Legislature(2001 - 2002)

03/28/2001 03:25 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 28, 2001                                                                                         
                           3:25 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Representative Lisa Murkowski, Chair                                                                                            
Representative Andrew Halcro, Vice Chair                                                                                        
Representative Kevin Meyer                                                                                                      
Representative Pete Kott                                                                                                        
Representative Norman Rokeberg                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Joe Hayes                                                                                                        
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 157                                                                                                              
"An Act  relating to trust  companies and providers  of fiduciary                                                               
services;  amending  Rules  6  and  12,  Alaska  Rules  of  Civil                                                               
Procedure,  Rule  40, Alaska  Rules  of  Criminal Procedure,  and                                                               
Rules  204, 403,  502, 602,  and 611,  Alaska Rules  of Appellate                                                               
Procedure; and providing for an effective date."                                                                                
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 67                                                                                                               
"An Act  requiring proof of  motor vehicle insurance in  order to                                                               
register  a   motor  vehicle;  and  relating   to  motor  vehicle                                                               
liability insurance for taxicabs."                                                                                              
     - MOVED CSHB 67(L&C) OUT OF COMMITTEE                                                                                      
HOUSE BILL NO. 106                                                                                                              
"An  Act  relating  to the  authorizations  for  state  financial                                                               
institutions;  relating  to  confidential  financial  records  of                                                               
depositors  and  customers  of  certain  financial  institutions;                                                               
relating to  the Alaska  Banking Code,  Mutual Savings  Bank Act,                                                               
Alaska  Small  Loans  Act,  and  Alaska  Credit  Union  Act;  and                                                               
providing for an effective date."                                                                                               
     - BILL HEARING POSTPONED                                                                                                   
PREVIOUS ACTION                                                                                                               
BILL: HB 157                                                                                                                  
SHORT TITLE:TRUST COMPANIES & FIDUCIARIES                                                                                       
SPONSOR(S): REPRESENTATIVE(S)MURKOWSKI                                                                                          
Jrn-Date   Jrn-Page                     Action                                                                                  
02/28/01     0463       (H)        READ THE FIRST TIME -                                                                        
02/28/01     0463       (H)        L&C, JUD                                                                                     
03/28/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
BILL: HB 67                                                                                                                   
SHORT TITLE:MOTOR VEHICLE REGISTRATION/INSURANCE                                                                                
SPONSOR(S): REPRESENTATIVE(S)ROKEBERG                                                                                           
Jrn-Date   Jrn-Page                     Action                                                                                  
01/17/01     0111       (H)        READ THE FIRST TIME -                                                                        
01/17/01     0111       (H)        L&C, JUD                                                                                     
03/26/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
03/26/01                (H)        Bill Postponed                                                                               
03/28/01                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
WITNESS REGISTER                                                                                                              
TERRY LUTZ, Supervisor                                                                                                          
Banking Section                                                                                                                 
Division of Banking, Securities and Corporations                                                                                
Department of Community and Economic Development (DCED)                                                                         
P.O. Box 110807                                                                                                                 
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Testified on HB 157 for the division.                                                                      
TERRY ELDER, Director                                                                                                           
Division of Banking, Securities and Corporations                                                                                
Department of Community and Regional Affairs (DCED)                                                                             
P.O. Box 110807                                                                                                                 
Juneau, Alaska 99811                                                                                                            
POSITION STATEMENT:  Testified on HB 157 for the division.                                                                      
DOUGLAS BLATTMACHR                                                                                                              
Alaska Trust Company                                                                                                          
1029 West Third Avenue, Suite 601                                                                                               
Anchorage, Alaska  99501-1981                                                                                                   
POSITION STATEMENT:  Testified on HB 157 regarding a memorandeum                                                              
he submitted to the committee.                                                                                                  
JANET SEITZ, Staff                                                                                                              
to Representative Norman Rokeberg                                                                                               
Alaska State Legislature                                                                                                        
Capitol Building, Room 118                                                                                                      
Juneau, Alaska 99801                                                                                                            
POSITION  STATEMENT:     Introduced   HB  67  for   the  sponsor,                                                               
Representative Rokeberg.                                                                                                        
MARY MARSHBURN, Director                                                                                                        
Division of Motor Vehicles                                                                                                      
Department of Administration                                                                                                    
3300 B Fairbanks Street                                                                                                         
Anchorage, Alaska 99503                                                                                                         
POSITION STATEMENT:  Testified on HB 67.                                                                                        
ACTION NARRATIVE                                                                                                              
TAPE 01-41, SIDE A                                                                                                              
Number 0001                                                                                                                     
CHAIR  LISA  MURKOWSKI  called   the  House  Labor  and  Commerce                                                               
Standing  Committee  meeting  to  order at  3:25  p.m.    Members                                                               
present at the call to  order included Representatives Murkowski,                                                               
Kott, Rokeberg, Crawford, and Hayes.   Representatives Halcro and                                                               
Meyer joined the meeting as it was in progress.                                                                                 
HB 157-TRUST COMPANIES & FIDUCIARIES                                                                                          
Number 0035                                                                                                                     
[Contains  discussion  of  HB  106  relating  to  confidentiality                                                               
CHAIR  MURKOWSKI announced  that the  committee would  hear HOUSE                                                               
BILL NO. 157,  "An Act relating to trust  companies and providers                                                               
of fiduciary services;  amending Rules 6 and 12,  Alaska Rules of                                                               
Civil  Procedure, Rule  40, Alaska  Rules of  Criminal Procedure,                                                               
and Rules 204, 403, 502, 602,  and 611, Alaska Rules of Appellate                                                               
Procedure; and providing for an effective date."                                                                                
CHAIR MURKOWSKI,  speaking as  the sponsor  of HB  157, explained                                                               
that she has been working on  this bill for three years, and said                                                               
proposed amendments and suggestions are still being received.                                                                   
CHAIR  MURKOWSKI directed  the  committee to  the bill  sectional                                                               
analysis  entitled  "Overview  of   HB  157,"  submitted  by  the                                                               
Division of Banking, Securities  and Corporations, which she said                                                               
was helpful.   She explained that  she didn't sit down  and write                                                               
this  legislation herself;  division personnel  had asked  her to                                                               
work with them to update the  Trust Company Act, which dates back                                                               
to the late 1940s.                                                                                                              
CHAIR  MURKOWSKI  stated  that  several  years  back  there  were                                                               
substantial changes in  the trust world through  the Alaska Trust                                                               
Act, and since [Alaska] is going  to have a trust industry, there                                                               
needs  to be  regulation of  it like  what is  being done  in the                                                               
banking industry.                                                                                                               
Number 0281                                                                                                                     
TERRY  LUTZ, Supervisor,  Banking Section,  Division of  Banking,                                                               
Securities,  and   Corporations,  Department  of   Community  and                                                               
Economic Development (DCED), remarked  that the current Act dates                                                               
back to  1949, with few  changes over the  years.  In  writing HB                                                               
157,  he said,  [the division]  worked with  the trust  industry,                                                               
attorneys  both  inside  and  outside  the  trust  industry,  and                                                               
Representative Murkowski.   He prefaced  his testimony  by saying                                                               
that he would go over the areas lacking in the law.                                                                             
MR.  LUTZ  commented that  in  putting  the bill  together,  [the                                                               
division]  reviewed  trust  Acts   from  several  states.    [The                                                               
division]  chose from  [examples  provided by]  other states  and                                                               
from the model  Act from the Conference of  State Bank Supervisor                                                               
(CSBS).  Mr.  Lutz pointed out that committee members  had a copy                                                               
of the letter of requested amendments dated March 15 [2001].                                                                    
Number 0433                                                                                                                     
MR. LUTZ  said a  new Act  is needed because  the current  one is                                                               
lacking in  the following areas:   it  lacks direction as  to who                                                               
should be chartered;  it gives limited guidance  on the formation                                                               
process  of  trust  companies;  it  provides  no  provisions  for                                                               
branching  either  intrastate  or   interstate;  it  provides  no                                                               
provisions  for   liquidations,  mergers,   or  sales   of  trust                                                               
