Legislature(1993 - 1994)
04/13/1993 03:00 PM House L&C
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE
STANDING COMMITTEE
April 13, 1993
3:00 p.m.
MEMBERS PRESENT
Rep. Bill Hudson, Chairman
Rep. Joe Green, Vice Chairman
Rep. Brian Porter
Rep. Bill Williams
Rep. Eldon Mulder
Rep. Jerry Mackie
Rep. Joe Sitton
MEMBERS ABSENT
None
COMMITTEE CALENDAR
HB 50: "An Act authorizing the Anchorage to Kenai
Peninsula and the Healy to Fairbanks power
transmission interties and approving the design
and construction costs of the interties; and
providing for an effective date."
PASSED OUT OF COMMITTEE
HB 51: "An Act making a special appropriation for design
and construction of power transmission interties
between Anchorage and the Kenai Peninsula and
between Healy and Fairbanks; and providing for an
effective date."
PASSED OUT OF COMMITTEE
*HB 279: "An Act extending the termination date of the
Alaska Public Utilities Commission to June 30,
1997."
PASSED OUT OF COMMITTEE
SB 86: "An Act relating to funds transfers under the
Uniform Commercial Code; changing Alaska Rule of
Civil Procedure 82; and providing for an effective
date."
PASSED OUT OF COMMITTEE
SB 112: "An Act relating to the Uniform Commercial Code;
amending Alaska Rules of Civil Procedure 8 and 82,
and Alaska Rule of Evidence 402; and providing for
an effective date."
PASSED OUT OF COMMITTEE
SB 149: "An Act revising the laws governing financial
institutions and relating to trust companies, the
Alaska Small Loans Act, and the Premium Financing
Act; amending Alaska Rule of Criminal Procedure 17
and Alaska Rule of Civil Procedure 45(b); and
providing for an effective date."
PASSED OUT OF COMMITTEE
(* first public hearing)
