Legislature(1999 - 2000)
04/09/1999 03:24 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 9, 1999
3:24 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative Andrew Halcro, Vice Chairman
Representative Lisa Murkowski
Representative John Harris
Representative Sharon Cissna
MEMBERS ABSENT
Representative Jerry Sanders
Representative Tom Brice
COMMITTEE CALENDAR
GOVERNOR'S APPOINTMENT:
Alaska Workers' Compensation Board
Andrew J. "Bear" Piekarski - Anchorage
- CONFIRMATION ADVANCED
HOUSE BILL NO. 143
"An Act relating to the executive officer employed for the Real
Estate Commission, to educational materials published by the Real
Estate Commission, to the Real Estate Surety Fund, to contracts by
the Real Estate Commission, and to disclosures in real property
transactions."
- MOVED CSHB 143(L&C) OUT OF COMMITTEE
HOUSE BILL NO. 62
"An Act relating to the Alaska Public Utilities Commission; and
providing for an effective date."
- MOVED CSHB 62(URS) OUT OF COMMITTEE
HOUSE BILL NO. 158
"An Act relating to the annual report of the director of the
division of insurance and to notice of cancellation of personal
insurance."
- HEARD AND HELD
HOUSE BILL NO. 136
"An Act relating to tourism and tourism marketing; eliminating the
Alaska Tourism Marketing Council; and providing for an effective
date."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 143
SHORT TITLE: REAL ESTATE:SURETY FUND & DISCLOSURES
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG
Jrn-Date Jrn-Page Action
3/19/99 514 (H) READ THE FIRST TIME - REFERRAL(S)
3/19/99 515 (H) L&C, JUD, FIN
3/24/99 (H) L&C AT 3:15 PM CAPITOL 17
3/24/99 (H) HEARD AND HELD
3/24/99 (H) MINUTE(L&C)
4/09/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 62
SHORT TITLE: ALASKA PUBLIC UTILITIES COMMISSION
SPONSOR(S): REPRESENTATIVES(S) THERRIAULT
Jrn-Date Jrn-Page Action
1/22/99 68 (H) READ THE FIRST TIME - REFERRAL(S)
1/22/99 69 (H) URS, L&C
2/08/99 172 (H) FIN REFERRAL ADDED
2/17/99 (H) URS AT 8:00 AM CAPITOL 120
2/17/99 (H) HEARD AND HELD
2/17/99 (H) MINUTE(URS)
3/10/99 (H) URS AT 8:00 AM CAPITOL 120
3/10/99 (H) HEARD AND HELD
3/10/99 (H) MINUTE(URS)
3/17/99 (H) URS AT 8:00 AM CAPITOL 120
3/17/99 (H) MOVED CSHB 62(URS) OUT OF COMMITTEE
3/17/99 (H) MINUTE(URS)
3/19/99 511 (H) URS RPT CS(URS) NT 5DP 1NR
3/19/99 512 (H) DP: DAVIES, COWDERY, HUDSON, KOTT,
3/19/99 512 (H) PORTER; NR: BERKOWITZ
3/19/99 512 (H) ZERO FISCAL NOTE (DCED)
3/19/99 512 (H) REFERRED TO LABOR & COMMERCE
4/09/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 158
SHORT TITLE: NOTICE OF INS. CANCELLATION TO ELDERLY
SPONSOR(S): REPRESENTATIVES(S) ROKEBERG
Jrn-Date Jrn-Page Action
3/24/99 556 (H) READ THE FIRST TIME - REFERRAL(S)
3/24/99 556 (H) L&C, JUD
4/07/99 (H) L&C AT 3:15 PM CAPITOL 17
4/07/99 (H) HEARD AND HELD
4/07/99 (H) MINUTE(L&C)
4/09/99 (H) L&C AT 3:15 PM CAPITOL 17
BILL: HB 136
SHORT TITLE: ABOLISH TOURISM MARKETING COUNCIL
SPONSOR(S): REPRESENTATIVES(S) THERRIAULT
Jrn-Date Jrn-Page Action
3/12/99 438 (H) READ THE FIRST TIME - REFERRAL(S)
3/12/99 438 (H) EDT, L&C, FIN
3/29/99 (H) EDT AT 5:00 PM CAPITOL 106
3/29/99 (H) HEARD AND HELD SUBCMTE APPOINTED
4/06/99 (H) EDT AT 4:30 PM CAPITOL 408
4/06/99 (H) <SUBCOMMITTEE MEETING>
4/09/99 (H) L&C AT 3:15 PM CAPITOL 17
4/09/99 712 (H) EDT REFERRAL WAIVED
4/09/99 712 (H) REFERRED TO LABOR & COMMERCE
WITNESS REGISTER
ED FLANAGAN, Commissioner-designee
Department of Labor
P.O. Box 21149
Juneau, Alaska 99802-1149
Telephone: (907) 465-2700
POSITION STATEMENT: Available for assistance during the
committee's consideration of Andrew J. "Bear" Piekarski for the
Alaska Workers' Compensation Board.
LARRY SPENCER
Real Estate Commission
175 South Franklin Street, Suite 330
Telephone: (907) 463-4111
POSITION STATEMENT: Testified in support of HB 143.
TOM MARTIN
1216 Madsen Avenue
Kodiak, Alaska 99615
Telephone: (907) 486-5421
POSITION STATEMENT: Testified in support of HB 143 as a licensed
real estate agent.
MICHAEL HUGHES, Board of Directors
Alaskan AIDS Assistance Association
P.O. Box 230523
Anchorage, Alaska 99523-0523
Telephone: (907) 345-3635
POSITION STATEMENT: The language he had been concerned about was
not present in the Version G committee substitute for HB 143.
CHARLES SANDBERG, President
Alaska Association of REALTORS
741 Sesame Street, Number 110
Anchorage, Alaska 99503
Telephone: (907) 277-4372
POSITION STATEMENT: Testified in support of HB 143.
ART CLARK, Chairman
Industry Issues Working Group
Alaska Association of REALTORS;
Member, Legislative Committee
Anchorage Board of REALTORS
7740 McHenry Circle
Anchorage, Alaska 99502
Telephone: (907) 345-4116
POSITION STATEMENT: Testified in support of HB 143 on behalf of
the Alaska Association of REALTORS.
RON JOHNSON
P.O. Box 529
Kenai, Alaska 99611
Telephone: (907) 283-7755
POSITION STATEMENT: Testified on HB 143 as a licensed real estate
broker and former member of the Real Estate Commission.
DAVE FEEKEN
Kenai Peninsula Association of REALTORS
100 Trading Bay Drive, Number 6
Kenai, Alaska 99611
Telephone: (907) 283-5888
POSITION STATEMENT: Testified in support of HB 143.
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2536
POSITION STATEMENT: Testified in support of HB 143.
WILDA RODMAN, Legislative Administrative Assistant
to Representative Gene Therriault
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-2812
POSITION STATEMENT: Presented HB 62 on behalf of the bill sponsor;
testified that the sponsor prefers the original bill title as
opposed to the title of CSHB 62(URS), but is in favor of the
two-year extension period rather than the original bill's four-year
period.
JIM ROWE, Director
Alaska Telephone Association
201 East 56th Street
Anchorage, Alaska 99518
Telephone: (907) 345-8760
POSITION STATEMENT: Testified in support of CSHB 62(URS).
MARK VASCONI, Director of Regulatory Affairs
AT&T Alascom
210 East Bluff Drive
Anchorage, Alaska 99515
Telephone: (907) 264-7308
POSITION STATEMENT: Testified in support of CSHB 62(URS)
JANET SEITZ, Legislative Assistant
to Representative Norman Rokeberg
Alaska State Legislature
Capitol Building, Room 24
Juneau, Alaska 99801
Telephone: (907) 465-4968
POSITION STATEMENT: Explained changes to current statute in HB 158
regarding notification of insurance cancellation as aide to the
House Labor and Commerce Standing Committee.
ROSEMARY HAGEVIG, Executive Director
Catholic Community Services
419 Sixth Street
Juneau, Alaska 99801
Telephone: (907) 463-6151
POSITION STATEMENT: Testified in support of HB 158, particularly
the section dealing with insurance notification, on behalf of
Catholic Community Services, parent organization to Southeast
Senior Services.
JOHN FERENCE, Deputy Director
Division of Insurance
Department of Commerce and Economic Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Telephone: (907) 465-2560
POSITION STATEMENT: Answered questions regarding HB 158.
JOHN GEORGE, Lobbyist
for the National Association of Independent Insurers
3328 Fritz Cove Road
Juneau, Alaska 99801
Telephone: (907) 789-0172
POSITION STATEMENT: Testified on industry concerns regarding HB
158.
