska, a             
 fiscal note would have been prepared.                                         
                                                                               
 Number 298                                                                    
                                                                               
 DUGAN PETTY, Director, Division of General Services, Department of            
 Administration came forward to testify.  He noted that this bill              
 was essentially the same as the one supported in this committee               
 last year.  The Department of Administration supports this bill.              
 This bill corrects an oversight with the initial legislation where            
 it's allowed for a bidder who employs persons with disabilities as            
 long as they are a sole proprietor, and qualified through the                 
 Alaska's bidder preference to receive a 10 percent preference.                
 What the present legislation effectively does is discriminates in             
 those same situations where a sole proprietor, partnership or a               
 corporation exists under the same circumstances.                              
                                                                               
 MR. PETTY continued with respect to the division's fiscal note and            
 stated that there was no additional cost per se.  No additional               
 people will be hired to administer this law if passed.                        
                                                                               
 MR. PETTY continued that Representative Sanders did have a point as           
 to the preferences on the books, that there was some financial                
 consequences to administering them in the overall cost to the                 
 contract.  The legislature has deemed that from a policy standpoint           
 the benefits of those preferences and fostering certain types of              
 Alaska businesses are worth this additional incremental cost.  The            
 division doesn't show this in its fiscal note because the cost of             
 awarding this bid is simply not a cost which comes back to the                
 division.  The division has seen in this particular preference a              
 bit more activity over the last couple of years and some                      
 circumstances where the costs have been demonstrably different than           
 what the cost would have been without it, but it is their job to              
 administer the division in accordance with the law.  There is not             
 a significant amount of additional cost associated with this, but             
 they haven't done any projections.                                            
                                                                               
 Number 425                                                                    
                                                                               
 REPRESENTATIVE HUDSON stated that he doesn't see how they can                 
 attribute any additional costs because they don't know what's going           
 to come up.  It may mean simply trading off a sole proprietor for             
 a 100 percent owned corporation which means an expanding of the pie           
 of those who can seek and qualify for the 10 percent disabled                 
 bidder's preference.                                                          
                                                                               
 Number 515                                                                    
                                                                               
 CHAIRMAN ROKEBERG stated that he has looked at the statute AS                 
 36.31.70, and subsection (e) specifically.  When this new                     
 legislation goes into effect it seemed that in reading the entire             
 statute there could already be a 5 percent state residency bid                
 preference.  He confirmed that this was correct.  He also                     
 referenced under subsection (c) a provision which calls for                   
 offering services through an employment program which offers a 15             
 percent bidders preference.  He asked what this program was.                  
                                                                               
 MR. PETTY responded that an employment program is a successor to              
 terminology which they used to call a sheltered workshop.  An                 
 employment program is a program that has been certified by either             
 the Division of Vocational Rehabilitation or the Division of                  
 Developmental Disabilities Program.  This bill doesn't allow for an           
 employer to receive both the preference for an employer who employs           
 someone with a disability and the employment program preference.              
 It would be one or the other.  This 10 percent disabled bidder                
 preference is added to the 5 percent Alaska bidder preference.  In            
 order to qualify for this someone must first qualify for the 5                
 percent Alaska bidder preference.                                             
                                                                               
 MR. PETTY went on to note his understanding that someone can't have           
 the 15 percent employment program preference in addition to the 10            
 percent disabled bidder or an employer who employs disabled bidder            
 preference.  These two can never be connected.  The maximum benefit           
 anyone can receive is 20 percent.                                             
                                                                               
 Number 681                                                                    
                                                                               
 DUANE FRENCH, Director, Alaska Division of Vocational                         
 Rehabilitation, Department of Education, testified by                         
 teleconference.  Mr. French stated that he supports this bill                 
 because it will expand opportunities for businesses that are wholly           
 owned by individuals with disabilities to qualify under the bidders           
 preference and for individuals with disabilities who have formed a            
 partnership to qualify under the bidders preference.  This                    
 legislation will expand vocational opportunities for people with              
 disabilities.  He wishes he could tell the committee that there are           
 a lot of businesses owned by people with disabilities which are               
 operating successfully and would qualify under the bidders                    
 preference, but unfortunately that's not the case.  There are only            
 a few businesses and he didn't think they needed to be overly                 
 concerned about there being a flood of businesses wholly owned by             
 people with disabilities who would qualify under this preference,             
 but it will make it possible for those few businesses which are               
 fully owned by people with disabilities.                                      
                                                                               
 MR. FRENCH stated that there are businesses which would qualify,              
 but not very many.  He knew of two or three specifically right now,           
 but he said this didn't mean there weren't more which they were not           
 aware of.  He added that the partnership provision only applies to            
 partners who each have a disability and would not apply to a                  
 husband and wife team where one or the other has a disability.                
                                                                               
 Number 954                                                                    
                                                                               
 MR. FRENCH continued to address subsections 1 and 2 in relation to            
 what defines disability.  The same definition used by the Americans           
 with Disabilities Act would apply to this legislation and would               
 include persons with HIV.                                                     
                                                                               
 Number 1032                                                                   
                                                                               
 REPRESENTATIVE HUDSON made a motion to move HB 18 out of committee            
 with individual recommendations with an accompanied zero fiscal               
 note and asked for unanimous consent.  Hearing no objections, it              
 was so moved.                                                                 
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIRMAN ROKEBERG adjourned the House Labor & Commerce Committee at           
 4:17 p.m.                                                                     
                                                                               

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