WITNESS REGISTER
REP. RAMONA BARNES
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-3438
Position Statement: Supported HB 50 and HB 51
MIKE KELLEY
Golden Valley Electric Association
758 Illinois
Fairbanks, Alaska 99706
Position Statement: Supported HB 50 and HB 51
CLAYTON HURLISS
Copper Valley Electric
P.O. Box 45
Glennallen, Alaska 99588
822-3211
Position Statement: Supported HB 50 and HB 51
SENATOR ROBIN TAYLOR
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-3873
Position Statement: Supported HB 50 and HB 51
THOMAS STEVENSON
Ketchikan Public Utilities
City of Ketchikan
Ketchikan, Alaska 99901
225-1000, ext 377
Position Statement: Supported HB 50 and HB 51
DON SCHROER, Chairman
Alaska Public Utilities Commission
1016 W. 6th, Ste. 400
Anchorage, Alaska 99501-1963
276-6222
Position Statement: Supported HB 279
DAVE HUTCHINS
Alaska Rural Electric Cooperative Association
703 W. Tudor, #200
Anchorage, Alaska 99503
561-6103
Position Statement: Supported 279
BOB LOHR, Executive Director
Alaska Public Utilities Commission
1016 W. 6th, Suite 400
Anchorage, Alaska 99501-1963
276-6222
Position Statement: Supported HB 279
BILL KELDER, Staff
Senator Jay Kertulla
Alaska State Legislature
State Capitol
Juneau, Alaska 99801-1182
465-6600
Position Statement: Read sponsor statement on SB 86 and
SB 112
ART PETERSON, Staff Attorney
Offices of Dillon and Findley
One Sealaska Plaza, Suite 202
Juneau, Alaska 99801
586-4000
Position Statement: Supported SB 86 and SB 112
WILLIS KIRKPATRICK, Director
Division of Banking and Securities
P.O. Box 110807
Juneau, Alaska 99811-0807
465-2521
Position Statement: Supported SB 86 and SB 112
MICHAEL BURNS, President
Key Bank
101 W. Benson
Anchorage, Alaska 99503
564-0250
Position Statement: Supported SB 149
RICHARD HARDCASTLE
Private Insurance Company
100 Main Street
Ketchikan, Alaska 99901
225-2176
Position Statement: Opposed SB 149
ALLAN SHATTUCK
Shattuck and Grummett Insurance
301 Seward St.
Juneau, Alaska 99503
586-2414
Position Statement: Opposed SB 149
HOWARD JAEGAR, Vice President
Shattuck and Grummett
301 Seward St.
Juneau, Alaska 99503
586-2414
Position Statement: Opposed SB 149
KAREN HOFSTAD
Petersburg Insurance Company
P.O. Box 203
Petersburg, Alaska 99833
772-3858
Position Statement: Opposed SB 149
SUSAN ERICKSON
P.O. Box 53
Petersburg, Alaska 99833
772-9237
Position Statement: Opposed SB 149
JIM SARVELA
First Bank
P.O. Box 7920
Ketchikan, Alaska 99901
228-4219
Position Statement: Opposed SB 149
JACK DAVIES
100 Main St.
Ketchikan, Alaska 99901
225-2176
Position Statement: Opposed SB 149
CRAIG INGHAM
McKinley Bank
P.O. Box 73880
Fairbanks, Alaska 99707
452-1751
Position Statement: Supported SB 149
GORDON DEPUE
P.O. Box 70531
Fairbanks, Alaska 99707
452-6891
Position Statement: Opposed SB 149
GARY ROTH
Denali Bank
119 N. Cushman
Fairbanks, Alaska 99701
456-1400
Position Statement: Opposed SB 149
JOHN SWEENEY
508 Marine Way
Kodiak, Alaska 99615
486-3101
Position Statement: Opposed SB 149
DAVID STRATTON
Life Underwriter
8300 Briarwood, Suite B
Anchorage, Alaska 99518
522-1194
Position Statement: Opposed SB 149
KEITH SILVER
Alaska State Insurance
505 W. Northern Lights, #216
Anchorage, Alaska 99503
272-4445
Position Statement: Opposed SB 149
JOHN GEORGE, Lobbyist
9515 Moraine Way
Juneau, Alaska 99801
789-0172
Position Statement: Opposed SB 149
PREVIOUS ACTION
BILL: HB 50
SHORT TITLE: AUTHORIZING POWER TRANSMISSION INTERTIES
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S)NAVARRE,Carney,Brice,Sitton,
Menard,Davies
TITLE: "An Act authorizing the Anchorage to Kenai Peninsula
and the Healy to Fairbanks power transmission interties and
approving the design and construction costs of the
interties; and providing for an effective date."
JRN-DATE JRN-PG ACTION
01/14/93 58 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/93 59 (H) LABOR & COMMERCE, FINANCE
02/11/93 (H) L&C AT 03:00 PM CAPITOL 17
02/11/93 (H) MINUTE(L&C)
02/15/93 350 (H) COSPONSOR(S): GREEN
04/08/93 (H) L&C AT 03:00 PM CAPITOL 17
04/08/93 (H) MINUTE(L&C)
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 51
SHORT TITLE: APPROP: POWER TRANSMISSION INTERTIES
BILL VERSION:
SPONSOR(S): REPRESENTATIVE(S) NAVARRE,Carney,Brice,
Sitton,Menard,Davies
TITLE: "An Act making a special appropriation for design and
construction of power transmission interties between
Anchorage and the Kenai Peninsula and between Healy and
Fairbanks; and providing for an effective date."
JRN-DATE JRN-PG ACTION
01/14/93 59 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/93 59 (H) LABOR & COMMERCE, FINANCE
02/11/93 (H) L&C AT 03:00 PM CAPITOL 17
02/11/93 (H) MINUTE(L&C)
02/15/93 351 (H) COSPONSOR(S): GREEN
04/08/93 (H) L&C AT 03:00 PM CAPITOL 17
04/08/93 (H) MINUTE(L&C)
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
BILL: HB 279
SHORT TITLE: EXTEND ALASKA PUBLIC UTILITIES COMMISSION
BILL VERSION:
SPONSOR(S): LABOR & COMMERCE
TITLE: "An Act extending the termination date of the Alaska
Public Utilities Commission to June 30, 1994."