KEVIN HAND, Legislative Administrative Assistant
to Representative Andrew Halcro
Alaska State Legislature
Capitol Building, Room 418
Juneau, Alaska 99801
Telephone: (907) 465-4939
POSITION STATEMENT: Provided cost of certified mail during hearing
on HB 158.
JOE BALASH, Legislative Secretary
to Representative Gene Therriault
Alaska State Legislature
Capitol Building, Room 511
Juneau, Alaska 99801
Telephone: (907) 465-4797
POSITION STATEMENT: Presented HB 136 on behalf of the bill
sponsor.
LISA VonBARGEN, Executive Director
Valdez Convention and Visitors Bureau
P.O. Box 1603
Valdez, Alaska 99686
Telephone: (907) 835-2984
POSITION STATEMENT: Commented briefly on the gradual tourism
marketing funding reduction contained in the Version K committee
substitute for HB 136.
NANCY LETHCOE
P.O. Box 1313
Valdez, Alaska 99686
Telephone: (907) 835-5175
POSITION STATEMENT: Testified in support of the Version K
committee substitute for HB 136 but encouraged the committee to
consider alternative funding sources such as those proposed in SB
122.
GINNY FAY, Legislative Liaison
and Acting Director of the Division of Tourism
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-2503
POSITION STATEMENT: Explained changes in the Version K committee
substitute for HB 136, answered questions.
TINA LINDGREN, Executive Director
Alaska Visitors Association
2525 "C" Street, Number 400
Anchorage, Alaska 99515
Telephone: (907) 561-5733
POSITION STATEMENT: Answered questions and testified on the
Version K committee substitute for HB 136.
PHIL GREENEY
1801 Old Glacier Highway
Juneau, Alaska 99801
Telephone: (907) 463-5855
POSITION STATEMENT: Testified as a bed and breakfast owner with
concerns, especially regarding secure funding, on the Version K
committee substitute for HB 136.
REPRESENTATIVE BETH KERTTULA
Alaska State Legislature
Capitol Building, Room 430
Juneau, Alaska 99801
Telephone: (907) 465-4766
POSITION STATEMENT: Asked questions during HB 136 hearing.
ACTION NARRATIVE
TAPE 99-35, SIDE A
Number 0001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee meeting to order at 3:24 p.m. Members present
at the call to order were Representatives Rokeberg, Halcro, Harris
and Cissna. Representative Murkowski arrived at 3:30 p.m.
GOVERNOR'S APPOINTMENT: AK WORKERS' COMPENSATION BOARD
Number 0118
CHAIRMAN ROKEBERG announced the committee's first order of business
is the Governor's appointment of Andrew J. "Bear" Piekarski of
Anchorage to the Alaska Workers' Compensation Board. The chairman
questioned whether Commissioner-designee Flanagan of the Department
of Labor wished to provide any testimony.
Number 0133
ED FLANAGAN, Commissioner-designee, Department of Labor, stated he
is available if Mr. Piekarski needs assistance.
CHAIRMAN ROKEBERG noted the record should reflect
Commissioner-designee Flanagan is present for moral encouragement.
The chairman confirmed Mr. Piekarski's resume was made available to
the committee. The chairman has known Mr. Piekarski for a number
of years as the business manager for the Alaska State District
Council of Laborers. He indicated he thought Mr. Piekarski would
make a very fine member of the Alaska Worker's Compensation Board.
Alluding to his involvement with Mr. Piekarski through hockey, the
chairman declared a conflict of interest. He commented a vote to
move the Governor's recommendation from the committee does not
reflect any intent on the part of the members to vote for or
against an individual during further consideration before the joint
body of the legislature.
Number 0255
REPRESENTATIVE HALCRO moved the name of Andrew J. "Bear" Piekarski
to the Alaska Workers' Compensation Board. There being no
objections, it was so ordered.
HB 143 - REAL ESTATE:SURETY FUND & DISCLOSURES
Number 0279
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 143, "An Act relating to the executive officer employed for
the Real Estate Commission, to educational materials published by
the Real Estate Commission, to the Real Estate Surety Fund, to
contracts by the Real Estate Commission, and to disclosures in real
property transactions." The chairman noted the presence of a
possible committee substitute (CS), Version G, and a possible
amendment G.1.
Number 0379
REPRESENTATIVE HALCRO moved that the committee adopt the proposed
Version G CS for HB 143 as a working document. Version G is
labeled 1-LS0150\G, Bannister, 4/6/99. There being no objection,
it was so ordered.
CHAIRMAN ROKEBERG stated Version G is before the committee and
proceeded to explain the changes in the proposed CS. The chairman
noted he had spent several hours in two meetings with the Real
Estate Commission during the break and recognized that Larry
Spencer of the commission was present. The chairman indicated the
original bill had been reviewed and modified based on
recommendations from the commission, the chairman, and industry
members. The bill packet contains a number of letters in support,
including an endorsement of Version G from the Alaska Association
of REALTORS.
Number 0463
CHAIRMAN ROKEBERG pointed out that Section 1 had been changed
slightly in Version G: "executive secretary" remains the formal
title of the executive secretary of the commission, but use of the
title "executive director" is allowed during performance of duties.
The use of this title would be allowed to provide title parity when
the executive secretary has dealings with directors of other
states' real estate commissions, but it is clearly not intended to
result in a pay increase. Section 2 of Version G allows the
commission to adopt regulations regarding disclosure of information
on real estate transactions; this section replaces the original
bill's entire section regarding psychological impairment, HIV
[Human Immunodeficiency Virus], ghosts, and so forth. The chairman
indicated he thought it would be best to allow the commission to
address this issue through regulation rather than including
specific information in the legislation. The chairman further
indicated he has a legal opinion that the commission might not even
need this section.
Number 0598
CHAIRMAN ROKEBERG explained the core of the legislation begins in
Section 3 of Version G. The surety fund maximum is $500,000.
Beginning on page 2, line 6, the legislation provides that the
interest income earned by the surety fund returns to the fund - to
the licensees. The chairman reminded the committee the surety fund
was established in lieu of a bonding situation. It was done for
the convenience of the real estate industry, but, more importantly,
for protection of Alaskan consumers. Page 2, line 7, specifies
that the money appropriated to the fund does not lapse. The
chairman stated, "Currently it's been necessary to make the
(indisc.) appropriation in the front section of the budget to move
the lapse of the fund, so this would prohibit that, any potential
excess monies in the fund, for example, right now because ... the
publications specialist position is not funded, the ... monies are
not being used up so it could be potentially under future surpluses
in the fund and that that should not lapse into the general fund,
... this prohibits that." The chairman indicated the added
language on lines 9 through 11, "for claims against the fund, for
hearing and legal expenses directly related to fund operations and
claims, and", ensures that any other expenses concerning a claim
can be addressed. However, this would be relatively unusual
because there is no legal counsel involved with hearings before the
fund: the claimant and claimee bring their own cases.
Number 0741
CHAIRMAN ROKEBERG continued. Section 4 provides for an accounting
of fund balances to the Real Estate Commission by the Department of
Commerce and Economic Development (DCED). This allows the
commission to be aware if the fund is near the ceiling or floor
amounts; this was part of the original legislation. Section 5
provides for the averaging of the surety fund balance, which can
vary, over the two-year licensing cycle. The fund has a $250,000
floor and a $500,000 cap. Averaging the fund balance allows the
commission to make adjustments accordingly when setting the
two-year surety fund fee along with the licensing fee. One
significant difference in the proposed CS is that the legislation
would no longer affect the educational purposes of the surety fund.
The chairman indicated his original idea of transferring these
purposes to the licensing fee would have subjected the Real Estate
Commission and the administration of this area to the whim of the
House Finance Standing Committee regarding funding because of the
budgetary statute regarding program receipts. The chairman
commented on the entire Real Estate Commission staff turnover
occurring in Anchorage - executive secretary, the publication
position under the surety fund, and the licensing examiner - and
indicated this lack of continuity was the reason to avoid
jeopardizing the commission's operating ability. Chairman Rokeberg
noted they have taken a different approach, referring to page 3,
subsection (d) of Version G. Subsection (d) read:
(d) If the salary of an employee is entirely or
partially paid for from money in the real estate surety
fund, the employee may perform administrative duties for
the commission in addition to any duties the employee
performs that are related to the real estate surety fund.
AS 08.88.910 does not apply to this subsection.
CHAIRMAN ROKEBERG indicated the industry complaint has been the
alleged misuse of surety fund monies for educational purposes.
