Legislature(2019 - 2020)BARNES 124

03/01/2019 03:15 PM LABOR & COMMERCE

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Audio Topic
03:16:35 PM Start
03:17:30 PM Overview(s): Department of Commerce, Community, and Economic Development by Deputy Commissioner Jon Faulkner
04:18:50 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Teleconference <Listen Only> --
+ Overview: Dept. of Commerce, Community, & TELECONFERENCED
Economic Development by Deputy Commissioner John
Faulkner
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 1, 2019                                                                                          
                           3:16 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Gabrielle LeDoux, Co-Chair                                                                                       
Representative Sara Hannan                                                                                                      
Representative Dave Talerico                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Adam Wool, Co-Chair                                                                                              
Representative Zack Fields                                                                                                      
Representative Louise Stutes                                                                                                    
Representative Josh Revak                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW(S): DEPT. OF COMMERCE~ COMMUNITY~ ECONOMIC DEVELOPMENT                                                                 
BY DEPUTY COMMISSIONER JON FAULKNER                                                                                             
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JON FAULKNER, Deputy Commissioner                                                                                               
Department of Commerce, Community, and Economic Development                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented an overview of the Department of                                                               
Commerce, Community, and Economic Development.                                                                                  
                                                                                                                                
SARA CHAMBERS, Director                                                                                                         
Division of Corporations, Business and Professional Licensing                                                                   
Department of Commerce, Community, and Economic Development                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Offered clarifying information during Mr.                                                                
Faulkner's testimony.                                                                                                           
                                                                                                                                
MATTHEW FAGNANI, Director                                                                                                       
Division of Economic Development                                                                                                
Department of Commerce, Community, and Economic Development                                                                     
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Answered   questions  pertaining  to  the                                                             
Division of Economic Development.                                                                                               
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance                                                                                                           
Department of Commerce, Community, and Economic Development                                                                     
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Answered   questions  pertaining  to  the                                                             
Division of Insurance.                                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:16:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GABRIELLE LEDOUX  called the  House Labor  and Commerce                                                             
Standing   Committee    meeting   to    order   at    3:16   p.m.                                                               
Representatives Talerico, Hannan, and  LeDoux were present at the                                                               
call to order.                                                                                                                  
                                                                                                                                
^OVERVIEW(S):  DEPARTMENT OF  COMMERCE,  COMMUNITY, AND  ECONOMIC                                                               
DEVELOPMENT BY DEPUTY COMMISSIONER JON FAULKNER                                                                                 
  OVERVIEW(S): DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC                                                              
        DEVELOPMENT BY DEPUTY COMMISSIONER JON FAULKNER                                                                     
                                                                                                                                
3:17:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX announced  that the only order  of business would                                                               
be  an overview  of the  Department of  Commerce, Community,  and                                                               
Economic  Development (DCCED)  presented  by Deputy  Commissioner                                                               
Jon Faulkner.                                                                                                                   
                                                                                                                                
3:17:53 PM                                                                                                                    
                                                                                                                                
JON  FAULKNER,  Deputy   Commissioner,  Department  of  Commerce,                                                               
Community, and Economic  Development (DCCED), introduced himself.                                                               
He addressed  slide 2 of  his PowerPoint presentation  [hard copy                                                               
included in  the committee packet] and  explained DCCED structure                                                               
consisting  of six  core divisions  and  six corporate  partners.                                                               
The  divisions listed  were  Administrative  Services, Banking  &                                                               
Securities,  Community &  Regional  Affairs, Insurance,  Economic                                                               
Development,   and   Corporations,   Business,   &   Professional                                                               
Licensing.   The  corporate partners  listed  were Alaska  Energy                                                               
Authority,  Alaska  Industrial  Development &  Export  Authority,                                                               
Alaska Gasline Development  Corporation, Alaska Seafood Marketing                                                               
Institute, Alcohol  and Marijuana Control Office,  and Regulatory                                                               
Commission of Alaska.                                                                                                           
                                                                                                                                
3:19:36 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER   addressed  slide  3,  titled   "Division  Mission                                                               
Statements."   The slide displayed  a mission statement  for each                                                               
of  DCCED's   divisions.    Mr.   Faulkner  said   these  mission                                                               
statements were  recently created by DCCED's  division directors.                                                               
He  emphasized   DCCED  Commissioner-Designee   Julie  Anderson's                                                               
commitment to synergy between divisions.                                                                                        
                                                                                                                                