companies;  and  it  is  limited  regarding  the  powers  of  the                                                               
department.   Mr. Lutz  explained that  [the current  Act] merely                                                               
says  that  [the  division]  has the  power  to  supervise  trust                                                               
MR. LUTZ, referring to Section 2,  AS 06.26.010, pages 1 and 2 of                                                               
the bill, explained that this  section states who can undertake a                                                               
trust  business  in  the  state,  including:    a  trust  company                                                               
chartered  by   [the  division];  state   financial  institutions                                                               
(indisc.)  for  which  [the  division]  has  asked  and  received                                                               
authority to [create] a trust  business; national banks with home                                                               
offices  in Alaska;  interstate national  banks with  branches in                                                               
[Alaska]; national  trust companies; interstate-state  banks with                                                               
trust powers; and interstate trust companies.                                                                                   
MR.  LUTZ,  referring to  Section  2,  AS 06.26.020.  Exemptions,                                                               
pages 3  and 4 of the  bill, pointed out that  this section lists                                                               
many exempt trust activities, a  few of which include:  attorneys                                                               
with limitations, broker-dealers,  investment advisers, insurance                                                               
companies,  cemetery associations,  certified public  accountants                                                               
(CPAs), family  members, homeowner  associations, court-appointed                                                               
conservators, representatives, and business partners.                                                                           
Number 0606                                                                                                                     
MR. LUTZ, referring  to Section 2, AS 06.26.050.  Powers of Trust                                                               
Companies,  pages  5 and  6  of  the  bill, explained  that  this                                                               
expands trust powers  for trust companies, including:   acting as                                                               
a trustee under  written agreement; receiving money  as a trustee                                                               
for investment  in real estate  property; acting as a  trustee by                                                               
court appointment; acting  as an executor for  an estate; [acting                                                               
as a] custodian for minors  and incapacitated persons; [ensuring]                                                               
safekeeping  for any  type  of personal  property;  acting as  an                                                               
investment  adviser   in  an  agreed-upon  activity;   and  other                                                               
incidental powers  that are reasonable and  necessary to exercise                                                               
powers exclusively conferred.                                                                                                   
Number 0658                                                                                                                     
MR. LUTZ, referring to Section  2, AS 06.26.060. Organizers, page                                                               
7 of the bill, said it gives  details of how to obtain a charter.                                                               
He  then referred  to Section  2, AS  06.26.120, page  10 of  the                                                               
bill, which addresses the minimum  capital requirements for trust                                                               
companies.   It has been  increased in the  bill to a  minimum of                                                               
$400,000  plus  [maintaining]  20   percent  of  that  amount  in                                                               
surplus.   [The division] looked  at what other  states required,                                                               
he said,  and [Alaska] is probably  at the low end  because other                                                               
states require millions of dollars  for capitalization of a trust                                                               
company.   [The  division] met  with Jonathan  Blattmachr, Alaska                                                               
Trust  Company,  who  was  comfortable with  that  number.    The                                                               
current provision in  law [indicates] a minimum  of $100,000, but                                                               
is [at the discretion] of the director.                                                                                         
MR. LUTZ, referring to Section 10,  page 63 of the bill, remarked                                                               
that  it  has a  grandfathering  transition  period for  existing                                                               
trust companies,  giving them  until 2007  to obtain  the minimum                                                               
Number 0795                                                                                                                     
MR.  LUTZ,  referring  to  Section 2,  Article  3,  Operation  of                                                               
Offices, AS 06.26.150, Trust Company  Home Office, page 12 of the                                                               
bill,  said  this  section  requires a  state  trust  company  to                                                               
maintain  its  home  office  and  records  in  Alaska,  and  each                                                               
executive  officer is  an agent  for service  of process  for the                                                               
trust  company.    It  provides  for  interstate  and  intrastate                                                               
branching,  he  explained, and  details  the  processes with  the                                                               
authority to branch.                                                                                                            
MR. LUTZ,  referring to Section 2,  AS 06.26.400, page 22  of the                                                               
bill, said it  requires trust companies to  disclose conflicts of                                                               
Number 0823                                                                                                                     
CHAIR MURKOWSKI  directed Mr. Lutz to  page 13 of the  bill where                                                               
it discusses branch and representative  offices.  She asked about                                                               
the distinction between the two.                                                                                                
MR. LUTZ  referred back to  AS 06.26.990,  Definitions, paragraph                                                               
(26), page 59  of the bill, which  read: "'representative office'                                                               
means  an  office that  provides  support  services for  a  trust                                                               
company,  but  at  which  the  trust  company  does  not  provide                                                               
fuduciary  services".    So  a  branch  could  provide  fuduciary                                                               
services, he explained, but the  representative office could not.                                                               
Mr.  Lutz further  explained that  a representative  office would                                                               
probably be a small office set  up with someone who isn't a trust                                                               
expert to solicit business.  If  an actual trust were going to be                                                               
set up,  it would  need to  be sent  to a  branch or  home office                                                               
where the expertise lies.                                                                                                       
CHAIR MURKOWSKI asked  if it is something  that [Alaska] actually                                                               
does.   She  said  she didn't  understand why  there  would be  a                                                               
representative  office if  it couldn't  do any  of the  fiduciary                                                               
things  that a  trust company  does.   She asked  for a  specific                                                               
example of how this would work in a "real-world setting."                                                                       
Number 0914                                                                                                                     
MR. LUTZ replied  that he didn't know if there  would ever be any                                                               
representative offices  in Alaska, but he  pictured credit unions                                                               
having similar offices,  not in Alaska, but in  many states where                                                               
customers are solicited.   The model Act is used  by the CSBS and                                                               
in   other   states,   and  in   almost   every   instance,   has                                                               
representative offices.  Upon being  asked whether [this language                                                               
is in  the bill] in  case people want  to avail themselves  of it                                                               
although  it  isn't  something that  is  currently  happening  in                                                               
Alaska, Mr. Lutz responded affirmatively.                                                                                       
REPRESENTATIVE  CRAWFORD asked  Mr.  Lutz  to explain  cumulative                                                               
voting from Section 2, AS 06.26.140, page 12 of the bill.                                                                       
Number 1031                                                                                                                     
TERRY  ELDER,  Director,  Division  of  Banking,  Securities  and                                                               
Corporations,  Department  of   Community  and  Regional  Affairs                                                               
(DCED),  explained  that  cumulative  voting is  allowed  in  the                                                               
corporations  code, but  is an  option that  companies can  avail                                                               
themselves of;  the purpose is  to allow minority  shareholders a                                                               
better opportunity to obtain representation on  a board.  It is a                                                               
mechanism  and procedure  for  voting so  that,  for example,  if                                                               
there are three  people running for a board and  a person has 100                                                               
shares, that person actually gets  300 votes, not just 100 votes.                                                               
It is  the number of shares  times the number of  people running,                                                               
he explained,  so that a person  could give all 300  votes to one                                                               
person.    It would  afford  a  better opportunity  for  minority                                                               
shareholders to get representation on the board.                                                                                
MR. LUTZ, referring  to Section 2, AS 06.26.450  to AS 06.26.470,                                                               
pages  22  to  24  of  the bill,  stated  that  this  legislation                                                               
provides  for transfer  and ownership  of a  trust company.   The                                                               
department  has  the  right  to  prevent the  sale  in  the  best                                                               
interest of the  public, should a trust company  become for sale.                                                               
Before  someone purchased  it, [the  department]  could deny  the                                                               
purchase for safety and soundness concerns.                                                                                     
Number 1160                                                                                                                     
MR. LUTZ, referring to Section  2, AS 06.26.610, Customer Records                                                               
Confidential,  page  29  of  the   bill,  said  it  provides  for                                                               
confidentiality of customer  records similar to what  is found in                                                               
the  banking code  and  in HB  106.   He  explained  that he  had                                                               
considered taking  it out of this  bill; however, if HB  106 goes                                                               
nowhere,  then  [Alaska]  would be  without  confidentiality  for                                                               
trust companies.                                                                                                                
CHAIR MURKOWSKI asked  if it is similar to what  is being done in                                                               
HB 106 and in compliance  with Gramm-Leach-Bliley Act (GLBA), so,                                                               
if HB 106 should pass, then the two wouldn't conflict.                                                                          
MR.  LUTZ replied  that he  didn't believe  that GLBA  would come                                                               
into play here since [a trust  company] is not a bank; it doesn't                                                               
conflict with  what is  in the banking  code currently  but would                                                               
require an [opportunity to] "opt in," rather than "opt out."                                                                    
CHAIR MURKOWSKI asked  whether the tie-in with HB  106 is because                                                               
of the changes being made to the banking code.                                                                                  