However, one existing problem is that the publication specialist
funded out of the surety fund has not been allowed to perform
administrative duties and assist the executive secretary because of
the statutory construction. The chairman noted the executive
secretary also receives some allocation from the surety fund.
Subsection (d) would allow the publication specialist to perform
administrative duties for the commission in addition to duties
relating to the surety fund, which is the education. This approach
has been discussed with the legislative committee of the Alaska
Association of REALTORS and they are in agreement at the current
juncture.
Number 0956
CHAIRMAN ROKEBERG referred to the possible G.1 amendment before the
committee. This amendment would provide for the insertion of a new
subsection (b) on page 2 [later discussion amends the lettering of
this subsection to (c)]. The chairman declared a conflict of
interest, noting he is a licensed real estate broker and does not
wish to be excused. Chairman Rokeberg indicated the original bill
had sought to remove the responsibility for publication of the
landlord-tenant booklet from the Real Estate Commission. From the
chairman's discussions with the commission and the legislative
committee of the Alaska Board of REALTORS, the licensees are
willing to pay the approximately $6,000 publication cost of this
booklet for both the public benefit and the education of the
industry members [testimony is unclear as to whether the cost is
annual or for the two-year licensing period]. However, there is no
statutory authority allowing the $6,000 removed for publication
from the surety fund to be replaced into the fund. The commission
charges $1 per booklet, but that $1 has to go into the general
fund. In addition, there are sometimes surplus funds from entry
fees for educational seminars the commission might hold. This
amendment provides that program receipts from any type of activity
funded by the surety fund go back into the surety fund, not into
the general fund. The chairman designated this G.1 amendment as
Amendment 1.
Number 1118
REPRESENTATIVE HALCRO moved Amendment 1. Amendment 1, labeled
1-LS0150\G.1, Bannister, 4/9/99 read:
Page 2, line 6:
Delete "and"
Page 2, line 7, following "in the fund":
Insert ", and money deposited in the fund under (b)
of this section"
Page 2, line 12:
Delete "a new subsection"
Insert "new subsections"
Page 2, following line 12:
Insert a new subsection to read:
"(b) If money from the real estate surety fund
is expended to prepare, print, manufacture,
sponsor, produce, or otherwise provide an item or a
service to a member of the public, to a real estate
licensee, to a potential real estate licensee, or
to another person, any money paid by the person to
the commission, either directly or through an agent
or contractor of the commission, to receive the
item or service shall be deposited in the fund. In
this subsection, "an item or a service" includes an
information pamphlet, an examination preparation
packet, an educational course, the certification of
a real estate education course, and the approval of
a real estate education instructor."
Reletter the following subsection accordingly.
CHAIRMAN ROKEBERG asked if there was any discussion of Amendment 1.
REPRESENTATIVE MURKOWSKI questioned if the existing subsection (b)
in Version G, beginning on line 13, page 2, was being deleted to
insert Amendment 1's language, or if the existing (b) remained and
was just relettered. The existing subsection (b) in Version G
read:
(b) The Department of Commerce and Economic
Development shall provide the commission every three
months with a statement of the activities of, balances
in, interest earned on, and interest returned to the real
estate surety fund."
CHAIRMAN ROKEBERG initially responded that Amendment 1 was simply
deleting the words "a new subsection" and inserting "new
subsections". However, he also questioned why the new subsection
was designated (b). He discussed this briefly with Janet Seitz,
aide to the House Labor and Commerce Committee and legislative
assistant to the chairman.
Number 1196
CHAIRMAN ROKEBERG called an at-ease at 3:42 p.m. The committee
came back to order in less than a minute.
CHAIRMAN ROKEBERG announced the committee would make a technical
amendment to line 10 of Amendment 1, the G.1 amendment, relettering
the subsection lowercase "(b)" to lowercase "(c)". The chairman
clarified that Amendment 1 is only intended to add that new
subsection. There being no objection to Amendment 1 as technically
amended, Amendment 1 was adopted as amended.
Number 1244
LARRY SPENCER, Real Estate Commission, came forward at the
chairman's invitation. He stated the commission appreciated the
opportunity to have input through the chairman's office and is in
support of the legislation.
Number 1279
TOM MARTIN testified next via teleconference from Kodiak in support
of HB 143. He testified as a private citizen, stating he is a
licensed real estate agent. Mr. Martin noted Linda Freed had also
been present, but had to leave. He conveyed that Ms. Freed is in
support of HB 143 and had said she would be sending a POM [public
opinion message]. Mr. Martin thanked the chairman for the bill's
introduction; he indicated he thinks it corrects some long-standing
problems with money going out of the surety fund inappropriately.
Number 1332
MICHAEL HUGHES, Board of Directors, Alaskan AIDS Assistance
Association, testified next via teleconference from Anchorage. Mr.
Hughes confirmed from the chairman that the committee was dropping
the miscellaneous provision specifying people exposed to HIV
[Section 8, original bill, 1-LS0150\D]. He indicated that
provision had been his reason for participating.
CHAIRMAN ROKEBERG questioned whether Mr. Hughes was aware that
provision is currently a matter of federal law under HUD [U.S.
Department of Housing and Urban Development].
MR. HUGHES replied he had not been aware.
CHAIRMAN ROKEBERG indicated the legislation's former provision had
basically been redundant, and was more or less included for the
information of Alaska licensees. The chairman noted Mr. Hughes
should be aware that currently any licensee is forbidden from
making that disclosure. The chairman added that Dr. Middaugh, the
chief state epidemiologist, had indicated his support for
broadening that provision to all infectious diseases, if the
provision had been retained, because there is no need to do so
[disclose].
MR. HUGHES said they had just been concerned with specifying one
disease versus any others.
Number 1413
CHARLES SANDBERG, President, Alaska Association of REALTORS,
testified next via teleconference from Anchorage in support of HB
143. He thanked the chairman for allowing the association's input
on this issue and expressed the support for this legislation by the
Alaska Association of REALTORS, representing over 1,100 members
statewide.
CHAIRMAN ROKEBERG questioned Mr. Sandberg regarding the importance
of passing the legislation this year because of the two-year
[licensing] cycle.
MR. SANDBERG replied they are ending their current licensing cycle.
The legislation affects how the Division of Occupational Licensing
and the Real Estate Commission calculate the license fees. If this
legislation is passed, it puts some finality on how that
calculation is made.
Number 1485
ART CLARK, Chairman, Industry Issues Working Group, Alaska
Association of REALTORS; Member, Legislative Committee, Anchorage
Board of REALTORS, testified next via teleconference from Anchorage
in support of HB 143 on behalf of the Alaska Association of
REALTORS. Mr. Clark indicated the issue of how the surety fund
monies were allocated has caused quite a bit of controversy
industry-wide in the past. He thinks the legislation goes a long
way toward clearing up some of those issues in an equitable manner.
REPRESENTATIVE HALCRO mentioned that airport noise is a huge
concern "out in our area," as Mr. Clark knows. Section 2 of the
legislation [misstated as "8"] gives the commission the power to
adopt disclosure information. Representative Halcro questioned if
Mr. Clark's committee has examined or addressed anything about
disclosures, or plans to do so, when someone buys or sells homes
within a certain noise corridor of the Anchorage International
Airport.
MR. CLARK indicated the issue has just recently come to the
legislative committee's attention and no formal position has been
adopted. Mr. Clark urged caution in this area. The Real Estate
Commission has the ability to pass regulations concerning this
matter; he would recommend that be the avenue addressed in seeking
any kind of noise level disclosure, rather than addressing it in
statute. Mr. Clark indicates there are difficulties with regards
to this information for both real estate agents and homeowners. He
thinks the noise level data are generated through the airport; he
is not aware how those calculations are made and where any problems
are.
REPRESENTATIVE HALCRO agreed that the commission would be best
suited to handle this. He stated, "My concern is - I'm not quite
sure if you remember - a year ago when the local assembly tried to
free zoning out in a certain corridor out by the airport, which
would have affected a number of subdivisions in our area and a
number of vacant lots." Representative Halcro indicated the
concern is for the commission to address the issue preemptively so
there would be something in place "versus ... kind of tying folks'
hands when it comes to zoning changes."
MR. CLARK replied he thinks that is probably a good way to handle
things. He expressed concern regarding anything "stuck in stone"
regarding zoning regulations or statute. He thinks it is better to
make the information available to people and let them decide
whether they wish to live there or not.
CHAIRMAN ROKEBERG thanked Representative Halcro for bringing the
issue up. Proceeding to further teleconference testimony, the
chairman invited Ron Johnson in Kenai to speak. He noted there is
a communication in the committee packet from Mr. Johnson.