3:20:28 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide  4, titled  "Economic Growth."   He                                                               
said he would  focus on introducing "team  members" consisting of                                                               
long-term  incumbents  and new  talent.    He introduced  Matthew                                                               
Fagnani, Director of the Division  of Economic Development (DED),                                                               
and spoke  to Mr. Fagnani's  overseeing of sections  dedicated to                                                               
economic development and investments.   He referenced an economic                                                               
development  plan called  "North to  Opportunity" and  stated the                                                               
department's intention to "retain  and build upon that document."                                                               
Mr.  Faulkner summarized  the "investment  arm" of  Mr. Fagnani's                                                               
division as consisting mostly of  loan origination and processing                                                               
for various funds.                                                                                                              
                                                                                                                                
3:21:24 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER addressed slide 5,  titled "Strong Communities."  He                                                               
introduced Sandra  Moller, Director of the  Division of Community                                                               
and Regional  Affairs (DCRA).   He mentioned her  vast experience                                                               
serving  rural  Alaska.    He listed  some  of  DCRA's  important                                                               
functions, including municipal  land trust obligations, community                                                               
aid, local  government assistance, native language  programs, and                                                               
Serve Alaska.                                                                                                                   
                                                                                                                                
3:21:57 PM                                                                                                                    
                                                                                                                                
MR.   FAULKNER   addressed   slide   6,   also   titled   "Strong                                                               
Communities."   He remarked  that DCRA  is very  large and  has a                                                               
diverse mission.   He  mentioned that DCRA  is the  only division                                                               
within DCCED that is constitutionally  mandated.  He said much of                                                               
DCRA's funding  comes through the  Alaska Energy  Authority (AEA)                                                               
and its Power Cost Equalization (PCE) program.                                                                                  
                                                                                                                                
3:22:30 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER addressed slide 7,  titled "'Right Touch Regulation'                                                               
& Consumer  Protection."  He  introduced Sara  Chambers, Director                                                               
of  the  Division  of  Corporations,  Business  and  Professional                                                               
Licensing  (CBPL).   He  claimed CBPL  is  "perhaps the  fastest-                                                               
growing division that  we have."  He said enforcement  is part of                                                               
Ms. Chambers' purview.                                                                                                          
                                                                                                                                
3:22:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HANNAN  referenced   the  revenue   sharing  and                                                               
community assistance programs listed on  slide 6.  She said those                                                               
programs would be "substantially  altered" under Governor Michael                                                               
J. Dunleavy's proposed  fiscal year 2020 budget.   She asked what                                                               
preparations  the department  has made  in anticipation  of those                                                               
alterations.    She  commented  that   she  had  heard  from  her                                                               
constituents  that  the  proposed  budget  "dramatically  impacts                                                               
their ability to receive those funds."                                                                                          
                                                                                                                                
3:23:35 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER  said  his  primary  focus for  this  part  of  the                                                               
presentation  was   to  introduce   the  people   overseeing  the                                                               
divisions.  He  said he would not go into  detail when discussing                                                               
budget  questions.    He   suggested  Representative  Hannan  was                                                               
referring  to  the "merging  of  certain  funds."   He  said  the                                                               
impacts under the proposed budget should be benign.                                                                             
                                                                                                                                
3:24:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked how the  elimination of the revenue sharing                                                               
and community assistance programs could be benign.                                                                              
                                                                                                                                
3:25:09 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER said the programs she mentioned are not going away.                                                                
                                                                                                                                
CO-CHAIR LEDOUX asked if the programs are being reduced.                                                                        
                                                                                                                                
MR. FAULKNER answered  that it is his  understanding the programs                                                               
are not being reduced at this time.                                                                                             
                                                                                                                                
3:25:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HANNAN posited  that the  department will  remain                                                               
obligated  to  maintain  the   revenue  sharing  programs  unless                                                               
legislation is passed to change that.                                                                                           
                                                                                                                                
3:26:17 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER affirmed  Representative Hannan's  conclusion.   He                                                               
referenced  the  Power Cost  Equalization  program  and said  the                                                               
plan, pending  legislative approval,  is to collapse  the program                                                               
into the general  fund and make it subject to  appropriation.  He                                                               
said this does not mean  the  programs are diminished in any way"                                                               
or that they are going away.                                                                                                    
                                                                                                                                
3:26:53 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide 8, titled  "Balanced Regulation and                                                               
Consumer Protection."   He  introduced Lori  Wing-Heier, Director                                                               
of the Division  of Insurance.  He said Ms.  Wing-Heier is tasked                                                               
with keeping  insurance markets  competitive and  transparent for                                                               
consumers.  He  called Ms. Wing-Heier an expert in  her field and                                                               
"a  true  resource to  Alaskans  as  we navigate  some  important                                                               
questions  regarding   healthcare  markets."    He   pointed  the                                                               
committee to the Division  of Insurance's responsibilities listed                                                               
on the  slide: licensing,  financial oversight,  filing approval,                                                               
consumer services, enforcement, and premium tax.                                                                                
                                                                                                                                