MR. LUTZ  answered affirmatively.   He said  he had  mentioned HB                                                               
106 because  the committee was  probably more familiar  with that                                                               
Number 1234                                                                                                                     
MR.  LUTZ went  on to  explain that  HB 157  provides a  detailed                                                               
process for  mergers and consolidations  of trust  companies, and                                                               
provides a  process for voluntary liquidation  of trust companies                                                               
should they wish to discontinue  business without going through a                                                               
sale  or merger.   It  also  provides a  process for  involuntary                                                               
liquidation; for  example, if [the division]  determines there to                                                               
be safety  and soundness  concerns, or for  other reasons  that a                                                               
trust  company needs  to be  close, it  gives [the  division] the                                                               
authority to close it.                                                                                                          
MR. LUTZ, referring  to Section 2, AS 06.26.9000, pages  51 to 53                                                               
of  the bill,  stated that  it details  a list  of powers  of the                                                               
department   including  the   ability  to:     exercise   general                                                               
supervision  over  trust  companies,  which was  the  only  thing                                                               
covered in the  current trust Act; adopt  regulations; review and                                                               
approve  applications; determine  minimal capital  needs; approve                                                               
transfer  of  ownership  of  trust  companies;  relieve  a  trust                                                               
company of  examination requirements  contained in  AS 06.01.015,                                                               
requiring  annual  examinations;   approve  branch  applications;                                                               
require a trust company to  maintain adequate capital; charge off                                                               
assets not lawfully acquired; write  down assets to market value;                                                               
to record liens;  maintain insurance;  require  directors to hold                                                               
meetings;  [allow] removal  of directors  under AS  06.26.510; to                                                               
take possession of a trust company; and issue orders.                                                                           
Number 1340                                                                                                                     
MR. LUTZ explained  that [the division] hopes all  of the various                                                               
scenarios   have  been   encountered  and   [addressed]  in   the                                                               
exemptions  contained  in  AS 06.26.020,  those  in  the  private                                                               
fiduciary  section, and  those  in AS  06.26.010  where it  talks                                                               
about who can [form] a trust business in this state.                                                                            
CHAIR MURKOWSKI asked for some  idea about the implementation and                                                               
transition  [period],  since  the 2007  date  for  grandfathering                                                               
seemed longer than normal.                                                                                                      
MR. LUTZ stated  that the trust industry felt that  it would need                                                               
this amount  of time to  attain the minimal  capital requirements                                                               
proposed in the  bill.  Part of that transition  period, he said,                                                               
is for  [the companies]  to come up  with a plan  that has  to be                                                               
approved  by [the  division], addressing  how they  are going  to                                                               
meet those requirements.  When asked  whether that plan has to be                                                               
submitted by April 1, 2002,  Mr. Lutz replied affirmatively.  And                                                               
when asked  whether - provided  that the department signs  off on                                                               
the plan  - [trust companies]  then have  until 2007 to  meet the                                                               
capital requirements.  Mr. Lutz responded affirmatively.                                                                        
CHAIR MURKOWSKI asked  Mr. Lutz to speak to the  zero fiscal note                                                               
and the impact to the department in regulating a new area.                                                                      
Number 1486                                                                                                                     
MR. ELDER said  while this bill fleshes out and  gives details on                                                               
how [the  department] will go  about regulating  trust companies,                                                               
[the department] actually regulates  them now, he remarked; there                                                               
are only two  trust companies in Alaska now and  they are already                                                               
examined by  [the department].   [The department] has to  look to                                                               
the banking code for guidance in  terms of when they are examined                                                               
and the process.   This just sets it up  under their own chapter;                                                               
it really doesn't  add anything new.  If there  were a big growth                                                               
of  trust  companies  in  Alaska, more  trained  staff  would  be                                                               
required.   He said training  needs to be increased  and improved                                                               
for the  current examiners  regarding trust  examination, because                                                               
only one examiner was sent to a trust examination school.                                                                       
Number 1597                                                                                                                     
REPRESENTATIVE  ROKEBERG  asked  whether trust  departments  with                                                               
interstate national banks are considered trust companies.                                                                       
MR. ELDER replied  affirmatively.  And he  confirmed that federal                                                               
law regulates them.   He explained that  the [interstate national                                                               
bank's trust  departments] are addressed under  AS 06.26.010, but                                                               
when talking  about the two  [existing] trust companies,  he said                                                               
he is speaking about two Alaska chartered state trust companies.                                                                
REPRESENTATIVE  CRAWFORD asked  if this  is going  to affect  the                                                               
trust company that manages pension funds.                                                                                       
MR. LUTZ said  he didn't believe it would.   He clarified that he                                                               
didn't believe it would be disrupting any current business.                                                                     
Number 1718                                                                                                                     
REPRESENTATIVE ROKEBERG  asked whether the [Division  of Banking,                                                               
Securities  and  Corporations]  had  a  chance  to  look  at  the                                                               
memorandum  from the  Alaska Trust  Company regarding  Article 4,                                                               
the private fiduciary  section, and asked whether  there had been                                                               
any discussions on it.                                                                                                          
MR.  ELDER   stated  that  [the   division]  just   received  the                                                               
memorandum.   When  asked if  there  was any  conflict there,  he                                                               
replied that this is a work  in progress and that amendments will                                                               
continue to be proposed.  And when  asked if this has been a bone                                                               
of contention, Mr.  Elder responded that he didn't  believe it to                                                               
be; ideas  have been  worked through, he  said, but  there hasn't                                                               
been any disagreement.                                                                                                          
REPRESENTATIVE  ROKEBERG  added  that  it looked  like  a  pretty                                                               
substantial  difference   [between  what   the  two   groups  are                                                               
proposing], because  [the Alaska Trust  Company] wants to  have a                                                               
change in  the definition of  a private fiduciary, which  he said                                                               
might  not be  entirely appropriate.   The  concept of  a private                                                               
trust  company  may  need  to   be  an  addition  rather  than  a                                                               
supplement.  [The  Alaska Trust Company] had  indicated that [the                                                               
two] are the same, although he wasn't sure.                                                                                     
MR. ELDER  said [the  department] didn't  think it  was necessary                                                               
because in  looking at [the  definition of a]  private fiduciary,                                                               
it  could  be  any  person,  which  could  be  a  company  or  an                                                               
individual.    He confirmed  that  [the  Alaska Trust  Company's]                                                               
definition is  different from  what is in  the bill;  however, he                                                               
said a  private fiduciary  could already  be this.   The  key, he                                                               
pointed out, is not to be offering the services to the public.                                                                  
Number 1867                                                                                                                     
REPRESENTATIVE ROKEBERG  asked if this  bill is what  is referred                                                               
to  as  the  trust  company regulations,  or  whether  there  are                                                               
additional regulations.                                                                                                         
MR. ELDER  responded that he  didn't believe that  [the division]                                                               
was working on trust company regulations.   Mr. Lutz works in the                                                               
section that  has spent a year  or so drafting this;  it has been                                                               
ongoing,  he  remarked.   And  he  verified that  [the  division]                                                               
doesn't have  a regulation  project.  Upon  being asked  if there                                                               
has  been   ongoing  discourse  with  the   trust  attorneys  and                                                               
companies in the state, Mr.  Elder replied affirmatively and said                                                               
he has  worked closely with them  since 1998.  He  said there are                                                               
no  existing  regulations  for  trust  companies  at  this  time;                                                               
however, as  a result of  this Act,  there probably will  be some                                                               
areas  where  [the  division]  will be  required  to  write  some                                                               
REPRESENTATIVE ROKEBERG referred  to the new model  trust Act and                                                               
said [Alaska]  doesn't have a  model trust statutory regime.   He                                                               
asked Mr. Lutz, in drafting this,  whether he looked at the whole                                                               
body of law that [Alaska] has passed.                                                                                           
MR.  LUTZ explained  that  this  Act doesn't  affect  all of  the                                                               
legislation that  passed in  the last five  years for  the Alaska                                                               
trust, rules  of perpetuity,  and so forth.   [The  division] has                                                               
not done anything here that would affect any of that, he said.                                                                  
MR.  ELDER added  that the  Department of  Law had  also reviewed                                                               
this [legislation].  He pointed out  that this is a trust company                                                               
Act,  not a  trust  Act.   This  is just  how  the companies  are                                                               
regulated as providers  of service and doesn't  really affect the                                                               
provisions in a trust.                                                                                                          
MR.  ELDER explained  that the  letter from  the division  [dated                                                               