Number 1671
RON JOHNSON testified next via teleconference from Kenai. He is a
licensed real estate broker and former member of the Real Estate
Commission. Mr. Johnson indicated his faxed comments to the
committee provide his views but he would like to reiterate
somewhat. He indicated he might be able to offer the committee
some insight as a commission member during the change from
executive director to executive secretary. His concern is that the
statute specifically precludes a licensee from misrepresenting
designations [from Mr. Johnson's fax, AS 08.88.401(a)]. He has not
seen that the "executive secretary" position is of less importance
than "executive director" in his attendance at industry meetings.
Mr. Johnson sees this as a potential step in the wrong direction:
the reason for allowing this title use might be forgotten in the
future and the position might be funded as an executive director
position. Per statute, the duties of the executive secretary of
the Real Estate Commission are specifically duties that would be
assigned to a secretary. In some states where there is actually a
director and/or a real estate commissioner, it is a different
position totally. Mr. Johnson indicated he does not see the logic
or reasoning behind allowing the executive secretary to use the
title of executive director.
CHAIRMAN ROKEBERG noted, though, the current executive secretary
[Grayce Oakley] is retiring. The commission is attempting to fill
the position and the chairman commented it is not an especially
high-paying job. The chairman questioned whether Mr. Johnson
didn't think that could be helpful in recruiting, or if Mr. Johnson
thought that was not important.
Number 1762
MR. JOHNSON indicated he didn't think it was at all important. He
thinks the position pays well enough to the duties. He indicated
the only place where he sees the duties being somewhat different
from the duties of a secretary is when the executive secretary, at
times, during surety fund or license hearings, acts as a
representative of the commission. Mr. Johnson noted that is part
of the surety fund travel budget he had planned to address a little
later - that is one of the reasons the executive secretary will
have to be allowed some money for travel. Mr. Johnson reiterated
his disagreement with allowing the executive secretary to use the
title of executive director; he sees it as a "pitfall down the
pike." He commented Governor Cowper perceived the only way to
regain control of the Real Estate Commission, forcing the board
itself to control the real estate business, was to eliminate the
director position and put it into a secretarial position.
CHAIRMAN ROKEBERG noted he appreciated Mr. Johnson's testimony.
The chairman indicated Mr. Johnson's suggested additional wording
in his fax, "into the general fund but is returned to the surety
fund.", to be placed after "does not lapse." on page 2, line 7 of
Version G, was not necessary from a statutory or drafting stand
point.
Number 1845
MR. JOHNSON explained he suggested the additional language for
clarity. Mr. Johnson also indicated he thinks the portion of the
legislation allowing the Real Estate Commission to adopt
regulations concerning disclosure should cite the enabling statute
[from Mr. Johnson's fax, AS 08.88.071(H)(7)]. Mr. Johnson
expressed his view of the importance of the newsletter, which gives
the commission the ability to communicate with the membership. He
further expressed his opinion that the budget, travel fund, et
cetera, should be controlled by the commission, and that the
director position should be vacant so the real estate commission is
able to direct the secretary.
CHAIRMAN ROKEBERG confirmed there were no questions for Mr. Johnson
and noted he thought Mr. Johnson had made some excellent comments.
Number 1917
DAVE FEEKEN, Kenai Peninsula Association of REALTORS, testified
next via teleconference from Kenai in support of HB 143. The Kenai
Peninsula board's legislative committee has met and is in total
agreement with the other witnesses who have testified, including
Mr. Johnson, in support of this issue.
Number 1959
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development, came forward to
testify in support of HB 143. The division employs the Real Estate
Commission's staff. Ms. Reardon appreciates the work done on the
draft CS and anticipates the fiscal note will be zero.
CHAIRMAN ROKEBERG asked if Ms. Reardon had a comment on the issue
Mr. Johnson raised concerning the executive director/executive
secretary title change.
MS. REARDON appreciated the change from the original bill because
of her expressed concern about it triggering a salary change.
Currently, the executive secretary is authorized by Ms. Reardon to
use the working title "executive administrator" when useful. Ms.
Reardon indicated she had not heard a lot of concern about negative
effects resulting from use of the "executive secretary" title, but
it is not a big issue to her either way.
REPRESENTATIVE HALCRO sought clarification on the committee's
positive fiscal note of $104,000.
Number 2020
MS. REARDON explained that fiscal note from the original bill had
been created with the intention of showing $104,000 less being
spent from the surety fund, with the money being moved straight
over as a "wash" to the general fund, but had not looked that way
as was pointed out at the previous hearing. In the proposed CS,
that shift from the surety fund no longer occurs and the issue
becomes moot. Ms. Reardon indicated the original bill's fiscal
note could have been presented differently to show the intended
zero wash, but a new zero note would be required to go with the CS
once it is adopted. In response to the chairman's comment, she
explained the department is not allowed to present fiscal notes
until committee substitutes are formally adopted.
REPRESENTATIVE CISSNA questioned if Ms. Reardon thought there might
possibly be a good reason to change the title since Ms. Reardon had
informed the executive secretary there was another title which
could be used if needed.
MS. REARDON indicated she has informed the three people in the
executive secretary job class that they may use the title
"executive administrator." Besides the executive secretary to the
Real Estate Commission, there is the executive secretary to the
State Medical Board and the executive secretary to the Board of
Nursing. Ms. Reardon further indicated at times one or the other
had mentioned it might be helpful to use a different title when
signing correspondence to avoid confusion that the executive
secretary was a clerical position rather than the top staff person
for the profession. They had arrived at "executive administrator"
or "administrator" as a working title. Ms. Reardon noted that
since "executive director" is another job class in the state
system, she did not switch to "executive director" at that time.
"Executive director" goes with autonomous commissions such as the
Alaska Public Utilities Commission. Ms. Reardon agreed she had
heard it might be useful to not always require the "executive
secretary" title be used, but indicated she has not heard of any
ongoing problem since that time.
Number 2142
CHAIRMAN ROKEBERG requested Mr. Spencer of the Real Estate
Commission rejoin the committee at the table. The chairman
indicated he wished to hear what Mr. Spencer thinks the
commission's position would be.
MR. SPENCER replied the idea did not originate with the commission
but it was brought to their attention in the drafting of this
legislation. He thinks the commission felt that it would useful to
provide the incoming secretary with possibly somewhat more of a
position of authority in dealing with the public, with licensees,
and people outside the state. If more respect for the position
could be engendered without necessarily increasing the pay, that
might be desirable.
CHAIRMAN ROKEBERG questioned the use of "executive administrator"
to be consistent with the directive of the division director.
MR. SPENCER thought either of those languages would assist.
CHAIRMAN ROKEBERG asked if Ms. Reardon had an opinion.
MS. REARDON answered she is very happy with the bill so it is a
minor detail to her. She supposes she prefers "executive
administrator," but does not want hinder the legislation in any
way.
Number 2219
CHAIRMAN ROKEBERG questioned if anyone else wished to testify on HB
143. He noted the committee's dilemma regarding what this position
would be called and requested input.
REPRESENTATIVE HALCRO indicated he would recommend the committee
adopt the language currently in the bill.
MR. JOHNSON commented the National Association of REALTORS has been
endorsing the "executive administrator" title for some time now,
moving away from the executive officers and that sort of thing. He
thinks it would really have a significant impact if they put the
"executive director" back.
CHAIRMAN ROKEBERG closed the public testimony on HB 143.
REPRESENTATIVE MURKOWSKI referred to the language in Section 2 of
the proposed CS which would be added to AS 08.88.081, "The
commission may adopt regulations concerning the disclosure of
information in real estate transactions.". She sought
clarification on the change from the specific language in the
original bill to this language which would allow the commission to
do the disclosure simply through regulation. Representative
Murkowski apologized if the chairman had made the explanation
already. She noted Mr. Johnson had touched on it briefly when he
said it might be wise to include the enabling statute.
Number 2322
CHAIRMAN ROKEBERG moved an amendment to remove Section 2 from
Version G. He indicated his reason for the amendment is that the
Real Estate Commission already has the authority to make
regulations and that he has a legal opinion supporting this. The
chairman noted, "The records of the Real Estate Commission will
show the discussion at which I requested them (indisc.) request the
Attorney General ask whether or not they have authority to make
regulations on any of the issues that were covered in the first
portion (indisc.) first draft of the bill. They have agreed to do
that. They also request[ed] to me that I request legal counsel,
our legal affairs, to do the same and I have done so. I have in
hand an opinion that says that the Real Estate Commission does have
the authority to draft regulations on those issues currently. This
is consistent with what the committee staff has found to be the
case in the state of New York where, relying on a real estate
opinion from the attorney general of the state of New York, the New
York Real Estate Commission has promulgated regulations as to
psychological impairment." He commented the form of disclosure
statement is AS 34.70.050 and there is an additional specific
portion of the chapter that allows the commission to draft
regulations to implement the chapter. He asked Ms. Reardon for
confirmation.