3:27:41 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER addressed  slide 9,  titled "Consumer  Protection."                                                               
He  introduced  Erika  McConnell,  Director of  the  Alcohol  and                                                               
Marijuana  Control  Office.    He  said  the  office  is  working                                                               
diligently to keep pace with  consumer expectations.  He said Ms.                                                               
McConnell is also tasked with licensing and enforcement.                                                                        
                                                                                                                                
3:27:59 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  said it  was  her  understanding that  Governor                                                               
Dunleavy wants to eliminate the  Alcoholic Beverage Control Board                                                               
and  the Marijuana  Control Boards.   She  asked Mr.  Faulkner to                                                               
confirm this.                                                                                                                   
                                                                                                                                
3:28:15 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER said  there is a proposal to merge  the two in order                                                               
to more efficiently execute their business.   He said that is all                                                               
the knowledge he had "on that particular question."                                                                             
                                                                                                                                
MR. FAULKNER addressed slide 10,  titled "Regulation and Consumer                                                               
Protection."    He  introduced Patrice  Walsh,  Director  of  the                                                               
Division of  Banking and  Securities.  He  said her  core mission                                                               
includes licensing,  Alaska Native Claims Settlement  Act (ANCSA)                                                               
proxy filings, enforcement, and consumer education.                                                                             
                                                                                                                                
3:29:17 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER  addressed  slide 11,  titled  "Overall  Department                                                               
Goals."    He  said  the department's  primary  objective  is  to                                                               
reinforce Governor  Dunleavy's message  that "Alaska is  open for                                                               
business"  and communicate  that sentiment  "to Alaskans  and the                                                               
world beyond  our borders."   He said the department  is focusing                                                               
efforts to "do everything possible"  to improve Alaska's economy.                                                               
He  said  the  department  is   focusing  on  core  services  and                                                               
constituent needs.                                                                                                              
                                                                                                                                
MR.  FAULKNER  mentioned  cross-department efforts  to  eliminate                                                               
redundancies  regarding permitting  and  activities  in order  to                                                               
help   constituents  work   through   easements   and  land   use                                                               
allocations, for example.  He  said the department is identifying                                                               
permitting backlogs  and trying to  fix those problems.   He also                                                               
mentioned cutting  red tape,  reducing inappropriate  reliance on                                                               
government, and  enabling the private  sector "to invest  more in                                                               
Alaska" and "to  solve problems the private sector  might be more                                                               
adept  at solving."   He  said  the department  hopes "all  these                                                               
things" will result in jobs and opportunities for Alaska.                                                                       
                                                                                                                                
3:31:06 PM                                                                                                                    
                                                                                                                                
MR.   FAULKNER   addressed   slide  12,   titled   "Division   of                                                               
Corporations, Business,  & Professional  Licensing."   He relayed                                                               
that professional  licensures are administered largely  by boards                                                               
with departmental or divisional  support for roughly 21 programs.                                                               
He said the remaining 22  programs are administered solely by the                                                               
division.     He   said  CBPL   also  manages   registration  for                                                               
corporations, business  licenses, and  tobacco endorsements.   He                                                               
listed the major functions of  the division:  Business licensing,                                                               
corporations,    professional    licensing,   enforcement,    and                                                               
administrative support  for professional boards  and commissions.                                                               
He mentioned the  duty of registering trademarks  and noted there                                                               
is an emerging interest in better protection of business names.                                                                 
                                                                                                                                
3:32:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  asked about  the 21  professions regulated                                                               
by licensure  boards, noting that  they were not listed  on slide                                                               
13  alongside  the  22  professions  regulated  directly  by  the                                                               
division.                                                                                                                       
                                                                                                                                
MR. FAULKNER  said he could  provide that information at  a later                                                               
time or defer to Sara Chambers of CBPL.                                                                                         
                                                                                                                                
SARA CHAMBERS,  Director, Division of Corporations,  Business and                                                               
Professional  Licensing, Department  of Commerce,  Community, and                                                               
Economic Development, referred Representative  Hannan to the list                                                               
of professions on slide 14.                                                                                                     
                                                                                                                                
3:33:46 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER  addressed  slide  13,  also  titled  "Division  of                                                               
Corporations,   Business,   &   Professional  Licensing.       He                                                               
highlighted the  workload overseen by Ms.  Chambers including the                                                               
22 professions  regulated by the  division.  He  acknowledged the                                                               
73,952  business  licenses,  1,351 tobacco  endorsements,  75,053                                                               
corporations, 89,414  professional licenses,  1,256 investigative                                                               
matters, and 221 license matters overseen by CPBL in 2018.                                                                      
                                                                                                                                