March  15,  2001]  addresses four  suggested  amendments  to  the                                                               
exemptions at  Section 2, AS  06.26.010.   In the bill,  there is                                                               
language that  says that this  kind of person, whether  a broker-                                                               
dealer,  attorney,  or  whatever,  is  exempted  when  the  trust                                                               
activity is solely incidental to  their business.  [The division]                                                               
was trying  to say that such  are not people really  in the trust                                                               
business,  so [the  division] doesn't  want to  regulate them  as                                                               
trust  companies.   The idea  for using  the "solely  incidental"                                                               
[language] was taken from the  securities Act because it provides                                                               
that one  doesn't have  to register as  an investment  adviser if                                                               
the  advice is  solely  incidental  to one's  work  as a  broker-                                                               
dealer.   However,  as [the  division] looked  at it  further, it                                                               
became apparent that  it would be better to be  more precise now,                                                               
because there would  always be the question of  the definition of                                                               
"solely  incidental."    So  [these  suggested  amendments]  were                                                               
offered as a way to be more  precise.  The language here is based                                                               
on the language in the CSBS model Act for those sections.  These                                                                
amendments proposed in the division's letter read:                                                                              
     1.  (Section 2, page  3, lines 3-5) Replace language in                                                                  
     lines   3-5  (AS   06.26.020(1))  with   the  following                                                                  
     is licensed  to practice law  in this state,  is acting                                                                    
     within  the  scope  of the  license,  and  neither  the                                                                    
     attorney,  or the  attorney's law  firm, is  trustee of                                                                    
     more than 50 trusts;                                                                                                       
     2.  (Section  2, page 3, lines  10-14) Replace language                                                                  
     in  lines 10-14  (AS 06.26.020(4))  with the  following                                                                  
     engages  in a  securities  transaction  or provides  an                                                                    
     investment   advisory  service   as   a  licensed   and                                                                    
     registered  broker-dealer,  agent of  a  broker-dealer,                                                                    
     state    investment    adviser,   investment    adviser                                                                    
     representative,  or  noticed  federal  covered  adviser                                                                    
     provided the person  is acting within the  scope of the                                                                    
     notice filed or the  license conferred and the activity                                                                    
     is  regulated  by  the   Department  of  Community  and                                                                    
     Economic  Development under  AS  45.55 or  by the  U.S.                                                                    
     Securities and Exchange Commission;                                                                                        
      3.   (Section  2,  page 3,  lines  15-18) Replace  the                                                                  
     language  in lines  15-18  (AS  06.26.020(5)) with  the                                                                  
     following language:                                                                                                      
     engages in the sale  and administration of an insurance                                                                    
     product as  an insurance  company licensed under  AS 21                                                                    
     or an insurance producer licensed under AS 21;                                                                             
     4.    (Section 2,  page  3,  lines 22-25)  Replace  the                                                                  
     language  in lines  22-25  (AS  06.26.020(8)) with  the                                                                  
     following language:                                                                                                      
     renders services  customarily performed by  a certified                                                                    
     public  accountant licensed  under  AS 08  in a  manner                                                                    
     authorized  by law,  and neither  the certified  public                                                                    
     accountant  or the  certified public  accountant's firm                                                                    
     is trustee of more than 50 trusts;                                                                                         
Number 2155                                                                                                                     
CHAIR  MURKOWSKI  turned  the committee's  attention  to  another                                                               
subject.   She said she would  like to see if  [the division] and                                                               
[the Alaska  Trust Company]  could look at  the points  that have                                                               
come  up   and  give  feedback   about  private   fiduciaries  in                                                               
preparation  for  a committee  substitute  (CS).   She  said  Mr.                                                               
Blattmachr  and  Mr.  Greer have  been  instrumental  in  working                                                               
through this process, but she  thought it might alleviate some of                                                               
the questions  if the  two groups got  together and  talked about                                                               
what could be done.                                                                                                             
CHAIR  MURKOWSKI  asked Mr.  Blattmachr  and  Mr. Greer  if  they                                                               
wanted  to add  testimony.   [Both men  deferred their  testimony                                                               
until a later date.]                                                                                                            
REPRESENTATIVE   ROKEBERG   asked   Mr.  Blattmachr   about   the                                                               
memorandum  he  had submitted  to  the  committee.   He  said  it                                                               
suggested  changing  the definition  of  a  private fiduciary  to                                                               
private trust company.  Representative  Rokeberg asked if that is                                                               
the common  term used in the  industry.  He further  asked if the                                                               
[term]  private  trust   would  be  in  addition   to  a  private                                                               
fiduciary, or whether they are incompatible.                                                                                    
Number 2291                                                                                                                     
DOUGLAS  BLATTMACHR, Alaska  Trust  Company, via  teleconference,                                                               
responded  that  the way  he  read  the exemption  from  offering                                                               
service  to   the  public,   referring  to   AS  06.26.990(a)(24)                                                               
Definitions,  page 58  of the  bill, is  that services  are being                                                               
provided  to the  general public  unless it  says "the  person to                                                               
whom  the fiduciary  services are  provided is  offered (A)  by a                                                               
family  member of  an  individual  who owns  100  percent of  the                                                               
person providing fiduciary services".                                                                                           
MR. BLATTMACHR explained that the  only place where services were                                                               
originally offered  to the general  public was under  the private                                                               
fiduciary section,  also known  as a private  trust company.   It                                                               
seems that one has  to be some form of an entity,  he said, to be                                                               
able to  get this exemption  under this definition.   [The Alaska                                                               
Trust Company]  thought it might  be clearer.   A lot  of wealthy                                                               
families want  to be able  to setup private trust  companies, and                                                               
they are starting to look at  different states that have easy set                                                               
up procedures  for private trust  companies for their  own family                                                               
trust businesses, which was one of  the reasons why "we" put this                                                               
in at a late date.  It is  a real issue now which could produce a                                                               
lot of new  activity in Alaska if [Alaska]  has friendly statutes                                                               
to accommodate what some of the other states have.                                                                              
REPRESENTATIVE  ROKEBERG  asked if  the  term  and concept  of  a                                                               
private fiduciary are common in trust law.                                                                                      
Number 2363                                                                                                                     
MR. BLATTMACHR  said it is  an old  concept, but people  like the                                                               
Rockefeller Trust Company  used it when it started  years ago; it                                                               
was  a private  trust company  just for  them; however,  over the                                                               
years,  it  has  gone  into offering  services  for  the  general                                                               
public.   He thought  the term "private  trust company"  had been                                                               
around for  a long time, but  there has been a  lot more interest                                                               
in recent years.  The actual  term isn't that important, he said,                                                               
but  it could  be limited  to some  extent to  more of  a defined                                                               
activity that constitutes a private fiduciary.                                                                                  
Number 2417                                                                                                                     
REPRESENTATIVE  HALCRO referred  to  Mr. Blattmachr's  memorandum                                                               
dated March  28, 2001.   He said  Mr. Blattmachr points  out that                                                               
the definition  on page 4, subparagraph  (18), lines 27 to  29 of                                                               
the  bill, seems  confusing.   Representative Halcro  pointed out                                                               
the additional  sheet faxed to  the committee by Mr.  Greer dated                                                               
March 27, 2001, amends it.   He asked Mr. Blattmachr if he'd seen                                                               
[the amendment].                                                                                                                
MR. BLATTMACHR said  he hadn't seen it, but he  and Mr. Greer had                                                               
spoken about it today.                                                                                                          
[HB 157 was held over.]                                                                                                         
HB  67-MOTOR VEHICLE REGISTRATION/INSURANCE                                                                                   
[Contains references to HB 68 and HB 39.]                                                                                       
TAPE 01-41, SIDE B                                                                                                              
Number 2428                                                                                                                     
CHAIR  MURKOWSKI announced  that the  committee would  hear HOUSE                                                               
BILL NO. 67,  "An Act requiring proof of  motor vehicle insurance                                                               
in  order to  register a  motor  vehicle; and  relating to  motor                                                               
vehicle liability insurance for taxicabs."                                                                                      
REPRESENTATIVE  ROKEBERG,  speaking  as  the sponsor  of  HB  67,                                                               
stated that the bill has a companion  bill, HB 68, which is a "no                                                               
civil liability  for taxis transporting drunks  or the tipsy-taxi                                                               
bill."  He  said it allows a taxi company  to provide two drivers                                                               
to drive  a patron and  his or her car  home.  Many  people don't                                                               
want to take  a cab home, he  said, because leaving a  car at the                                                               