MS. REARDON indicated it looked like the existing language in AS
08.88.081 allows this.
Sec. 08.88.081. Commission regulations. The
commission shall adopt regulations necessary to carry out
the purposes of this chapter.
REPRESENTATIVE MURKOWSKI confirmed the chairman only intended to
remove the language which was to be added, not to remove the
existing statutory language.
Number 2425
CHAIRMAN ROKEBERG noted with that he would move Amendment 2: that
conceptually Section 2 be removed from the bill. There being no
objection, Conceptual Amendment 2 was adopted.
Number 2442
REPRESENTATIVE HALCRO moved Amendment 3 on page 1, line 10, after
"executive" to delete "director" and insert "administrator".
CHAIRMAN ROKEBERG asked if there were any questions or objections
to Conceptual Amendment 3. There being none, Conceptual Amendment
3 was adopted.
REPRESENTATIVE MURKOWSKI indicated the bill title would need to be
changed because of the wording "executive officer".
CHAIRMAN ROKEBERG indicated the amendment should include the
appropriate title change, noting that was the reason it was
conceptual.
TAPE 99-35, SIDE B
Number 0001
There was brief discussion regarding "executive officer" in the
bill title and whether another amendment was necessary. No
additional amendment was deemed necessary.
Number 0053
REPRESENTATIVE HALCRO made a motion to move CSHB 143, Version G as
amended, out of committee with individual recommendations and the
attached "zero" fiscal note. There being no objection, CSHB(L&C)
moved out of the House Labor and Commerce Standing Committee.
HB 62 - ALASKA PUBLIC UTILITIES COMMISSION
Number 0083
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 62, "An Act relating to the Alaska Public Utilities
Commission; and providing for an effective date." The chairman
pointed out the committee has before it CSHB 62(URS), Version H.
Number 0094
WILDA RODMAN, Legislative Administrative Assistant to
Representative Gene Therriault, Alaska State Legislature, came
forward to present HB 62 on behalf of the bill sponsor. She noted
Representative Therriault apologizes for his absence; he has a
House Finance Standing Committee commitment. Ms. Rodman summarized
the sponsor statement. Under AS 42.05 and AS 42.06, the Alaska
Public Utilities Commission (APUC) regulates public utilities by
certifying qualified providers of public utility and pipeline
services. The commission is designed to ensure utilities provide
safe and adequate services and facilities at reasonable rates.
Under AS 44.66.010, termination of state boards and commissions,
APUC will expire June 30, 1999. If the legislature does not act to
extend the commission, APUC would have one year, until June 30,
2000, to conclude its affairs. The CS for HB 62 was amended to
extend the commission for two years, instead of four, to allow the
legislature to revisit the commission's progress toward addressing
several problems identified through the public hearing process.
MS. RODMAN explained HB 62 was intentionally introduced with a
broad title because Representative Therriault believes the reason
the legislature specifies the sunset date is to address possible
commission shortcomings. Representative Therriault believes
shortcomings have been identified through the hearing process. Ms.
Rodman indicated the sponsor prefers the legislation's original
title but, because of the short time remaining in the legislative
session, does not object to passage of the current version in a
timely manner.
Number 0199
REPRESENTATIVE MURKOWSKI asked for clarification regarding the
sponsor's non-support of the title change. [HB 62's original title
was, "An Act relating to the Alaska Public Utilities Commission;
and providing for an effective date." CSHB 62(URS)'s title is, "An
Act extending the termination date of the Alaska Public Utilities
Commission until June 30, 2001; and providing for an effective
date."]
MS. RODMAN related the title was changed over the sponsor's
objections. The sponsor wished the title to remain broad and to
address some structural problems with the commission. She noted
many of the structural problems have been identified, and some are
being addressed in another bill. In response to Representative
Murkowski's request for further clarification, Ms. Rodman confirmed
the sponsor supports the commission's extension, but not the
current title change. She added the sponsor supports the two-year
extension, as opposed to the four-year extension contained in the
original bill. Ms. Rodman clarified for Representative Cissna that
the title change contained more than just the change in extension
period. She indicated the much narrower new title means many other
issues relating to the commission cannot be dealt with. Ms. Rodman
noted the sponsor would like the record to reflect that he thinks
it is not good public policy to usher the sunset through without
dealing with the problems; the reason for the sunset is to deal
with shortcomings in the commission. However, the sponsor wishes
to see the bill move.
Number 0247
CHAIRMAN ROKEBERG said he is also a member of the House Special
Committee on Utility Restructuring (URS). This particular
legislation received significant hearing in that committee. As the
sponsor's staff indicates, the original bill contained additions
beyond the sunset. The chairman noted the audit had not been
completed when the bill came to URS; that audit is now complete.
From the testimony before it, URS determined restructuring of APUC
is necessary. Chairman Rokeberg indicated the House Labor and
Commerce Standing Committee would be receiving the legislation
dealing with this restructuring and would have ample opportunity to
take up the issues surrounding the commission at that time. The
chairman further indicated, noting he had been part of the
decision-making process, that the prior committee determined it
would be cleaner to do this with a shorter horizon. He emphasized
the need for the APUC to be extended because of the effect of a
sunset on industry, the existing dockets, and business before the
commission.
CHAIRMAN ROKEBERG commented the testimony was that the commission
is dysfunctional enough without the threat of a "wind-down" year,
and the resulting cost of that to the utilities. The chairman
noted, therefore, the bill sponsor has agreed to allow this bill to
move forward, although the sponsor had wished to do further
restructuring with his legislation. Chairman Rokeberg stated his
intention to move CSHB 62(URS) as rapidly as possible. In response
to Representative Halcro's question about whether the National
Regulatory Research Institute's (NRRI) report ["audit"] on APUC in
the bill packet was done in lieu of LB&A's [Joint Committee on
Legislative Budget and Audit] audit, the chairman answered in the
negative. He indicated the LB&A audit picked up a great deal of
the NRRI report and the committee would be dealing extensively with
that report unless URS did more work by the following week.
Chairman Rokeberg noted the presence of Walter Wilcox, Sr., aide to
the House Special Committee on Utility Restructuring.
Number 0379
JIM ROWE, Director, Alaska Telephone Association (ATA), testified
via teleconference from Anchorage in support of CSHB 62(URS).
Noting he appreciated the chairman's remarks, Mr. Rowe said the ATA
is very much in support of passage of this reauthorization and they
look forward to working on APUC restructuring issues in another
bill. In response the chairman's question, Mr. Rowe confirmed ATA
is in support of this bill.
Number 0402
MARK VASCONI, Director of Regulatory Affairs, AT&T Alascom, came
forward to testify in support of CSHB 62(URS). He thinks the
chairman's comments were accurate; if the commission went into a
"wind-down" period, more problems might arise from that. Mr.
Vasconi believes industry wants at least the assurance of some
continuity. He noted other possible structural changes are being
addressed in another bill, expressing that they would all probably
have an opportunity to comment on those changes in the near future.
CHAIRMAN ROKEBERG closed the public hearing on HB 62 after
confirming no one else wished to testify. The chairman confirmed
the committee had no further questions or discussion regarding the
legislation.
Number 0455
REPRESENTATIVE HALCRO made a motion to move CSHB 62(URS) out of
committee with individual recommendations and the attached zero
fiscal note. There being no objection, CSHB 62(URS) moved out of
the House Labor and Commerce Standing Committee.
Number 0477
CHAIRMAN ROKEBERG called an at-ease at 4:22 p.m. The committee
came back to order at 4:29 p.m.
HB 158 - NOTICE OF INS. CANCELLATION TO ELDERLY
Number 0484
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 158, "An Act relating to the annual report of the director of
the division of insurance and to notice of cancellation of personal
insurance." Chairman Rokeberg explained the legislation as the
bill sponsor. He indicated the first portion of the bill would
amend AS 21.06.110 by adding a new subsection with the language,
"statistical information regarding health insurance, including the
number of individual and group policies sold in the state; and".
This information would be provided to the Division of Insurance,
Department of Commerce and Economic Development, to assist the
division by mandating insurance companies doing business in the
state to determine the number of people covered under individual
group policies or non-ERISA policies [ERISA, Employee Retirement
and Security Act]. The chairman noted this has been after a
five-year quest for information from the department.