JRN-DATE JRN-PG ACTION
04/08/93 1110 (H) READ THE FIRST TIME/REFERRAL(S)
04/08/93 1110 (H) LABOR & COMMERCE
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
BILL: SB 86
SHORT TITLE: FUND TRANSFERS UNDER THE UCC
BILL VERSION:
SPONSOR(S): SENATOR(S) KERTTULA
TITLE: "An Act relating to funds transfers under the Uniform
Commercial Code; changing Alaska Rule of Civil Procedure 82;
and providing for an effective date."
JRN-DATE JRN-PG ACTION
02/03/93 220 (S) READ THE FIRST TIME/REFERRAL(S)
02/03/93 221 (S) LABOR & COMMERCE, JUDICIARY
03/02/93 (S) L&C AT 01:30 PM FAHRENKAMP
ROOM 203
03/02/93 (S) MINUTE(L&C)
03/03/93 588 (S) L&C RPT 1DP 2NR
03/03/93 588 (S) ZERO FISCAL NOTES (DCED, LAW)
03/12/93 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/15/93 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/19/93 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/22/93 896 (S) JUD RPT 4NR
03/22/93 896 (S) PREVIOUS ZERO FNS (DCED, LAW)
03/31/93 (H) MINUTE(ECO)
04/02/93 1063 (S) RULES 3CAL 1NR 4/2/93
04/02/93 1069 (S) READ THE SECOND TIME
04/02/93 1069 (S) ADVANCED TO THIRD READING
UNAN CONSENT
04/02/93 1069 (S) READ THE THIRD TIME SB 86
04/02/93 1070 (S) PASSED Y20 N-
04/02/93 1070 (S) EFFECTIVE DATE VOTE SAME AS
PASSAGE
04/02/93 1070 (S) COURT RULE CHANGE VOTE SAME AS
PASSAGE
04/02/93 1080 (S) TRANSMITTED TO (H)
04/02/93 954 (H) READ THE FIRST TIME/REFERRAL(S)
04/02/93 954 (H) LABOR & COMMERCE, JUDICIARY
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
BILL: SB 112
SHORT TITLE: UNIFORM COMMERCIAL CODE REVISIONS
BILL VERSION: CSSB 112(JUD)
SPONSOR(S): SENATOR(S) KERTTULA
TITLE: "An Act relating to the Uniform Commercial Code;
amending Alaska Rules of Civil Procedure 8 and 82, and
Alaska Rule of Evidence 402; and providing for an effective
date."
JRN-DATE JRN-PG ACTION
02/11/93 338 (S) READ THE FIRST TIME/REFERRAL(S)
02/11/93 338 (S) LABOR & COMMERCE, JUDICIARY,
FINANCE
03/02/93 (S) L&C AT 01:30 PM FAHRENKAMP
ROOM 203
03/02/93 (S) MINUTE(L&C)
03/04/93 (S) L&C AT 01:30 PM FAHRENKAMP
ROOM 203
03/05/93 613 (S) L&C RPT CS 1DP 3NR SAME TITLE
03/05/93 613 (S) ZERO FISCAL NOTES TO SB & CS
(DCED, LAW)
03/19/93 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/22/93 897 (S) JUD RPT CS 4NR SAME TITLE
03/22/93 897 (S) ZERO FISCAL NOTE TO L&C & JUD
CS (DNR)
03/22/93 897 (S) PREVIOUS ZERO FNS APPLY TO CS
(DCED,LAW)
03/22/93 (S) FIN AT 09:00 AM SENATE FIN 518
03/23/93 911 (S) FIN RPT 3DP 4NR (JUD)CS SAME
TITLE
03/23/93 911 (S) PREVIOUS ZERO FNS APPLY (DCED,
LAW, DNR)
03/23/93 (S) FIN AT 09:00 AM SENATE FIN 518
03/31/93 1004 (S) RULES RPT 3CAL 1NR 3/31/93
03/31/93 1008 (S) READ THE SECOND TIME