establishment would [put it in jeopardy] of being vandalized.                                                                   
REPRESENTATIVE  ROKEBERG  explained  that during  exploration  of                                                               
that issue, the  discovery was made that there  is no requirement                                                               
for  taxi  cab  companies  to have  any  liability  insurance  in                                                               
[Alaska], which would  be considered a necessity if  one is going                                                               
to be  transporting anyone.   Therefore,  this separate  bill was                                                               
introduced.  And  he said he'd had the idea  of requiring further                                                               
proof of  insurance at the  point of registration, similar  to HB                                                               
39, which  is in  the bill  and has  caused there  to be  a large                                                               
fiscal note.                                                                                                                    
Number 2348                                                                                                                     
JANET  SEITZ, Staff  to  Representative  Norman Rokeberg,  Alaska                                                               
State Legislature,  explained that HB 67  includes the statement,                                                               
"The ...  Division of Motor  Vehicles shall refuse to  register a                                                               
vehicle   if   [the]   applicant  fails   to   provide   evidence                                                               
satisfactory  that the  applicant has  motor vehicle  insurance."                                                               
There  are a  lot  of  drivers out  there  who  don't have  motor                                                               
vehicle insurance.   She  said she  served on  the driving-under-                                                               
the-influence  (DUI) taskforce  in Anchorage,  and the  taskforce                                                               
discussed  proof  of insurance  for  cars  registered in  Alaska.                                                               
This  [bill]  is  an  attempt  to move  in  that  direction,  she                                                               
MS. SEITZ commented that the rest  of the bill deals with taxicab                                                               
liabilities.      There   are    some   local   governments   and                                                               
municipalities  that have  minimums for  taxicab policies,  which                                                               
she  included  in  the  committee's packet.    There  is  nothing                                                               
contained in the bill that would  interfere with the ability of a                                                               
local  government/municipality  to  set  a  higher  standard  for                                                               
Number 2287                                                                                                                     
REPRESENTATIVE ROKEBERG added  that this was done  because of the                                                               
"single-subject rule," so there had to be two different bills.                                                                  
MS. SEITZ concurred and said  the drafters advised against having                                                               
the  taxicab  insurance  requirements  and  the  civil  liability                                                               
coverage exemption in the same bill.                                                                                            
CHAIR  MURKOWSKI referred  to the  sponsor statement.   There  is                                                               
mention of  developing an electronic  notification system  in the                                                               
event that  the insured  goes out and  gets registration  for the                                                               
vehicle, and then  cancels it after-the-fact.  She  asked if this                                                               
was included  as a part  of the fiscal  note and how  that system                                                               
would work.                                                                                                                     
MS.  SEITZ  deferred  the  question  to  Mary  Marshburn  of  the                                                               
Division of Motor  Vehicles (DMV), but said it  was the intention                                                               
that with the [available] technology,  a notice could be sent out                                                               
from an insurance company when a person canceled coverage.                                                                      
CHAIR MURKOWSKI asked  if it would be required that  the state be                                                               
notified when insurance is canceled.                                                                                            
MS. SEITZ  remarked that this  was the hope.   She said  the bill                                                               
just says that a  person has to provide proof that  he or she has                                                               
insurance to register the automobile.                                                                                           
Number 2225                                                                                                                     
REPRESENTATIVE HALCRO referred to page  2 of the fiscal note from                                                               
the DMV.  He said the  only effective way to implement this would                                                               
be   by  having   constant  communication   with  the   insurance                                                               
companies,  which would  cost $2  per vehicle,  equating to  $1.4                                                               
million per  year.  This,  he said,  is obviously not  covered in                                                               
the fiscal note.                                                                                                                
REPRESENTATIVE  HALCRO  said he  has  had  discussions with  Mary                                                               
Marshburn regarding  this same thing.   He said  constituents had                                                               
contacted  him complaining  about  uninsured motorist  insurance.                                                               
He and Ms. Marshburn had  similar discussions about the automatic                                                               
notification [system],  and Ms.  Marshburn relayed the  same cost                                                               
to him.                                                                                                                         
Number 2173                                                                                                                     
CHAIR  MURKOWSKI  referred   to  Section  1  of   the  bill,  the                                                               
requirement to register the vehicle.   Is there a rural exemption                                                               
available for registration of the  vehicle, she asked, as opposed                                                               
to insurance?                                                                                                                   
MARY MARSHBURN, Director, Division  of Motor Vehicles, Department                                                               
of Administration,  via teleconference,  clarified that  there is                                                               
an exemption for  rural areas not connected to  a highway system,                                                               
or those  areas with an  average vehicular traffic count  of less                                                               
than  499 for  registration  of a  vehicle.   A  vehicle is  only                                                               
covered by mandatory insurance if  it is subject to registration.                                                               
When  asked  how [Section  1]  might  affect  that, she  said  it                                                               
wouldn't because if the vehicle  isn't required to be registered,                                                               
it would have no effect on those vehicles.                                                                                      
Number 2121                                                                                                                     
REPRESENTATIVE HALCRO  asked the  sponsor if  he'd spoken  to the                                                               
Alaskan   Automobile   Dealers   Association  or   to   financial                                                               
institutions that  register vehicles about the  [possible] impact                                                               
on business.   He also  asked if  there had been  discussion with                                                               
any outside  groups that provide  the service that  allows people                                                               
to forgo a trip to the DMV when a car is purchased.                                                                             
MS. SEITZ replied  in the negative; however, she  noted that when                                                               
she recently  purchased a car,  she had to provide  her financial                                                               
institution with a  binder showing coverage or  that coverage was                                                               
being  sought   through  an  insurance  company   and  that  [the                                                               
insurance company] would notify [the  car dealer] if coverage was                                                               
REPRESENTATIVE  HALCRO said  he,  too, went  through the  process                                                               
recently.  He went to the  credit union and filled out the forms,                                                               
the car was registered, then a  month later the credit union sent                                                               
him a  letter saying a copy  of his insurance binder  hadn't been                                                               
received yet, although he already  had a copy of the registration                                                               
at his home.   He said if  there is no lien holder  when a person                                                               
goes to  a dealer, and if  the car is registered  there, a person                                                               
might  fall through  the  cracks if  the onus  isn't  put on  the                                                               
seller of the car.                                                                                                              
Number 2032                                                                                                                     
REPRESENTATIVE ROKEBERG said  the notice should be  on the person                                                               
registering.    He  said  he  appreciates  [hearing  about  that]                                                               
because  this does  occur.   The  DMV's lack  of proper  computer                                                               
systems is causing  a huge dislocation and is a  matter of public                                                               
safety in  the state,  and he  added that  it is  almost reaching                                                               
critical proportions.  There is a public outcry, he remarked.                                                                   
CHAIR MURKOWSKI  referred to [requiring] mandatory  insurance for                                                               
taxicabs,  and  asked  if  the  [taxi  drivers]  are  having  any                                                               
problems with what is being proposed.                                                                                           
MS. SEITZ  commented that [Representative Rokeberg's  office sent                                                               
out notices], but hadn't heard anything back.                                                                                   
Number 1984                                                                                                                     
REPRESENTATIVE MEYER said anytime  the Anchorage Assembly brought                                                               
up anything to  do with taxicabs, [the taxi drivers]  came out in                                                               
"hordes."   He  said he  is  surprised that  the committee  isn't                                                               
hearing anything;  however, maybe the [cab  drivers] in Anchorage                                                               
already have  the insurance and  are all right  with it.   On the                                                               
local level they watch ordinances closely, he remarked.                                                                         
MS. SEITZ pointed  out that the minimums established  in the bill                                                               
don't  interfere with  local ordinances,  and are,  for the  most                                                               
part,  less  than  what  most  [communities]  have  anyway.    In                                                               
Anchorage, for  example, [a taxicab  diver] would be  required to                                                               
carry insurance  under the  local ordinance  that is  higher than                                                               
what is required in the proposed bill.                                                                                          
Number 1930                                                                                                                     
CHAIR  MURKOWSKI  mentioned that  the  sponsor  had provided  the                                                               
committee  with the  ordinances  from  Anchorage, Fairbanks,  and                                                               
Juneau.   She  asked  if [ordinances]  were  available for  other                                                               
communities such as Kenai or Ketchikan.                                                                                         
MS. SEITZ  stated that Kenai's [ordinances]  are online; however,                                                               
there  was  no  reference  to insurance  provisions  for  taxicab                                                               
REPRESENTATIVE ROKEBERG  said the  committee could  separate that                                                               