Number 0524
CHAIRMAN ROKEBERG explained the second portion of the legislation
results from the experience of his neighbor. The neighbor is in
his 80s, with an invalid wife. The neighbor was involved in an
automobile accident and afterwards discovered his insurance had
expired about four months previously; he hadn't realized he had
failed to pay his bill. The chairman indicated his neighbor is
quite lucid but might be suffering from mild forms of dementia,
which is not unusual at that age. As a result, the gentleman was
able to make a settlement of some $25,000 against an actual $80,000
damage amount. [Chairman Rokeberg indicated this settlement
information is in a letter in the bill packet from Reverend Ronald
Martinson of the Central Lutheran Church in Anchorage. There is an
April 7, 1999, letter from Reverend Martinson on this issue in the
bill packet but it does not contain information regarding
settlement.]
Number 0577
CHAIRMAN ROKEBERG emphasized the need to verify that senior and
elderly Alaskans receive proper notice their insurance is going to
be canceled. The legislation only covers personal insurance -
property and casualty - excluding life and health. Currently, the
insurance companies only have to register a notice of mailing
within their own records; they do not have to have a return
receipt. The legislation gives Alaskans over 67 years old a longer
period of notification and a letter mailed return receipt ten days
prior to cancellation. Commenting that this is like an unfunded
mandate to the insurance industry, the chairman noted the insurance
industry would incur some costs because the timing would begin at
60 days, rather than the current 30 days, and the return receipt
would be required. The chairman requested that Janet Seitz, aide
to the House Labor and Commerce Standing Committee, explain the
current statutory requirements for notification and the changes the
legislation would make for older Alaskans.
Number 0665
JANET SEITZ, Legislative Assistant to Representative Norman, Alaska
State Legislature came forward. As aide to the House Labor and
Commerce Standing Committee (Labor and Commerce), she explained the
changes. Ms. Seitz indicated the current basic scheme for everyone
is shown on page 2, line 17 through 23, of the bill: written
notice of cancellation at least 30 days before the effective date,
a 20-day notice, and a 10-day notice. House Bill 158 would require
a different notice schedule if a person is 67 or older: first
notice at least 60 days before the effective date of cancellation,
second notice at least 30 days, and a third written notice at least
10 days before sent by certified mail.
CHAIRMAN ROKEBERG questioned if the committee understands what the
legislation does. He confirmed for Representative Harris that only
the last mailing is by certified mail.
Number 0720
REPRESENTATIVE HALCRO confirmed from the chairman that the incident
mentioned in the sponsor statement and in the letter on the Central
Lutheran Church letterhead concern the same individual.
Representative Halcro commented the letter says the couple had a
caregiver who confessed to taking advantage of the couple's
finances for over $40,000.
CHAIRMAN ROKEBERG said that is a different incident not spoken to
in the bill; he indicated it simply makes this couple's situation
that much worse.
REPRESENTATIVE HALCRO questioned whether the caregiver could have
thrown away the notice of cancellation.
CHAIRMAN ROKEBERG agreed it was possible.
REPRESENTATIVE HALCRO questioned how this legislation would prevent
this situation if someone keeps throwing the notice away or if
someone moves.
CHAIRMAN ROKEBERG answered he thinks it protects the insurance
company because it would have the return receipt, being able to
prove the notice was sent. He thinks it helps both the recipient
and the insurer.
REPRESENTATIVE HALCRO asked if any other cases like this have
occurred, indicating he is trying to understand the reason for
changing the notice structure.
CHAIRMAN ROKEBERG commented the witness testimony might be helpful.
Number 0804
REPRESENTATIVE MURKOWSKI questioned why the legislation is
requesting statistical information on health insurance but no other
types of insurance.
CHAIRMAN ROKEBERG replied that is the figure they have been seeking
for five years. The department does an excellent job obtaining all
kinds of other statistics but that one has been elusive. This
legislation is something of a statutory mandate to obtain that
statistical information. It gives the Division of Insurance
justification if there is a cost involved in obtaining the
information and provides justification to the insurance companies
for the division's request.
Number 0856
ROSEMARY HAGEVIG, Executive Director, Catholic Community Services,
came forward to testify in support of HB 158. Ms. Hagevig noted
Catholic Community Services is the parent organization to Southeast
Senior Services; they serve 2,200 seniors in 15 Southeast Alaska
communities. They support the legislation, particularly the
section dealing with insurance notification for Alaska's elderly
citizens. The efforts to provide an extra safety net for probably
some of the most vulnerable members of the state's population are
appreciated. Ms. Hagevig shared that she speaks from personal
experience as a distant caregiver for an aging parent. Her sibling
living close to the parent tries to intercept the mail every day to
make sure something important does not go astray. Ms. Hagevig
indicated this legislation would be of great assistance to those
seniors, many of whom might be afflicted with dementia or
Alzheimer's disease, who are trying very hard to maintain
independent living for as long as possible outside of institutional
situations. She understands there would be some complications with
the insurance industry but is confident they could be resolved.
REPRESENTATIVE MURKOWSKI noted this applied to personal insurance
and questioned whether Ms. Hagevig thought it should be broadened.
MS. HAGEVIG thinks it is a step in the right direction, and she is
sure there was a good reason for beginning this process with
personal insurance. She related a recent situation she had heard
firsthand from a woman in Ketchikan. The woman's husband had died,
had apparently forgotten to pay his life insurance premiums, and
the wife was unable to collect anything. Ms. Hagevig noted these
are very serious situations in people's lives as they become older,
and she commented on the growth of this segment of the population.
Number 0993
CHAIRMAN ROKEBERG pointed out to the committee there is a statutory
grace period for life insurance, mentioning 30 days, but no
mandated grace period for personal insurance. The chairman
indicated he has had some discussion with members of the industry
regarding notifications to relatives or other caregivers; he thinks
it is difficult to do that statutorily.
MS. HAGEVIG said in her personal situation her sibling has made
every effort to change the [mailing] address when these situations
come to light; this is another solution but it is not always
effective. Also, not all senior citizens have family members close
enough to be able to do that for them.
CHAIRMAN ROKEBERG commented that having a change of address is
probably the best advice to anyone in the circumstance; hopefully
they will generate some publicity with this legislation and pass
that information on.
Number 1094
JOHN FERENCE, Deputy Director, Division of Insurance, Department of
Commerce and Economic Development, came forward to answer the
committee's questions on HB 158 from a technical standpoint.
REPRESENTATIVE MURKOWSKI referred to an April 7, 1999, letter in
the bill packet from the Alliance of American Insurers which states
that this is going to be very problematic because there is nothing
currently in place for them to monitor when someone turns 67.
Representative Murkowski commented regular notices would be sent
out to 70 percent of the public but it would then be necessary to
monitor everyone's birthday. She asked Mr. Ference how the
division would monitor the industry's compliance with this
legislation, if passed.
MR. FERENCE replied they monitor in two fashions: through consumer
complaints and a periodic random audit process addressed to both
insurance agents and companies. The division looks at producer
files to see if the notices are copied there and it examines
insurance companies to see if the companies have issued proper
notices. In addition, the division responds to individual consumer
complaints.
REPRESENTATIVE MURKOWSKI questioned whether the division has
received complaints regarding the notification situations this
legislation would address.
Number 1198
MR. FERENCE replied the division receives consumer complaints on a
regular basis about inadequate or missing notices. Investigation
results show that more often than not the notices were sent and are
missing in transit or were received and ignored. Mr. Ference
indicated the complaints come from no particular concentration of
the population.
CHAIRMAN ROKEBERG indicated an amendment to the effect that nothing
in this paragraph would authorize the director to require the
insurer to release proprietary information had been suggested
regarding the statistical information. The chairman questioned
whether Mr. Ference objected to an amendment of this type.
MR. FERENCE replied he is not really in a position to offer an
opinion because he does not know if the carrier they would request
this information from would view it as proprietary. However, if
the provision is not in the legislation, it is not a question.
CHAIRMAN ROKEBERG asked if a distinction would be made between
covered lives and policies, questioning if the committee needed to
be specific in law or if the division could handle that.
Number 1297
MR. FERENCE confirmed the division could handle that itself.
CHAIRMAN ROKEBERG emphasized the objective is the amount of
non-ERISA-covered.
MR. FERENCE questioned that the information desired is the number
of people who are beneficiaries of health insurance.
CHAIRMAN ROKEBERG noted they wanted to make the distinction between
non-ERISA and ERISA-covered.
REPRESENTATIVE HALCRO questioned whether there is similar
legislation in other states regarding the amount of notice as well
as the statistical mandate.
MR. FERENCE replied that, to the best of his knowledge, this would
be a longer notice period than is required in any other
jurisdiction. In response to chairman's question, Mr. Ference
confirmed this is a new idea, to the best of his knowledge, and has
not been directly looked at in other states.