MR. FAULKNER  addressed slide 14,  which listed all 21  boards or                                                               
commissions regulating professions overseen by the division.                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide  15, which  displayed a  line graph                                                               
measuring the  total number of professional  licenses overseen by                                                               
the state from 2007 to 2018.   The graph demonstrated growth from                                                               
50,768 licenses in 2007 to 89,414 in 2018.                                                                                      
                                                                                                                                
3:35:25 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  asked  whether  the rise  in  licenses  can  be                                                               
attributed to an increase in  the number of regulated professions                                                               
or  an  increase   in  the  number  of   people  within  existing                                                               
professions, or a combination of the two.                                                                                       
                                                                                                                                
MR. FAULKNER said  it's a combination of the  two plus additional                                                               
licensees from  out of state doing  business in Alaska.   He said                                                               
there is a growing awareness  that the licensing of those out-of-                                                               
state individuals "affects Alaskans."                                                                                           
                                                                                                                                
3:36:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN asked  if the amount measured  in the graph                                                               
reflects a  combination of professions regulated  by the division                                                               
and those regulated by a board or commission.                                                                                   
                                                                                                                                
MR. FAULKNER affirmed that is correct.                                                                                          
                                                                                                                                
3:36:48 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER addressed  slide 16,  which displayed  a bar  graph                                                               
measuring  the total  number of  professional licensing  programs                                                               
from 1987  to the present.   The graph reflected a  growth in the                                                               
number of programs  from 25 in 1987  to 43 at present.   He noted                                                               
that  the  division  recently completed  a  comprehensive  reform                                                               
initiative to  streamline initial professional  licensures online                                                               
through myAlaska.   He said  the new system  allows professionals                                                               
to submit and track applications,  receive status updates, access                                                               
documents,  and pay  fees  online.   He  said  the department  is                                                               
undertaking  a study  to improve  digital  processing for  "every                                                               
single  element"  under  the  division.    He  relayed  that  the                                                               
division brings  in about  $15 million  annually with  about $3.6                                                               
covering operations.                                                                                                            
                                                                                                                                
MR. FAULKNER addressed slide 17,  titled "Division of Banking and                                                               
Securities."  He  said the division's core mission  is to support                                                               
stable financial systems which support  economic growth.  He said                                                               
the division performs   a lot of examinations" both  in state and                                                               
out of state  for compliance.  He said  the division investigates                                                               
to ensure the  safety and soundness of the banking  industry.  He                                                               
stated  that the  division is  committed  to sharing  information                                                               
with the  industry in  order to streamline  those processes.   He                                                               
highlighted   the   division's   core  services   including   the                                                               
registration of financial entities,  examination of licensees for                                                               
compliance, provision of educational  outreach, and acceptance of                                                               
ANCSA proxy filings.                                                                                                            
                                                                                                                                
3:39:38 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide 18,  subtitled "What  are Regulated                                                               
Financial  Services?"    He  highlighted   a  list  of  regulated                                                               
financial services,  both in state  and out of state,  with which                                                               
the  division  concerns  itself.     He  mentioned  state  banks,                                                               
Business Industrial  Development Corporations  (BIDCOs), mortgage                                                               
lenders,  security brokers,  security agents,  mutual funds,  and                                                               
ANCSA proxy filings.                                                                                                            
                                                                                                                                
MR.  FAULKNER   addressed  slide  19,  subtitled   "2018  by  the                                                               
Numbers."    The slide  listed  figures  such  as the  number  of                                                               
individuals, organizations, offices, and  filings overseen by the                                                               
Division of  Banking and Securities.   Mr.  Faulkner acknowledged                                                               
the substantial volume of work done by the division in 2018.                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide  20, titled  "Major Accomplishments                                                               
in 2018."  The slide displayed  a list of accomplishments for the                                                               
Division of  Banking & Security.   Mr. Faulkner noted  that these                                                               
accomplishments occurred  prior to his joining  the department in                                                               
December  2018.   He  said  the  division settled  a  multi-state                                                               
enforcement case  with LPL Financial  LLC regarding the  sales of                                                               
unregistered,  non-exempt  securities.    He said  the  State  of                                                               
Alaska  brought in  $499,000 in  civil penalties  as a  result of                                                               
that  settlement.   Mr. Faulkner  claimed the  settlement sent  a                                                               
strong  message  that states  play  a  vital role  in  protecting                                                               
investors  by  holding  firms  accountable.    He  described  the                                                               
settlement  as a  cross-state cooperation  that "strengthens  the                                                               
system as a whole."                                                                                                             
                                                                                                                                