[portion] and  delete the first  section [of the bill];  it could                                                               
be taken up  as a committee bill,  he said, because it  is a huge                                                               
issue that deserves consideration by this committee.                                                                            
REPRESENTATIVE  MEYER  mentioned  requiring  that  everyone  have                                                               
insurance, which  is currently the  law, and then  requiring that                                                               
the state  patrol or local police  ask for proof every  time they                                                               
pull someone over.   If a person didn't have  insurance, he said,                                                               
then he  or she would get  a "fix-it" ticket and  would have five                                                               
days to  get insurance; if  the person didn't comply,  then there                                                               
would be a $200 or $300 fine.                                                                                                   
REPRESENTATIVE  ROKEBERG   said  he   is  more   concerned  about                                                               
[drivers]  having insurance  when in  an automobile  accident and                                                               
harming innocent citizens, because  it raises the underinsured or                                                               
uninsured motorist  premiums on  all policies.   He said  this is                                                               
going to  cost millions  of dollars to  really do  anything about                                                               
it;  the  fiscal note  is  $1.7  million, which  doesn't  include                                                               
having  the  troopers out  busting  people  for failure  to  have                                                               
REPRESENTATIVE   ROKEBERG  said   [the  legislature]   is  losing                                                               
credibility in  the public's eye by  not being able to  make this                                                               
enforceable.  He  asked Ms. Marshburn about  the car registration                                                               
process and proof of insurance.                                                                                                 
Number 1761                                                                                                                     
MS.  MARSHBURN   replied  that  the   state  requires   that  the                                                               
individual  registering  a  vehicle  affirm  that  the  necessary                                                               
policy is  in place and will  continue as long as  the vehicle is                                                               
registered and  used.   This allows the  electronic venues  to be                                                               
used  for  registration,  and  doesn't impose  a  burden  on  the                                                               
[emission  inspection] (IM)  stations  and  car dealerships  that                                                               
also register vehicles.  The  majority of people are law-abiding,                                                               
she said.  The national  average for uninsured motorists is about                                                               
15 percent,  and Alaska was below  that last year at  14 percent;                                                               
she added that it has been as  high as 20 percent and is trending                                                               
MS. MARSHBURN  said the  most effective way  of dealing  with the                                                               
mandatory  insurance issue  is  through electronic  verification.                                                               
Requiring  a binder  or paper  proof  of insurance  is really  no                                                               
proof at  all.  A  person could obtain a  binder and have  a card                                                               
from  the insurance  company  in  the car  saying  that there  is                                                               
coverage for  the next year,  when, in truth, that  person hadn't                                                               
paid the premium.   That is not an effective  method of providing                                                               
proof of coverage, she emphasized.                                                                                              
MS. MARSHBURN  pointed out  that she thought  there was  merit to                                                               
considering  Representative Meyer's  suggestion.   She  explained                                                               
that from the standpoint of  raising public [awareness], a person                                                               
needs to carry  proof, and to make sure that  the insurance is in                                                               
effect.   Requiring  that it  be carried  in a  vehicle would  be                                                               
good,  with noncompliance  resulting in  a "fix-it"  ticket or  a                                                               
Number 1639                                                                                                                     
MS.  MARSHBURN  said  short  of  electronic  verification,  there                                                               
really  is no  good way  to significantly  reduce [the  number of                                                               
people who don't carry the] mandatory insurance.                                                                                
REPRESENTATIVE  HALCRO said  he and  Ms. Marshburn  had discussed                                                               
the needs  of her  department overall.   He said for  a $5  or $6                                                               
"bump" in the cost of renewing  a driver's license, or $5 for the                                                               
license  and  $2 additional  for  one's  vehicle, [Alaska]  could                                                               
implement and pay for the  technology necessary to [realize] some                                                               
of these ideas.                                                                                                                 
MS. MARSHBURN explained that the  driver's license is a five-year                                                               
license that  costs $15; either a  digital-license-technology fee                                                               
or an  additional fee could  be added  to help get  an electronic                                                               
verification system for "MI [IM]."                                                                                              
Number 1541                                                                                                                     
REPRESENTATIVE  HALCRO   said  he  is  concerned   about  passing                                                               
legislation that  puts an  additional burden  on the  DMV without                                                               
passing the  cost along to the  user because [the DMV  office] is                                                               
currently maintaining numerous vacancies.                                                                                       
MS.  MARSHBURN reported  that  there are  now  21 vacancies  held                                                               
vacant.   [Alaska] is just  shy of 500,000 drivers,  with 742,260                                                               
registered vehicles in the state.                                                                                               
MS.  MARSHBURN,  when  asked  what  the  cost  is  for  [vehicle]                                                               
registration, she  replied that  for a  run-of-the-mill passenger                                                               
vehicle  the  fee  is  $68  plus  any  applicable  motor  vehicle                                                               
registration  tax  if  within  a  municipality  where  [the  DMV]                                                               
collects the tax  - Anchorage or Fairbanks.  It  is $68 every two                                                               
years [for a car], and $158 for a commercial vehicle.                                                                           
REPRESENTATIVE HALCRO  asked what  percentage gets  "kicked back"                                                               
to the community where the car is registered.                                                                                   
Number 1460                                                                                                                     
MS. MARSHBURN responded  that the motor-vehicle tax  goes back to                                                               
the community.   The division  collects about $45 million  a year                                                               
total, including  driver's license  and registration  [fees], and                                                               
[the   DMV]  returns   about  $10   million  in   taxes  to   the                                                               
municipalities in Alaska.                                                                                                       
REPRESENTATIVE HALCRO asked why the $10 million is rebated.                                                                     
MS. MARSHBURN  said the motor  vehicle registration tax is  a tax                                                               
that  the state  collects as  the property  tax on  vehicles.   A                                                               
municipality can  elect to have  the state collect that  tax, and                                                               
that is done for 14 municipalities.                                                                                             
Number 1400                                                                                                                     
REPRESENTATIVE  ROKEBERG asked  for  clarification  that the  $45                                                               
million includes the ad valorem tax.                                                                                            
MS.  MARSHBURN responded  affirmatively.   She  said $35  million                                                               
goes into the general fund, and  about $10 million is returned to                                                               
the  municipalities.   Responding to  a question  about how  many                                                               
[staff] work at the DMV  with 21 current vacancies, she responded                                                               
that  there are  not many.    When asked  why there  are so  many                                                               
vacancies,  she  responded  that  it  has to  do  with  the  boat                                                               
registration program and supplemental  funding, and also the fact                                                               
that [the DMV] only collected revenue  for part of this year, and                                                               
had  a large  program  startup cost.   She  said  [the DMV]  only                                                               
collects for  the boat registration  program and had a  full year                                                               
of  costs,  because the  bill  passed  at  the  end of  the  last                                                               
legislative session and was implemented  on January 1 [2001].  So                                                               
[the  DMV] only  collected  revenue from  January  1 onward,  she                                                               
remarked, and people don't really  register boats until the water                                                               
REPRESENTATIVE  KOTT  asked  Ms.   Marshburn  how  the  proof  of                                                               
insurance applies  to those private sector  vendors who currently                                                               
issue tags, and asked how it would work with the mail-in system.                                                                
Number 1335                                                                                                                     
MS.  MARSHBURN  replied that  there  are  two  ways that  it  can                                                               
happen.    One way  would  be  to have  the  dealers  and the  IM                                                               
stations that register vehicles either  require proof of a binder                                                               
before completing the  sale and registering the  vehicle, or have                                                               
a sign  which states that  the vehicle can't be  registered until                                                               
the individual can  furnish proof of insurance;  the dealer would                                                               
push  that responsibility  off onto  the DMV.   The  dealer would                                                               
complete the sale,  bundle the paperwork, and send it  to DMV and                                                               
it would  be up to the  DMV to refuse  the sale if there  were no                                                               
proof of insurance.                                                                                                             
MS. MARSHBURN  explained that the  Web and the  interactive voice                                                               
response (IVR) are completely automated.   She said the DMV would                                                               
have to require  the individual to mail in  proof of registration                                                               
and then do a physical  match-up in-house on the registration and                                                               
proof of  insurance.  She said  it is something that  she doesn't                                                               
even want to think  about in terms of the volume,  trying to do a                                                               
match-up, and then  scanning the proof of  insurance or reviewing                                                               
the  person's   insurance  to  make   sure  that  it   meets  the                                                               
requirements of the law.                                                                                                        
MS.  MARSHBURN  said [the  DMV]  would  probably discontinue  the                                                               
electronic  venues at  that point  and  just bring  all of  those                                                               
transactions in-house if a "live body" has to be inserted.                                                                      