CHAIRMAN ROKEBERG expressed his approval.
Number 1367
JOHN GEORGE, Lobbyist for the National Association of Independent
Insurers (NAII), came forward. Among the members of NAII are
Allstate [Allstate Insurance Company], GEICO [GEICO Corporation],
USAA, Progressive [The Progressive Corporation] - major writers of
automobile insurance in the state of Alaska. The notice required
by this legislation would be a real problem for insurers. Mr.
George said he had spoken this afternoon with an Allstate
representative who had been an underwriter in the pre-computer
days. This representative commented the company did not have age
information for some of its clients because the original
applications were taken manually. Unless the client applied for a
senior citizen discount, the company might not know who its
67-year-olds are. The NAII believes that there are thousands or
possibly even hundreds of thousands of cancellation notices issued
every year in the state of Alaska. Mr. George questioned how many
people even pay their insurance 60 days before it is due,
commenting it is due just prior to cancellation. He indicated
there would also be problems with people who pay their insurance on
a monthly basis. Mr. George further indicated they are working on
these logistical concerns with the chairman.
Number 1453
MR. GEORGE expressed that his foremost concern, however, is the
approaching year 2000 (Y2K). The NAII and other trade associations
have lobbied the National Association of Insurance Commissioners
(NAIC), the National Conference of Insurance Legislators (NCOIL),
and the National Conference of State Legislators (NCSL) who have
all passed resolutions urging state legislators not to pass
legislation which could require insurance company programmers to
concentrate on issues other than meeting Y2K compliance. Even if
this legislation were to progress, NAII would urge the legislature
for an effective date after Y2K so the insurance company
programmers can continue their compliance efforts to ensure that
the entire system doesn't crash. Mr. George indicated his clients
have some serious problems with the legislation but the intent is
appreciated. He thinks there are some solutions and these are
being discussed with the companies. He noted it has occurred to
him that the more a person suffers from dementia, the less likely
the person is to need an automobile. Mr. George added there is an
additional fail-safe with automobiles or homes that are financed:
there is a lender ensuring that that insurance stays in force as
well. He admitted, however, the older a person is, the less likely
there is to be a lender involved.
Number 1558
REPRESENTATIVE HARRIS questioned if the insurance companies would
be a lot happier if the notification series remained as it is
currently - 30, 20, 10 - and the last letter had to been sent by
certified mail no matter the person's age. It seems to him the
certified part is the point here, that someone signed for the
letter verifying that it was actually picked up.
MR. GEORGE replied that would make it more palatable. He thinks
anytime something has to be done differently, such as the certified
mail, it is less than optimal, but that is certainly one of the
alternatives being examined. He referred to a previous comment of
the chairman's regarding this being an unfunded mandate; Mr. George
noted that is actually not true. Insurance premiums are largely
based on age categories. It might be discovered that this could
result in a premium increase for whatever age group it applies to
because insurers can add the extra notice requirement into their
rate structure. Mr. George noted this aspect is being worked on as
well. He reminded the committee that insurers don't like canceling
insurance and would much rather keep it on the books if it is good,
solid business.
Number 1681
REPRESENTATIVE HARRIS commented it seems from Mr. George's
testimony that if the certified cost is spread out over all the age
categories for health insurance, the 67-plus Alaskans would not be
hit any more than the lower age brackets.
MR. GEORGE clarified that this would apply to automobile and
homeowners' insurance, not health insurance. Mr. George said he
did not know why it would be spread out over everyone if they were
speaking of a specific notice for a specific group, indicating he
had misunderstood Representative Harris's comment about a certified
final mailing for all policy cancellations, no matter the person's
age. Mr. George made a few additional statements under this
misunderstanding.
Number 1797
REPRESENTATIVE MURKOWSKI questioned which would be more expensive
for the insurance companies: determining and monitoring the age of
all of a company's insureds to identify incoming 67-year-olds or
Representative Harris's idea that all final 10-day cancellation
notices would be automatically sent via certified mail.
MR. GEORGE replied that uniformity would be nice. He reminded the
committee that Alaska is a very small market and these are national
companies. Almost anything the legislature does would probably be
a minor exception to these companies. Mr. George commented that
sending out a certified notice to every Alaskan would still be
somewhat of a thorn in the companies' side. Even in Alaska they
are speaking of thousands and thousands of these notices. A lot of
people pay their insurance within 10 days of the expiration date.
He indicated sending 20,000 certified letters out per month could
be a significant expense and even the physical process of
certifying the letters would be inconvenient. Mr. George also
noted from his previous experience as director of the Division of
Insurance, when the division was "served" for an insurance company,
the division, in turn, had to send that summons/complaint to the
insurance company certified return request, and about a third of
the cards never came back. Mr. George related he became so
frustrated he called the office of Senator Ted Stevens. He
received a call back from the Postmaster General informing him the
postal service did not know what was happening but could not fix
it. Mr. George said the situation was never resolved and he
indicated certified return receipt was not a fail-safe.
Number 2000
CHAIRMAN ROKEBERG asked how much certified mail costs.
KEVIN HAND, Legislative Administrative Assistant to Representative
Andrew Halcro, Alaska State Legislature, answered $2.90.
CHAIRMAN ROKEBERG indicated a business could also apply and fill
out their own certified mail if the mail is picked up at the place
of business.
MR. GEORGE noted that is a manual step and indicated the companies'
current mailing processes are completely automated. Mr. George
reiterated the companies do think there are some solutions here and
they are continuing to work on them. He mentioned Florida and
Arizona both have aged populations; he commented someone has
probably thought of this there as well.
CHAIRMAN ROKEBERG questioned Mr. George's indicated testimony
regarding concern for the upcoming year 2000 date change and the
programmers' ability to program. The chairman noted Mr. George had
also testified that the underwriters are looking at age groups when
doing actuarial calculations to assess rates. The chairman
commented he was not sure if he could buy into the Y2K problem Mr.
George had mentioned; it seems to the chairman that if actuarial
calculations are going to be done for a policy rate quote to an
individual, that person's age already has to be in the calculation.
Number 2170
MR. GEORGE responded that the major changes are for young drivers
versus anyone over 25 or so. They are speaking about a fair number
of people who have been insured for the last 30 or 40 years who did
not get into the computer system. Mr. George emphasized his
concern about Y2K is that any changes which require a programmer to
change the program to give a different notice to a certain group of
people, or other action, takes a programmer's time. Currently,
that programmer is concentrating on generically beating the Y2K
problem. The companies would like to let the programmers continue
to concentrate on that. Mr. George noted it would be a significant
problem for some companies, and would not be as big a deal for
others.
CHAIRMAN ROKEBERG noted he looked forward to Mr. George's letter
endorsing HB 82 [HB 82 - IMMUNITY: CLAIMS ARISING FROM Y2K
PROBLEMS].
Number 2263
REPRESENTATIVE CISSNA commented regarding health insurance and
expressed that she could see a significant advantage in having an
extended time to make sure people received something. She
questioned if older policy holders didn't usually pay more because
of their age.
MR. GEORGE answered there is actually a senior citizen discount on
automobile policies.
REPRESENTATIVE CISSNA questioned if this discount was often given
because the senior citizens had been policy holders for many years,
had helped support the company, and helped support other policy
holders.
MR. GEORGE replied he doesn't know that they are required to have
been longtime policy holders. He believes the theory is that
people probably drive less as they reach a more mature age and
probably are statistically involved in fewer accidents because of
fewer miles. He noted, though, the rate of accident per mile might
actually be higher. Mr. George qualified that he was speaking off
the top of his head and really does not know how that comes out
statistically.
Number 2435
REPRESENTATIVE CISSNA noted her father had had an insurance
company; the thought had been to always try and provide service.
She commented she was sure all of the companies Mr. George
represents do that.
MR. GEORGE reminded the committee that insurance companies make
money by writing insurance, not by canceling it. It is expensive
to cancel a policy then reinstate it or lose it altogether. The
companies pay commissions to agents to make sure those things don't
happen.
REPRESENTATIVE HALCRO said he had a couple of questions. He
stated, "The way the bill is written, you have to give 60 days
first notice, then 30 and then..." [TESTIMONY INTERRUPTED BY TAPE
CHANGE]
[From tape log notes: 'If my policy']
TAPE 99-36, SIDE A
Number 0001
REPRESENTATIVE HALCRO continued, "...and send out three notices
before you can cancel me, is that the way you're reading ... the
legislation?"
MR. GEORGE replied, "I'm not sure that carrying someone would be
the (indisc.) - you would - if the policy expired August 1, 60 days
prior to that you would send out the notice, so that on the day the
policy expired it could be canceled. You wouldn't wait until close
to the end and then cancel it and have to extend it beyond."