03/31/93 1008 (S) JUD CS ADOPTED UNAN CONSENT
03/31/93 1008 (S) THIRD READING 4/1 CALENDAR
03/31/93 (H) MINUTE(ECO)
04/01/93 1032 (S) READ THE THIRD TIME
CSSB 112(JUD)
04/01/93 1033 (S) PASSED Y20 N-
04/01/93 1033 (S) COURT RULE CHANGES VOTE SAME AS
PASSAGE
04/01/93 1033 (S) EFFECTIVE DATE CLAUSES SAME AS
PASSAGE
04/01/93 1033 (S) KELLY NOTICE OF RECONSIDERATION
04/02/93 1079 (S) RECONSIDERATION NOT TAKEN UP
04/02/93 1080 (S) TRANSMITTED TO (H)
04/02/93 954 (H) READ THE FIRST TIME/REFERRAL(S)
04/02/93 955 (H) LABOR & COMMERCE, JUDICIARY
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
BILL: SB 149
SHORT TITLE: REVISION OF BANKING CODE
BILL VERSION: CSSB 149(FIN)
SPONSOR(S): LABOR & COMMERCE
TITLE: "An Act revising the laws governing financial
institutions and relating to trust companies, the Alaska
Small Loans Act, and the Premium Financing Act; amending
Alaska Rule of Criminal Procedure 17 and Alaska Rule of
Civil Procedure 45(b); and providing for an effective date."
JRN-DATE JRN-PG ACTION
03/05/93 616 (S) READ THE FIRST TIME/REFERRAL(S)
03/05/93 616 (S) JUDICIARY, FINANCE
03/19/93 (S) JUD AT 01:30 PM BELTZ ROOM 211
03/22/93 (S) FIN AT 09:00 AM SENATE FIN 518
03/22/93 898 (S) JUD RPT 1DP 2NR
03/22/93 898 (S) ZERO FISCAL NOTE (DCED)
03/23/93 (S) FIN AT 09:00 AM SENATE FIN 518
03/23/93 911 (S) FIN RPT CS 5DP 2NR
SAME TITLE
03/23/93 911 (S) PREVIOUS ZERO FN (DCED)
03/31/93 1004 (S) RULES 3CAL 1NR 3/31/93
03/31/93 1007 (S) READ THE SECOND TIME
03/31/93 1007 (S) FIN CS ADOPTED UNAN CONSENT
03/31/93 1008 (S) ADVANCE TO 3RD RDG FAILED Y12 N8
03/31/93 1008 (S) THIRD READING 4/1 CALENDAR
04/01/93 1031 (S) READ THE THIRD TIME
CSSB 149(FIN)
04/01/93 1032 (S) PASSED Y18 N2
04/01/93 1032 (S) COURT RULE CHANGE VOTE SAME AS
PASSAGE
04/01/93 1032 (S) EFFECTIVE DATE VOTE SAME AS
PASSAGE
04/01/93 1032 (S) ADAMS NOTICE OF RECONSIDERATION
04/02/93 1079 (S) RECONSIDERATION NOT TAKEN UP
04/02/93 1081 (S) TRANSMITTED TO (H)
04/02/93 955 (H) READ THE FIRST TIME/REFERRAL(S)
04/02/93 955 (H) LABOR & COMMERCE, JUDICIARY
04/13/93 (H) L&C AT 03:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 93-37, SIDE A
Number 001
CHAIRMAN HUDSON convened the House Labor and Commerce
Committee at 3:10. Members present were Reps. Hudson,
Green, Porter, Williams, Mulder, Sitton and Mackie.
HB 50 AUTHORIZING POWER TRANSMISSION INTERTIES
HB 51 APPROP: POWER TRANSMISSION INTERTIES
REPRESENTATIVE RAMONA BARNES, SPEAKER OF THE HOUSE, spoke on
behalf of HB 50 and HB 51 and gave the following summary of
the history of the energy fund:
"In 1981, SB 25 and 26 created the energy plan for Alaska.