Number 1234                                                                                                                     
REPRESENTATIVE HALCRO asked if the  fee for a driver's license is                                                               
set in statute or is set by regulation.                                                                                         
MS. MARSHBURN  replied that it is  set in statute, as  are all of                                                               
the fees from the DMV.                                                                                                          
Number 1113                                                                                                                     
REPRESENTATIVE ROKEBERG  reiterated that this is  a serious issue                                                               
that needs to  be investigated.  He said the  fix-it ticket might                                                               
have some value, although he wasn't  sure what the cost would be.                                                               
It is illegal now, he said, so why don't "they" bust people now?                                                                
REPRESENTATIVE  KOTT  asked Ms.  Marshburn  if  other states  are                                                               
doing what [Alaska] is contemplating.                                                                                           
MS.  MARSHBURN  replied that  some  states  do require  proof  of                                                               
insurance; however,  uniformly, the  reply from other  states has                                                               
been that  it is not  effective.   Second, the law  only requires                                                               
proof of  insurance to be  shown if a  person is in  an accident;                                                               
right now  the law requires that  the vehicle be covered,  but it                                                               
doesn't  require  a  person  to  carry  or  show  that  proof  of                                                               
CHAIR MURKOWSKI asked if a  person, when being stopped for having                                                               
a  taillight out,  for example,  couldn't be  asked for  proof of                                                               
insurance at that time.                                                                                                         
MS.   MARSHBURN   answered   affirmatively.     She   said   [the                                                               
police/trooper]  can  ask  for  it, but  there  is  currently  no                                                               
requirement  that it  be carried  and  furnished in  law now,  so                                                               
there is no way to cite for it.                                                                                                 
Number 0994                                                                                                                     
REPRESENTATIVE KOTT said when a person  is in an accident, and it                                                               
is reported  to the state,  a form is  filled out and  the person                                                               
has  to indicate  insurance coverage  at that  time; if  a person                                                               
wasn't insured, he asked, what would be the penalty?                                                                            
MS. MARSHBURN commented that when  the officer cites a person, he                                                               
or  she gives  the person  forms that  need to  be completed  and                                                               
returned  to  the  division.    When  the  forms  come  into  the                                                               
division, a  person supplies some  insurance information  such as                                                               
who the  carrier is, what the  [policy] number is, and  so forth.                                                               
[The  DMV] audits  every third  one  of those  via the  insurance                                                               
company to verify  that the individual is telling the  truth.  If                                                               
a  person  is in  violation  of  the  law,  then the  license  is                                                               
suspended for failure to have  the vehicle covered, and the first                                                               
suspension is for 90 days.                                                                                                      
MS.  MARSHBURN said  the municipalities  could decide  to require                                                               
that  proof of  insurance  be  carried in  the  vehicle, and  she                                                               
thought Anchorage was contemplating that.                                                                                       
Number 0881                                                                                                                     
REPRESENTATIVE  HALCRO asked  when the  driver's license  fee was                                                               
last raised.                                                                                                                    
MS. MARSHBURN said probably ten years ago, in 1991.                                                                             
REPRESENTATIVE  HALCRO said  it appeared  there was  an amendment                                                               
effective July 3, 1991.                                                                                                         
REPRESENTATIVE HAYES  explained that in  the military, to  get on                                                               
post, a person has to have  the insurance information in the car,                                                               
because proof of insurance is asked  for.  It wouldn't be much of                                                               
a stretch for  the cities, he remarked, because  they are already                                                               
doing it in the military.                                                                                                       
REPRESENTATIVE  KOTT commented  that  there is  a requirement  to                                                               
show proof of  insurance when the vehicle is  registered, but the                                                               
military  police  in  stopping  and  citing  people  for  traffic                                                               
violations on the post or base  don't ask for proof of insurance;                                                               
they just want to see the driver's license.                                                                                     
Number 0764                                                                                                                     
CHAIR MURKOWSKI  remarked that  she wasn't  sure that  there were                                                               
any easy  fixes.   [The committee]  could do  one of  two things:                                                               
separate this  out and send  on the taxicab  insurance [portion],                                                               
or work through an active subcommittee  to figure out if there is                                                               
a way to  address it.  She asked for  clarification that the only                                                               
thing that can work is an electronic format to track things.                                                                    
MS.  MARSHBURN answered  affirmatively.   She  reiterated that  a                                                               
person  could bring  in proof  of insurance.   However,  it could                                                               
have been  canceled that morning; a  piece of paper is  not proof                                                               
that the policy  is in effect.   If [the DMV] has  the ability to                                                               
electronically link  [up with] the insurance  companies, then the                                                               
data would be much more accurate.                                                                                               
Number 0672                                                                                                                     
REPRESENTATIVE ROKEBERG  said there  is a  huge fiscal  note, and                                                               
the "poor" DMV has a  manpower shortage; Ms. Marshburn notes that                                                               
it  would be  an additional  two minutes  per transaction,  which                                                               
causes four  and a  half extra  state positions.   If there  is a                                                               
"fix-it"  ticket   written  for  failure  to   provide  proof  of                                                               
insurance, how come  it isn't necessary to  register the vehicle?                                                               
It  shouldn't be  a burden  to  dealers because  they require  it                                                               
before releasing a car, or at least require a binder.                                                                           
Number 0611                                                                                                                     
REPRESENTATIVE  HALCRO  said   if  a  person  goes   into  a  car                                                               
dealership  on   Saturday  looking  for   a  car  and   does  the                                                               
transaction,  that person  may  or may  not  finance through  the                                                               
dealership.  All  of the loan paperwork would be  done there, but                                                               
there is no  way that an insurance agent can  be accessed.  State                                                               
law  says that  a  person is  covered  for 30  days  if there  is                                                               
insurance.   It  is  the customer's  responsibility  or the  lien                                                               
holder's responsibility; if  someone comes in and says  he or she                                                               
has insurance,  "we" take their word  for it if the  car has been                                                               
paid for.   And,  in the  case of the  lien holder,  "we" already                                                               
procure a  security agreement  or some  kind of  written contract                                                               
with  the financial  institution.   The  credit  union gives  the                                                               
person 30 days  to let them know when the  insurance is received;                                                               
"they" do  the DMV work, and  the person gets the  title and copy                                                               
of  registration  in the  mail.    If  proof of  insurance  isn't                                                               
provided within two  week, [the company] may be forced  to go out                                                               
and get  the person  insurance and  then bill him  or her  for it                                                               
because [the company] wants to protect its collateral.                                                                          
Number 0449                                                                                                                     
REPRESENTATIVE ROKEBERG  said [the  legislature] is not  going to                                                               
disrupt commerce by adopting this  provision, because it is going                                                               
to be accommodated for anyway.                                                                                                  
REPRESENTATIVE  HALCRO pointed  out that  many people  sell their                                                               
cars through  the newspaper.  After  being paid for the  car, the                                                               
person selling  the car  doesn't care  whether the  purchaser has                                                               
REPRESENTATIVE  KOTT  said  when  renting  a  car,  there  is  no                                                               
guarantee [that a person has insurance],  if he or she is waiving                                                               
the car-rental insurance.                                                                                                       
REPRESENTATIVE ROKEBERG said  the title could be  changed and the                                                               
car reregistered.   The  bill says  that a  person would  have to                                                               
fill out proof  of insurance there.  The secondary  market is not                                                               
affected at all, he remarked.                                                                                                   
REPRESENTATIVE KOTT  said if [the  legislature] is trying  to get                                                               
those  uninsured  motorists off  the  roads,  in that  particular                                                               
scenario they  are going  to be  driving until  they go  down and                                                               
register that  vehicle so, "You are  not going to get  them."  He                                                               
said getting  to this problem  in its entirety couldn't  be done;                                                               
the only way to get to the  problem is if $1.3 million is funded.                                                               
This is  why, he said, after  talking to Ms. Marshburn,  he opted                                                               
not to pursue that course of action in the other bill.                                                                          
Number 0340                                                                                                                     
REPRESENTATIVE KOTT made  a motion to amend the  bill by removing                                                               
Section 1.                                                                                                                      
REPRESENTATIVE HALCRO  said the  problem could  be that  a person                                                               
could pay the  insurance company for a month, go  down to the DMV                                                               
and  register the  car, and  then fail  to pay  the bill  when it                                                               
comes in a  month, but the person would still  have the card that                                                               