3:42:29 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide 21, titled   Community and Regional                                                               
Affairs      He  asserted  the  department's  intention  to  keep                                                               
important  CRA programs  intact.   He  restated the  department's                                                               
intention to pursue operational efficiencies.                                                                                   
                                                                                                                                
MR.  FAULKNER summarized  the daily  work conducted  by CRA.   He                                                               
highlighted the Planning and Land  Management Section and praised                                                               
their work  with community profile maps  and interactive mapping.                                                               
He extolled  the comprehensive  Alaska Community  Database Online                                                               
and called  it "a community  resource that  we're proud of."   He                                                               
mentioned other examples of  local government assistance overseen                                                               
by CRA, including the Office of  the State Assessor and the Local                                                               
Boundary Commission.                                                                                                            
                                                                                                                                
3:44:31 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER addressed  slide 23,  subtitled "Other  Functions."                                                               
He summarized additional responsibilities  of CRA, including work                                                               
with the  Alaska Native Language Preservation  & Advisory Council                                                               
and Serve  Alaska.  He said  one of the department's  missions is                                                               
to  "really  highlight"  Serve  Alaska,  which  he  described  as                                                               
flexible in meeting the needs of underserved areas.                                                                             
                                                                                                                                
MR.  FAULKNER addressed  slide 24,  subtitled  "Other duties  and                                                               
those  prescribed by  law."   He  listed  several grant  programs                                                               
administered  by  CRA   including  Community  Assistance  Program                                                               
grants,  National  Forest Receipts,  Payment  in  Lieu of  Taxes,                                                               
Shared Fisheries Business Tax, and  Fishery Resource Landing Tax.                                                               
He mentioned that "quite a  bit of training" is conducted through                                                               
CRA for energy-related projects.                                                                                                
                                                                                                                                
3:46:05 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER mentioned  the department's  constitutional mandate                                                               
to advise and assist local government.                                                                                          
                                                                                                                                
MR.  FAULKNER addressed  slide 25,  titled  Division  of Economic                                                               
Development      He  called  DED   "small  and  nimble  but  very                                                               
ambitious."   He explained that its  goal is to create  more jobs                                                               
for Alaskans.   He broke  down the division's core  services into                                                               
two   categories:      investments  and   economic   development.                                                               
Regarding  investments,  he  mentioned efforts  to  evaluate  the                                                               
state's revolving loan funds for  efficiency.  He noted that some                                                               
of these funds require annual legislative appropriation.                                                                        
                                                                                                                                
MR. FAULKNER  remarked upon Governor  Dunleavy's new  task force,                                                               
whose mission  is to create jobs  and diversify the economy.   He                                                               
mentioned  daily  discussions within  the  department  on how  to                                                               
remove barriers to industry and  impediments to success.  He said                                                               
the department  recently sent out  a questionnaire on  that topic                                                               
to over 10,000 Alaskans.  He  said the department would share the                                                               
results of that questionnaire upon final compilation.                                                                           
                                                                                                                                
MR.  FAULKNER  mentioned  the creation  of  an  "online  business                                                               
park."  He described it as  an emerging technology with "a lot of                                                               
promise."    He explained  that  an  online  business park  is  a                                                               
platform  that "takes  every  seed concept  we're  aware of"  and                                                               
publishes it publicly to target investors.                                                                                      
                                                                                                                                
3:49:07 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER   addressed  slides  26  and   27,  each  subtitled                                                               
"Activities  and  Accomplishments  in  FY18."    He  pointed  the                                                               
committee's  attention to  a  list of  DED's  successes from  the                                                               
previous year.   He stressed that his focus was  not to look back                                                               
but rather to focus on  initiatives moving forward, including the                                                               
governor's task force and the pursuit of new efficiencies.                                                                      
                                                                                                                                
MR. FAULKNER commented on  the division's statewide Comprehensive                                                               
Economic Development Strategy  (CEDS), which he said  he wants to                                                               
build  upon  moving  forward.    He  mentioned  an  intention  to                                                               
condense the CEDS document from 70 pages to half that size.                                                                     
                                                                                                                                
3:50:57 PM                                                                                                                    
                                                                                                                                
REPRESENATIVE HANNAN referenced  a bullet point on  slide 27 that                                                               
read  "DED  supports  Alaska's   startups  and  entrepreneurs  by                                                               
supporting   sprints  and   pitch   competitions  and   providing                                                               
technical  assistance."    She  asked  Mr.  Faulkner  to  explain                                                               
"sprints and pitch competitions."                                                                                               
                                                                                                                                