This plan included the 4 Dam Pool, Power Cost Equalization
and a clause that was known as the blackmail clause. This
clause in essence said that the grants that were given to
the 4 Dam Pool would be paid back to the state, plus
interest, if by the year 1991 there was less than $1 billion
to construct Susitna/Watana Dam and an intertie system for
the railbelt.
"In 1984, the representatives of the 4 Dam Pool came back to
Juneau seeking to have the blackmail clause removed from the
statutes due to cost overruns that would require additional
funds. Their claim was that unless the state gave them
another outlay of cash they would not be able to bond at a
favorable rate due to the existence of the blackmail clause
in statute.
"The Railbelt then gave up the blackmail clause with the
understanding that in exchange there would be $200 million
per year appropriated in the same manner as the Senior
Citizens Longevity Bonus, as an example. In addition to
that appropriation, there was to be $100 million deposited
into the Bradley Lake Dam account. At that time, we also
increased the per kilowatt amount to be subsidized by Power
Cost Equalization.
"This then, became law. Although this continuing
appropriation was no different from any other that is
required annually, the environmental community took it to
court and a ruling was made that one legislature could not
bind another, even though it was no different than numerous
other annual appropriations. That first $200 million plus
the $100 million for Bradley Lake Dam were the only funds
ever deposited into the energy account.
"In 1990, a deal was cut to raid the fund, and approximately
$123 million was spent on various capital projects, very few
of which had anything to do with energy. There is currently
$123 million in an intertie reserve account. These two
bills contain funding for a Northern and Southern intertie
at $55 million for one and $40 million for the other, which
only pays for 1/2 of each project. The utilities themselves
would bond for the other half of the money.
"We must look to the needs of the whole state. HB 50 and 51
contain not only the Northern and Southern interties, but
funding for Tyee, Swan Lake, and Sutton to Glennallen.
"There is a portion of the bill that has an ongoing
appropriation of $800,000 to the Alaska Energy Authority.
The Speaker suggests that the Alaska Energy Authority has
outlived its usefulness, and that when the bills finally get
to the floor, that the appropriation to the AEA be deleted
and the money to go directly to the utilities involved."
Number 190
SPEAKER BARNES also suggested that Power Cost Equalization
be addressed under the Department of Community and Regional
Affairs. The Speaker believed that the Department of
Community and Regional Affairs better knows the needs of
rural Alaska and that the money saved by not funding the
energy authority could be used by the rural communities.
Number 210
MIKE KELLEY, GENERAL MANAGER, GOLDEN VALLEY ELECTRIC
ASSOCIATION, testified that the previous speaker gave an
excellent history of the railbelt fund.
MR. KELLEY asked that the committee pass HB 50 and HB 51 out
to Finance to be fine-tuned and eventually passed into law.
Number 222
CLAYTON HURLISS, GENERAL MANAGER, COPPER VALLEY ELECTRIC,
stated that his organization was very pleased that these
bills were going forward and would work together with the
members of the legislature to make sure these bills go
through in the best form possible.
MR. HURLISS stated that his group was concerned about the
order of priorities. Mr. Hurliss said that projects ought
to be considered and funded on the basis of whether they are
ready and to go and if there is enough time to build them.
Number 240
REP. MACKIE asked Speaker Barnes if she had problems with
Tyee and Swan Lake being in the bill.
SPEAKER BARNES responded that she supports Tyee and Swan
Lake, as well as the Sutton to Glennallen interties.
Number 250
REP. MACKIE stated that the legislature should look at these
projects with a statewide prospective, which also includes
Power Cost Equalization.
Number 264
REP. PORTER stated that he would be supportive of moving the
bills out of committee.
Number 285
SPEAKER BARNES asked the record to reflect that it is true
that one legislature cannot bind the next and that there are
many new people in the legislature, but that she has been in
the legislature all the years referred to above. Speaker
Barnes added that the agreements she made in previous years
that relate to the energy package before this committee has
borne out her support for Power Cost Equalization.
Number 295
REP. GREEN inquired about the funding sources for these
projects.