the  insurance company  sent.    He said  the  only  real way  to                                                               
address  the  problem is  by  investing  in the  technology  that                                                               
allows  the DMV  to  be in  constant  communication with  various                                                               
insurance  companies that  would give  automatic notification  if                                                               
insurance  lapses  or  is  canceled.   He  said  if  he  were  an                                                               
insurance company in  the state, that is something  that he would                                                               
want to be onboard with,  because the fewer people driving around                                                               
without insurance, the better off clients are going to be.                                                                      
Number 0248                                                                                                                     
REPRESENTATIVE ROKEBERG said he didn't  objected to the motion to                                                               
amend  the  bill.    He   suggested  that  the  long-term  policy                                                               
committee  raise  the  fees  so digital  licenses  can  become  a                                                               
REPRESENTATIVE ROKEBERG  said the DMV's  [information technology]                                                               
needs to be  [improved] because it doesn't work  and is affecting                                                               
public safety.                                                                                                                  
REPRESENTATIVE HAYES  said for a  public policy call,  he doesn't                                                               
think  that  it is  a  bad  bill, even  with  that  section.   He                                                               
suggested that  if the  House Finance Committee  wants to  pull a                                                               
section,  that  is  fine.    The reality  of  the  situation,  he                                                               
remarked, is pay now or pay later.                                                                                              
Number 0046                                                                                                                     
REPRESENTATIVE  HALCRO asked  for verification  that the  concern                                                               
from the Division of Legislative  Legal and Research Services was                                                               
that of  the single-subject  rule, [that  the two  bill subjects]                                                               
have to be split up regardless.                                                                                                 
REPRESENTATIVE ROKEBERG  said he  is trying to  [raise awareness]                                                               
of the problem.                                                                                                                 
REPRESENTATIVE  CRAWFORD  commented  that  it is  a  good  public                                                               
policy, and he said [the bill] should be moved as it is.                                                                        
REPRESENTATIVE KOTT reaffirmed  that he was going  to continue to                                                               
offer his amendment.                                                                                                            
TAPE 01-42, SIDE A                                                                                                              
Number 0067                                                                                                                     
REPRESENTATIVE KOTT said  if the bill passes this  year, it would                                                               
take  another year  for the  system  to "come  onboard" with  the                                                               
technology and so forth.                                                                                                        
REPRESENTATIVE  MEYER stated  that  Ms.  Marshburn had  mentioned                                                               
that 14  percent of the drivers  don't have insurance.   If [that                                                               
amount  was  dropped  down  to]  4  percent,  would  that  reduce                                                               
everyone's insurance rates  in the state, he asked.   By spending                                                               
some  money  here, he  said,  will  a  rebate  be given  back  to                                                               
constituents through lower insurance rates?                                                                                     
REPRESENTATIVE HALCRO  remarked that the  only way that  the rate                                                               
of [uninsured motorists]  is known is from the  number of traffic                                                               
accidents and  the number  of people involved,  and then  that is                                                               
broken  out  into  the  percentage   of  people  who  don't  have                                                               
insurance.   If a person were  wondering if that would  equate to                                                               
an  across-the-board  decrease  in uninsured  motorist  rates,  a                                                               
person  would have  to be  able to  make sure  that everyone  was                                                               
"lifted"  up.   It would  come  down to  the insurance  companies                                                               
making more money,  thereby lowering rates and giving  it back to                                                               
Number 0184                                                                                                                     
REPRESENTATIVE KOTT  asked Ms. Marshburn  if that  percentage [14                                                               
percent   for   uninsured   motorists]   includes   those   rural                                                               
communities that don't require vehicle registration.                                                                            
MS. MARSHBURN  answered affirmatively.   She said if  [a vehicle]                                                               
is  not required  to be  registered, [the  vehicle owner]  is not                                                               
subject to the mandatory insurance (MI) provision.                                                                              
REPRESENTATIVE  HALCRO asked  Ms.  Marshburn if  he  is making  a                                                               
correct assertion  in saying that 11  or 14 percent of  people in                                                               
accidents  don't  have  insurance, and  that  percentage  doesn't                                                               
cover those who  are driving around without  insurance that never                                                               
get in accidents.                                                                                                               
MS. MARSHBURN replied affirmatively.   She said an assumption can                                                               
be made that  the percentage of uninsured motorists  in the state                                                               
can be somewhat inflated because  it is the irresponsible drivers                                                               
who drive without insurance; however,  that is purely subjective,                                                               
and there is no way to really assess  that.  If that is the case,                                                               
then there  are more  law-abiding drivers.   She  reiterated that                                                               
this bill  is trying to do  something that is truly  effective in                                                               
reducing  the  MI  rate.    The  division  doesn't  believe  that                                                               
requiring paper proof of insurance  is effective, she reiterated,                                                               
and  the  money  that  the  DMV has  described  as  necessary  to                                                               
implement  this  would  be  better   used  on  a  more  effective                                                               
Number 0352                                                                                                                     
CHAIR  MURKOWSKI suggested  that  Ms. Marshburn  is saying,  then                                                               
that  if this  [legislation] were  to pass  with this  section in                                                               
place, with the fiscal note  attached, [the legislature] would be                                                               
throwing good money after bad  because an effective policy is not                                                               
being  implemented.   She asked  whether the  recommendation from                                                               
Ms. Marshburn  is that [the legislature]  not do it, if  it can't                                                               
be effective.                                                                                                                   
MS. MARSHBURN remarked that this is correct.                                                                                    
REPRESENTATIVE KOTT said  maybe this is more of an  issue for the                                                               
insurance  companies;  if  [insurers] required  drivers  to  post                                                               
whatever the  requirements are for  their policy for a  period of                                                               
two   years   and   wouldn't  cancel   [a   policy]   under   any                                                               
circumstances, then  a person would  have insurance.  He  said if                                                               
Representatives Halcro,  Rokeberg, and  Meyer would like  to meet                                                               
with the  division during the interim,  he would be happy  to sit                                                               
in on a meeting or two.                                                                                                         
Number 0480                                                                                                                     
REPRESENTATIVE HAYES objected to  the amendment [deleting Section                                                               
A  roll  call vote  was  taken.   Representatives  Halcro,  Kott,                                                               
Crawford,  and   Murkowski  voted   in  favor  of   adopting  the                                                               
amendment.   Representatives  Meyer,  Hayes,  and Rokeberg  voted                                                               
against it.   Therefore, the amendment  was adopted by a  vote of                                                               
REPRESENTATIVE KOTT made a motion to  move HB 67 [as amended] out                                                               
of  committee with  individual recommendations  and the  attached                                                               
fiscal note.                                                                                                                    
Number 0667                                                                                                                     
MS.  MARSHBURN commented  that the  fiscal note  is $314,000  and                                                               
that  she  would rather  put  that  money towards  an  electronic                                                               
verification  system.   She clarified  that she  hadn't commented                                                               
about  local option,  but  said  it is  one  way  of raising  the                                                               
profile on the need to carry insurance.                                                                                         
REPRESENTATIVE HALCRO  said he voted for  [the amendment] because                                                               
[the legislature]  is going  to have  to do  it sooner  or later;                                                               
however, it  was his  understanding that  because of  the single-                                                               
subject rule, this bill wasn't going to be able to go anywhere.                                                                 
REPRESENTATIVE ROKEBERG  stated that he  has another bill.   And,                                                               
when  asked  about having  two  subjects  in  the same  bill,  he                                                               
responded that both are insurance [issues].                                                                                     
Number 0773                                                                                                                     
CHAIR MURKOWSKI  announced that there  had been a motion  to move                                                               
HB 67 as amended from  committee with individual recommendations.                                                               
She added that there would be a  new fiscal note.  There being no                                                               
objection,  CSHB  67(L&C)  moved  out  of  the  House  Labor  and                                                               
Commerce Standing Committee.                                                                                                    
CHAIR MURKOWSKI noted  that there had been  some discussion about                                                               
what needed  to be  done, and the  need for more  money to  do it                                                               
right.  She said it is  something that this committee should look                                                               
at during the interim.                                                                                                          
Number 0806                                                                                                                     
MS. MARSHBURN, when asked to  confirm that without Section 1, the                                                               
bill  now  carries  a  zero  fiscal  note,  responded,  "It  does                                                               
indeed."  [CSHB 67(L&C) was moved out of the committee.]                                                                      
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
5:10 p.m.                                                                                                                       

Document Name Date/Time Subjects