MR. FAULKNER  defined "pitches" as solicitations  for interest in                                                               
business  ideas.   He said  the  department is  engaged with  the                                                               
University  of  Alaska  regarding the  University's  startup  and                                                               
angel investment funds.   He mentioned the 49th  State Angel Fund                                                               
(49SAF) located in Anchorage.                                                                                                   
                                                                                                                                
MR. FAULKNER said the department  offers coordination for sprints                                                               
and pitch competitions for startup  and capital ideas through the                                                               
online  business park  model.   He  described  sprints and  pitch                                                               
competitions as   entrepreneurs forming little  communities where                                                               
they're trying to match the  needs with technology and capital to                                                               
see an idea move forward."                                                                                                      
                                                                                                                                
3:52:39 PM                                                                                                                    
                                                                                                                                
REPRESNTATIVE  HANNAN asked  for elaboration  regarding what  DED                                                               
does to "support"  sprints and pitch competitions.   She asked if                                                               
DED hosts a startup conference.                                                                                                 
                                                                                                                                
MR.  FAULKNER  said  DED  has   no specific  plans  to  host  any                                                               
specific forums."   He explained  DED is "largely  supporting the                                                               
efforts of  the private sector."   He emphasized  DED's intention                                                               
to stimulate "organic" growth  rather than "aggressively hosting"                                                               
events itself.   He said  DED does not  have the resources  to do                                                               
that.                                                                                                                           
                                                                                                                                
3:53:35 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked how DED intends to stimulate them."                                                                       
                                                                                                                                
MR.  FAULKNER  said  DED  is   having  ongoing  conversations  to                                                               
determine how to best stimulate  the private sector.  He restated                                                               
the goal of  eliminating barriers to private sector  success.  He                                                               
cited  the  DCCED  staff  members'  vast  experience  within  the                                                               
private  sector  and  expressed   hope  that  their  success  and                                                               
experience will come to bear.                                                                                                   
                                                                                                                                
MR. FAULKNER said  the best answer to  Co-Chair LeDoux's question                                                               
would  be to  stimulate investment  in existing  enterprises that                                                               
want  to expand  and  to  help startups  overcome  barriers.   He                                                               
mentioned coordinating  the wealth  of public  sector information                                                               
to  private  sector capital.    He  also mentioned  communication                                                               
efforts    though  not via  out-of-state travel  - to  spread the                                                               
word globally  "that Alaska is  more than just a  desirable place                                                               
to do business, it's the best place to do business."                                                                            
                                                                                                                                
3:56:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN asked for  additional specifics, citing the                                                               
placement  of  "sprints  and pitch  competitions"  on  the  slide                                                               
subtitled "Activities  and Accomplishments  in 2018."   She asked                                                               
if DCCED had, for example, sent  someone to a university forum or                                                               
produced fliers  or if  it employs a  venture capital  expert who                                                               
coordinates events  and participants.  She  referenced the Juneau                                                               
Economic Development Council (JEDC)  which had recently hosted an                                                               
entrepreneurial startup forum.  She asked  if DED did or is doing                                                               
something similar, or if it funds local economic councils.                                                                      
                                                                                                                                
MR.  FAULKNER answered  that DCCED  Assistant Commissioner  Shawn                                                               
Williams  attended  the  JEDC  event.   He  said  the  department                                                               
intends to send a representative  to as many similar local events                                                               
as possible  in order to  communicate the message that  Alaska is                                                               
open for business.   He emphasized DCCED   focus  is primarily on                                                               
stimulating  the  private   sector,  "not  necessarily  expanding                                                               
government's role  in that process."   He said DCCED  is availing                                                               
itself   of   every   possible  channel,   including   brochures,                                                               
conferences,  and collaboration  with  The  University of  Alaska                                                               
Center for Economic Development (CED).                                                                                          
                                                                                                                                
3:58:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked what DED  did in 2018 to supporting sprints                                                               
and pitch competitions.                                                                                                         
                                                                                                                                
3:59:17 PM                                                                                                                    
                                                                                                                                
MATTHEW   FAGNANI,  Division   Director,  Division   of  Economic                                                               
Development,  Department  of  Commerce, Community,  and  Economic                                                               
Development, said  DCCED participated  in several types  of pitch                                                               
and startup opportunities in 2018.   He cited as an example the 1                                                               
Million  Cups program.    He said  the  department utilized  [the                                                               
Alaska  Small   Business  Development   Center]  (SBDC)   at  the                                                               
University of Alaska Anchorage to  help reach out to startups and                                                               
help  them  work  through  complex  issues.    He  mentioned  the                                                               
department's work  in presenting a crowdfunding  opportunity that                                                               
was utilized by [Baranof Island Brewing Company].                                                                               
                                                                                                                                