SPEAKER BARNES responded that each of the interties will be
bonded separately.
Number 324
SPEAKER BARNES stated that the difference between HB 50 and
HB 51 and the proposal the Alaska Energy Authority came up
with is that their bill would have used all the Railbelt
energy money.
Number 350
REP. MACKIE clarified his position on this issue. Rep.
Mackie stated that it was his view that Power Cost
Equalization not be tinkered with and that the energy needs
of Southeast Alaska be included in the statewide perspective
of this bill.
Number 368
SENATOR ROBIN TAYLOR echoed Speaker Barnes' comments and
added that these bills are the culmination of a lengthy and
arduous process over many years. Sen. Taylor believes that
we are now in a place where we can put our differences aside
and put forth a bill that would put some good projects on
line.
SEN. TAYLOR stated he believes the state will eventually be
relieved of the burden of Power Cost Equalization when all
these projects come on line.
Number 408
THOMAS STEVENSON, MANAGER, KETCHIKAN PUBLIC UTILITIES,
testified that HB 50 and HB 51 are necessary ingredients for
the economic development of the state.
Number 429
REP. MACKIE moved HB 50 and HB 51 with individual
recommendations. No objections were heard; it was so
ordered.
Number 449
HB 279 EXTEND ALASKA PUBLIC UTILITIES COMMISSION
DON SCHROER, ALASKA PUBLIC UTILITIES COMMISSION (APUC),
stated that the APUC is due to end on June 30, 1993, at
which time they would go into a wind down year. He said HB
279 would extend the commission for four years.
MR. SCHROER stated that there is a Senate bill that would
only extend the commission for one year, but it was his
feeling that it would save costs and resources to extend
four years and forego another legislative audit within a
year.
REP. MULDER asked if he had understood that the reason there
was a proposal to sunset every year was that the commission
was taken off of the state payroll and funded through
program receipts, which would mean that the legislature lost
fiscal oversight.
REP. MULDER asked Mr. Schroer how he thought the commission
had worked under this new funding scenario.
MR. SCHROER answered that the budget APUC requested this
year was slightly less than the one requested last year, and
added that the commission was still part of the overall
budget process and can't arbitrarily spend money or raise
salaries.
Number 525
DAVE HUTCHINS, EXECUTIVE DIRECTOR, ALASKA RURAL ELECTRIC
COOPERATIVE ASSOCIATION, testified that they are in support
of extending the APUC. Mr. Hutchins noted, however, that
since the legislative budget and audit report came in late,
the commission should only be extended for one year to give
the legislature a chance to take a look at the report and
its recommendations.
Number 572
BOB LOHR, EXECUTIVE DIRECTOR, APUC, testified that not only
is the APUC accountable to the legislature, but they are
also accountable to the customers of the utilities.
Number 595
REP. MACKIE moved am 1 to shorten the sunset date from 4
years to one year.
TAPE 93-37, SIDE B
Number 001
REP. PORTER objected.
A roll call vote was taken with Rep. Porter voting against
the amendment; Reps. Mulder, Williams, Green, Mackie, Sitton
and Hudson voting for it.
Amendment 1 passed.
Number 037
REP. MULDER moved HB 279 and amended with individual
recommendations and fiscal note.
No objections were heard; it was so ordered.
Number 085
SB 86 FUND TRANSFERS UNDER THE UCC
SB 112 UNIFORM COMMERCIAL CODE REVISIONS
BILL KELDER, STAFF, SEN. JAY KERTTULA, testified in support
of SB 86. Mr. Kelder read a sponsor statement on Sen.
Kertulla's behalf. Mr. Kelder stated that SB 86 is known as
the "funds transfer bill" and generally speaking brings the
funds transfer portion of Alaska's uniform commercial code
up to date with regard to current electronic technology as
it applies to modern business practices.
Number 100
MR. KELDER added that SB 112 makes amendments to Alaska's
Uniform Commercial Code, and in most instances these changes
are designed to bring the code up to date with the rest of
the country.
Number 220
ART PETERSON, STAFF ATTORNEY, DILLON AND FINDLEY, private
law offices and a Uniform Law Commissioner for Alaska, said
he supports SB 86 and SB 112. Mr. Peterson echoed Mr.
Kelder's remarks and pointed out two significant things in
the bills:
1) it recognizes that modern technology plays a major part
in today's business and;
2) doing business that way raises questions that these
bills will provide answers for.
Number 300
REP. PORTER moved SB 86 with individual recommendations and
fiscal note.
No objections were heard; it was so ordered.
REP. GREEN moved SB 112 with individual recommendations and
fiscal note.
No objections were heard; it was so ordered.
Number 415
SB 149 REVISION OF BANKING CODE
WILLIS KIRKPATRICK, DIRECTOR, DIVISION OF BANKING, testified
in support of SB 149. Mr. Kirkpatrick stated that the
current Alaska Banking Code was critically obsolete. The
existing code was taken from Oregon law at the time of
Alaska statehood and has had only minor revisions since
then. The Division of Banking, Securities, and Corporations
has for the past few years been working to identify areas
where changes in the code are needed. These changes fall
into three basic categories:
1) obsolescence concerning today's financial institution
marketplace;
2) obsolescence in addressing problems or failing banks; and
3) the need for a banking law that could provide additional
economic development opportunities.
MR. KIRKPATRICK went on to explain these changes in detail.
(the details are in a position paper in the committee files)
Number 560
MICHAEL BURNS, PRESIDENT, KEY BANK, testified in support of
SB 149. Mr. Burns spoke specifically on the section of the
bill which would allow the banking industry to sell
insurance. Mr. Burns stated that this section would allow
the banking industry to compete much the same as Allstate,
the insurance company, competes with the banks in providing
loans. Mr. Burns stated that he didn't see any reason that
banks should be prohibited from competing in the insurance
market.
MR. BURNS stated that the committee would hear the argument
that banks could be in the position of exerting undue
influence on loan applicants to purchase insurance from
them, but Mr. Burns believes this argument is wrong as the
bill contains anti-tie-in clauses that would prohibit this.
REP. MACKIE questioned how the banking industry expected
small independent insurers to stay in business with the
banking industry competing.
TAPE 93-38, SIDE A
Number 001
MR. BURNS replied that the market place would take care of
itself. If the banking industry doesn't provide a better
product, then the insurance agency will get the business.
Number 005
RICHARD HARDCASTLE, PRESIDENT, HARDCASTLE/DAVIES INSURERS OF
KETCHIKAN, testified against the section of SB 149 that
would allow banks to sell insurance. Mr. Hardcastle said he
believes allowing banks to sell insurance was unfair
competition and pointed out two of the more important
reasons:
1) large capitalized institutions have a tremendous number
of captive prospects in their existing files can use their
influence to sell them insurance; and
2) loan applicants would feel obligated to buy insurance
from banks in order to get the loan.
Number 020
MR. HARDCASTLE stated that the banking industry suggests
that the anti-tie-in provisions in law would prevent any
problems, but as a practical matter they just don't work.
Number 025
MR. HARDCASTLE suggested the committee delete the section of
the bill allowing banks in the insurance business and pass
the bill out.
Number 050
ALAN SHATTUCK, PRESIDENT, SHATTUCK AND GRUMMET INSURANCE,
spoke against sections 2, 4 and 5. Mr. Shattuck said he
believes these sections take too much of the legislative
oversight away and put it into regulations.
MR. SHATTUCK dittoed Mr. Hardcastle's remark that anti-tie-
in laws do not work well.
Number 073
HOWARD JAEGAR, VICE PRESIDENT, SHATTUCK AND GRUMMETT, AND
PRESIDENT OF ALASKA INDEPENDENT INSURANCE AGENTS AND
BROKERS, stated that his group was against allowing banks to
sell insurance. Mr. Jaegar added that allowing banks to
sell insurance was in direct conflict to the very businesses
they hold deposits for or lend money to.