4:00:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX asked Mr. Fagnani  to clarify the state's role in                                                               
the crowdfunding initiative.                                                                                                    
                                                                                                                                
                                                         th                                                                     
MR FAGNANI referenced  Senate Bill 126 [passed in the  29  Alaska                                                               
State Legislature]  which enabled a type  of crowdfunding [equity                                                               
crowdfunding, or "crowdinvesting"]  that enables friends, family,                                                               
and neighbors    but  not out-of-state investors  - to  invest in                                                               
local  businesses.   He said  DCCED  facilitated  the rollout  of                                                               
that."                                                                                                                          
                                                                                                                                
CO-CHAIR LEDOUX  asked Mr.  Fagnani to clarify  what he  meant by                                                               
 facilitated  the rollout.    She  asked if  DCCED requested  for                                                               
Senate Bill 126 to be introduced.                                                                                               
                                                                                                                                
MR FAGNANI  clarified that he  meant the department  promoted the                                                               
initiative by  putting it on  its website and  fielding inquiries                                                               
about it.  He said the  department did not put any resources into                                                               
promoting it, but rather facilitated information.                                                                               
                                                                                                                                
4:02:41 PM                                                                                                                    
                                                                                                                                
MR.  FAULKNER addressed  slide  28,  subtitled "Challenges,"  and                                                               
spoke  to   difficulties  regarding  [the   Commercial  Fisheries                                                               
Revolving  Loan  Fund],  specifically  industry  volatility,  the                                                               
uniqueness of  collateral, and  the lack  of startup  capital for                                                               
new fishers.   He  also cited  as a challenge  the lack  of large                                                               
loan funding  sources for "larger, midsize  fishermen" looking to                                                               
upsize their boats.  He  noted the Commercial Fisheries Revolving                                                               
Loan Fund  also supports mariculture and  fisheries enhancements.                                                               
He  spoke to  efforts  to streamline  the mariculture  permitting                                                               
process.                                                                                                                        
                                                                                                                                
4:05:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HANNAN  referenced   slide   28,  which   listed                                                               
"Depletion  of   Strategic  Minerals  funding"  as   a  challenge                                                               
pertaining to DED.  She asked him to elaborate.                                                                                 
                                                                                                                                
MR. FAULKNER deferred to Mr. Fagnani.                                                                                           
                                                                                                                                
4:06:04 PM                                                                                                                    
                                                                                                                                
MR. FAGNANI  said the Strategic  Minerals fund was  a legislative                                                               
appropriation that was not reallocated,  so the funding no longer                                                               
exists.   He  said DED  still produces  a report  on mining.   It                                                               
presented one to the legislature earlier in the session.                                                                        
                                                                                                                                
4:07:16 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER addressed slide 29,  titled  Division of Insurance."                                                               
Mr. Faulkner drew the committee's  attention to a list of revenue                                                               
streams overseen by the division.                                                                                               
                                                                                                                                
MR.  FAULKNER addressed  slide 31,  subtitled "Federal  Funding."                                                               
He said federal funding includes the State Flexibility Grant.                                                                   
                                                                                                                                
4:09:41 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide  32, subtitled  "Alaska Reinsurance                                                               
Program."   He called the  program a major accomplishment  of the                                                               
Division of Insurance.  Essentially,  he said, it is  designed to                                                               
remove  the highest  cost claims  from  Alaska individual  health                                                               
insurance ...  and bring more  competitive rates to  those higher                                                               
risk markets."  He explained  the Alaska Reinsurance Program is a                                                               
conditions-based  program that  covers 33  of the  most expensive                                                               
conditions which drive up healthcare costs.                                                                                     
                                                                                                                                
4:10:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  quoted text  from  slide  32 that  read,  "This                                                               
program  is invisible  to  the  insured."   She  asked what  that                                                               
meant.                                                                                                                          
                                                                                                                                
4:11:11 PM                                                                                                                    
                                                                                                                                
LORI WING-HEIER, Director, the  Division of Insurance, Department                                                               
of Commerce, Community, and  Economic Development, explained that                                                               
Premera  is  the  only  insurance  provider  currently  available                                                               
through the  individual market in  Alaska.  She said  if patients                                                               
filing a  claim have certain expensive,  chronic conditions, they                                                               
would  still  deal  with  Premera   and  access  its  network  of                                                               
providers.   But,  she added,  behind  the scenes  that claim  is                                                               
being picked up by the state reinsurance program.                                                                               
                                                                                                                                
CO-CHAIR  LEDOUX  asked  how  many people  are  covered  by  this                                                               
program in a given year.                                                                                                        
                                                                                                                                