MR. JAEGAR stated that allowing large banking organizations
to compete with local merchants. Because banks control the
extension of needed credit, they have unlimited access and
there would be a temptation to exert coercion to sell other
products.
Number 158
REP. MACKIE stated that it was his belief that small
insurers would be hurt and he therefore moved to delete page
24, line 18, of section 47.
Number 230
REP. PORTER objected and expressed his concern that he
didn't have enough information yet and he would like to hear
from the other persons waiting on teleconference.
Number 257
REP. GREEN added that he wanted further information of
sections 4 and 5 of the bill.
Number 280
KAREN HOFSTAD, INDEPENDENT INSURER, testified from
Petersburg and noted that she had sold insurance in another
state that allowed banks to sell insurance and she saw that
it caused a lot of conflict and abuse. Ms. Hofstad stated
that when banks loan money and provide insurance, there is a
subtle indication that the person or business should buy
from the bank.
MS. HOFSTAD suggested the committee delete sections 2, 4 and
5 from the bill.
Number 305
SUSAN ERICKSON testified from Petersburg and echoed Ms.
Hofstad's comments.
Number 310
JIM SARVELA, CHIEF FINANCIAL OFFICER, 1ST BANK, testified
from Ketchikan that his concern was that banks be on an
equal playing field with other institutions. Mr. Sarvella
pointed out that the other institutions that primarily sell
insurance also make loans. This bill would give all the
participants equal opportunities in the marketplace.
Number 330
JACK DAVIES, HARDCASTLE AND DAVIES INSURANCE, stated the
impact of section 2 is anti-consumer. Mr. Davies added that
as far as he knew there was never a consumer coming before
asking that banks be allowed to sell insurance.
Number 343
CRAIG INGHAM, PRESIDENT OF MT. MCKINLEY BANK, noted that
currently Allstate, State Farm, etc., are involved in the
credit side of the equation in offering loans. Mr. Ingham
further stated that the banks would create a separate
corporation or subsidiary to sell this insurance, which
would alleviate any undue pressure a borrower might feel.
Number 368
GORDON DEPUE urged deletion of section 2 of the bill. Mr.
Depue said he does not believe that anti-tie-in provisions
would prohibit the banks from pressuring customers to buy
insurance on property they are borrowing from them for.
Number 374
GARY ROTH, PRESIDENT, DENALI STATE BANK, testified that SB
149 should pass as is. Mr. Roth said he believed that this
was a turf war and that compromise was not possible.
Number 416
JOHN SWEENEY echoed comments above against section 2 of the
bill.
Number 431
DAVID STRATTON, PRESIDENT, ALASKA LIFE UNDERWRITER, stated
that section 2 must be deleted. Mr. Stratton quoted Senator
Murkowski as being against banks getting into the insurance
industry.
Number 451
KEITH SILVER stated that he supports the removal of section
2 of SB 149. Mr. Silver dittoed the remarks of Mr. Stratton
and the others.
Number 460
JOHN GEORGE, REPRESENTING THE AMERICAN COUNCIL OF LIFE
INSURANCE, testified that an asset that the independent
insurance agent has is his expiration dates. Mr. George
explained that this is a list of all the policy holders and
the dates their policies expire. Mr. George pointed out
that if section 2 passes it would in effect give the
independent insurance agencies' most tightly guarded secret
away to their competitor. Mr. George suggested that this
would give an unfair advantage to the competitors.
MR. GEORGE pointed out that sections 4 and 5 should be
deleted also to eliminate the possibility of a back door
opening for banks to get into the insurance business.
Number 485
REP. MACKIE responded that according to Mr. Kirkpatrick
deleting section 2 would be sufficient since federal law
specifically requires that insurance sales be specifically
allowed in state statute.
REP. PORTER removed his earlier objection to Rep. Mackie's
amendment to delete section 2 from the SB 149.
REP. SITTON moved SB 149 with individual recommendations,
fiscal note and unanimous consent.
No objections were heard; it was so ordered.
CHAIRMAN HUDSON adjourned the committee at 5:15 p.m.
| Document Name | Date/Time | Subjects |
|---|