MS. WING-HEIER estimated between 550 and 600 people.                                                                            
                                                                                                                                
CO-CHAIR LEDOUX asked what the cost is to the State of Alaska.                                                                  
                                                                                                                                
MS. WING-HEIER said the figure is included in the next slide.                                                                   
                                                                                                                                
MR. FAULKNER  addressed slide 33,  subtitled "Table 1:  State vs.                                                               
Federal Funding  for Alaska Reinsurance  Program."  The  table on                                                               
slide 33 featured figures and  projections for the calendar years                                                               
between 2018 and 2026.                                                                                                          
                                                                                                                                
4:12:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX  asked for confirmation  that, in 2018,  the cost                                                               
for approximately 550-600 people was approximately $60 million.                                                                 
                                                                                                                                
MS. WING-HEIER answered that is correct.                                                                                        
                                                                                                                                
4:13:30 PM                                                                                                                    
                                                                                                                                
MR. FAULKNER  addressed slide 34, subtitled  "Health Insurance in                                                               
Alaska."  The  slide featured a list of advantages  and a list of                                                               
challenges.  Mr. Faulkner mentioned  growth in infrastructure and                                                               
increased access to services as  an advantage.  He also mentioned                                                               
the  reduction  of consumer  costs  as  a  result of  the  Alaska                                                               
Reinsurance  Program.   He highlighted  challenges including  the                                                               
continued rise of healthcare costs.                                                                                             
                                                                                                                                
MR.    FAULKNER   addressed    slide    35,   subtitled    "Major                                                               
Accomplishments and  Challenges in  FY2018."  The  slide featured                                                               
four  bullet points:   State  Flexibility  Grant Award,  External                                                               
Healthcare   Review,   Small    Business   Survey,   and   5-year                                                               
accreditation  through  the  National  Association  of  Insurance                                                               
Commissioners.                                                                                                                  
                                                                                                                                
4:14:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN remarked that,  earlier in the session, she                                                               
had participated in  a presentation by Ms. Wing-Heier.   She said                                                               
she  wanted   to  recognize  Ms.   Wing-Heier  and   praised  her                                                               
helpfulness.                                                                                                                    
                                                                                                                                
4:15:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX noted that  additional DCCED representatives were                                                               
in  attendance  or  available via  teleconference  for  committee                                                               
questions.                                                                                                                      
                                                                                                                                
4:15:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX asked  if  the 550-600  people  involved in  the                                                               
Alaska Reinsurance Program qualified  for the Affordable Care Act                                                               
(ACA).                                                                                                                          
                                                                                                                                
MS. WING-HEIER clarified that the  Alaska Reinsurance Program  is                                                               
the Affordable Care Act."                                                                                                       
                                                                                                                                
CO-CHAIR LEDOUX  asked,  Don't [the  550-600 people]  get federal                                                               
subsidies?"                                                                                                                     
                                                                                                                                
MS.  WING HEIER  answered  that lower-income  and some  moderate-                                                               
income  policy  holders receive  federal  subsidies  to help  pay                                                               
premiums, not the claims.                                                                                                       
                                                                                                                                
CO-CHAIR LEDOUX  asked if the  State of Alaska  reinsures because                                                               
Premera would leave the state if it didn't.                                                                                     
                                                                                                                                
MS.  WING-HEIER said  there was  discussion about  this topic  in                                                               
2016.   She  explained that  Moda Health  had withdrawn  from the                                                               
market;  Premera expressed  that they  might  do the  same.   Ms.                                                               
Wing-Heier   said    health   insurance   premiums    had   risen                                                               
significantly  and were  becoming "totally  unaffordable ...  for                                                               
Alaskan consumers."   She  claimed this was  the impetus  for the                                                               
reinsurance  program.   She  detailed how  the  state funded  the                                                               
first year with  $55 million.  She added that  "we worked hard to                                                               
get the waiver  by the second year" and that  the program "is now                                                               
self-supporting with federal funds.                                                                                             
                                                                                                                                
4:17:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  LEDOUX  listed   additional  DCCED  representatives  in                                                               
attendance and available via teleconference.                                                                                    
                                                                                                                                
4:18:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR LEDOUX thanked  Mr. Faulkner and his  associates for the                                                               
presentation.                                                                                                                   
                                                                                                                                
4:18:50 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Labor and  Commerce Standing Committee  meeting was  adjourned at                                                               
4:19 p.m.                                                                                                                       
                                                                                                                                

Document Name Date/Time Subjects
2019.Committees.House Labor and Commerce Overview Presentation.pdf HL&C 3/1/2019 3:15:00 PM
Commerce