REPRESENTATIVE HALCRO agreed, noting Mr. George had said some
people do pay their insurance on a monthly basis. Therefore, there
is no way this time period would fit within that 60-day window.
MR. GEORGE replied it would be "putting a round peg in a square
hole," indicating it created some logistical problems.
Number 0089
REPRESENTATIVE HALCRO questioned if the company would have to
continue to carry the person if the certified mail was returned,
asking what the intent was.
CHAIRMAN ROKEBERG noted the company could cancel the policy.
REPRESENTATIVE HALCRO said that is where his problem lies. In the
case the chairman had cited, if the caregiver had thrown away the
certified letter it would not have made any difference.
CHAIRMAN ROKEBERG agreed that is true.
REPRESENTATIVE HALCRO stated, "With all due respect, I think this
is a solution looking for a problem."
MR. GEORGE pointed out Ms. Hagevig had described that her sibling
tries to intercept the parent's mail: a notice to another person
might be a simple solution. A person could designate themselves or
someone else to receive notices of cancellation. Mr. George
indicated that perhaps information to this effect could be included
with the person's premium billing when he/she hits the specific
age. Mr. George further indicated the industry is examining all of
these things to find workable solution.
Number 0218
CHAIRMAN ROKEBERG reminded Representative Halcro the present
statutory policy is that the insurance company makes and files a
note to itself that the cancellation notice has been sent. The
company does not have to account to anyone regarding this. To the
chairman, requiring the return receipt ensures there was an intent
to make notice by mail to the insured. The return receipt also
gives the insurance company proof it did make the notice.
REPRESENTATIVE HALCRO noted the current statutes state that they
shall obtain a certificate of mailing from the United States Postal
Service, so that is already required under AS 21.36.260.
MR. GEORGE explained, as he understands it, an insurance company
will have a computer printout with the list of names and the stack
of envelopes. This list is signed by a postal employee. Mr.
George indicated there is also is a certification by the insurance
company employee that he/she actually mailed those notices. He
expressed doubt about certified mailing.
Number 0337
CHAIRMAN ROKEBERG indicated the company would receive the return
receipt verifying the letter had been delivered.
MR. GEORGE answered, "Or not."
CHAIRMAN ROKEBERG commented that perhaps the committee should
mandate that if the return receipt was not received, the company
should give the individual a grace period.
MR. GEORGE referred to the return receipt, indicating that piece of
paper would have to be dealt with manually, rather than by
computer, and there would be some matching problems because it is
a fixed post office form.
CHAIRMAN ROKEBERG noted he appreciates Mr. George's comments and
has indicated to the industry that he is happy to work with them on
solutions. Chairman Rokeberg commented some of the possible
solutions might be increasing the age and examining other forms.
He explained the intent of the 60-day period was to allow
sufficient time if a caregiver or someone else was paying the bills
for the individual. However, the chairman does understand that
probably would be a programming change and probably a larger cost
than the certified return receipt.
Number 0501
REPRESENTATIVE MURKOWSKI asked why statutory grace periods are
allowed with a cancellation or termination of a life insurance
policy, but not with any other form of insurance.
MR. GEORGE answered that life and health have very different types
of products and grace periods do exist. He noted he had been
surprised on examining the statute that a person has two or three
years after a life insurance policy lapses to be able to pay the
premium and have the policy reinstated. Mr. George indicated this
might affect the Ketchikan woman whose situation Ms. Hagevig
described.
REPRESENTATIVE MURKOWSKI said it makes one wonder if a grace period
couldn't just be allowed for certain individuals above a certain
age.
MR. GEORGE noted that was one of the possibilities being
considered, even if there were a fee for that. For example, the
person receives the notice on the day the policy actually cancels
but if he/she sends payment in within 15 days for an extra $25
dollars, the person could possibly be reinstated.
Number 0599
CHAIRMAN ROKEBERG commented, "Option to extend prepayment," noting
it could be inserted in the initial billing. He indicated possibly
the person could be sold 30 or 60 days worth of grace for a prepaid
premium. He confirmed no one else wished to testify on the
legislation and expressed his desire to see HB 158 move out of
committee to the next committee of referral, the House Judiciary
Standing Committee (Judiciary). The chairman noted he has agreed
to work with industry and make some adjustments to the legislation
as it moves through the process. He commented the chairman of
Judiciary formerly chaired Labor and Commerce and has been an
active legislative participant with NAIC and NCOIL. Chairman
Rokeberg thinks the required age needs to be raised somewhat and
the time frames need to be examined, along with any suggestions the
industry can make that might reduce the cost and serve these people
better. Confirming no one else wished to testify, the chairman
closed the public testimony on HB 158. He pointed to the D.1
amendment before the committee, explaining it was requested by some
members of the insurance industry and he thinks it is valid. The
chairman designated this proposed amendment as Amendment 1.
Amendment 1, labeled 1-LS0128\D.1, Ford, 4/7/99, read:
Page 2, line 11
Following "sold":
Insert "or terminated"
Following "state;":
Insert "this paragraph does not authorize the
director to require an insurer to release proprietary
information;"
CHAIRMAN ROKEBERG moved Amendment 1, questioning if everyone had an
understanding of it. He asked if there were any objections to the
amendment. There being none, Amendment 1 was adopted. With that,
the chairman requested the committee's indulgence to move the
legislation to Judiciary for further activity.
Number 0786
REPRESENTATIVE HALCRO objected to moving the legislation out of
committee.
CHAIRMAN ROKEBERG asked Representative Halcro to speak to his
objection.
REPRESENTATIVE HALCRO said he thinks the bill has a lot of
logistical problems; since he does not sit on Judiciary, he does
not feel comfortable moving the legislation until these problems
are addressed in the current committee.
REPRESENTATIVE MURKOWSKI noted she sits on Judiciary and she would
prefer that the work on this legislation be done in this committee,
rather than Judiciary. She thinks Labor and Commerce will produce
a good product and then Judiciary can do the final review.
Number 0881
REPRESENTATIVE CISSNA commented on the references to the committee
members as freshmen legislators, noting many of the new members are
younger members. She indicated the issue the bill addresses is
something that becomes a more significant problem as one approaches
her own age and she expressed the hope that if the legislation is
heard again in Labor and Commerce, the committee would hear from
other witnesses.
CHAIRMAN ROKEBERG indicated he is concerned about the lateness of
the session and the "bottleneck" in Judiciary.
REPRESENTATIVE HARRIS suggested the committee take an at-ease.
REPRESENTATIVE MURKOWSKI noted, "And Mr. Chairman, if I may speak
to that bottleneck I think that we could address..."
Number 0945
CHAIRMAN ROKEBERG called a brief at-ease at 5:19 p.m. The
committee came back to order at approximately 5:21 p.m.
Number 0947
CHAIRMAN ROKEBERG announced that HB 158 would be held over until
Monday [April 12, 1999].
Number 0997
CHAIRMAN ROKEBERG called an at-ease at 5:22 p.m. The committee
came back to order at 5:26 p.m.
HB 136 - ABOLISH TOURISM MARKETING COUNCIL
Number 1004
CHAIRMAN ROKEBERG announced the committee's next order of business
is HB 136, "An Act relating to tourism and tourism marketing;
eliminating the Alaska Tourism Marketing Council; and providing for
an effective date." Representative Beth Kerttula joined the
committee just prior to the chairman's announcement. The chairman
indicated there was a Version K committee substitute for HB 136.
Number 1015
REPRESENTATIVE HALCRO moved that the committee adopt the proposed
Version K CS for HB 136 as a working document. Version K is
labeled 1-LS0616\K, Cook, 4/9/99. There being no objection,
Version K was before the committee.
Number 1044
JOE BALASH, Legislative Secretary to Representative Gene
Therriault, Alaska State Legislature, came forward to present HB
136 on behalf of the bill sponsor. Mr. Balash read the sponsor
statement into the record:
"House Bill 136 is based on a plan brought forward by the
tourism industry and is similar to legislation sponsored
last session by the House and Senate Finance Committees.
It consolidates the state's tourism marketing efforts,
reduces the size and functions of the Division of
Tourism, and allows the state to reduce its contribution
to tourism marketing over time.
"Currently, Alaska's statewide tourism marketing efforts
are carried out by three organizations - the Alaska
Tourism Marketing Council, the Alaska Visitors
Association, and the Division of Tourism in the
Department of Commerce and Economic Development. These
efforts, under our bill, will be consolidated into a
single marketing function that is broadly representative
of the various sectors of the visitor industry in the
state. This organization will put together a marketing
program to address media advertising, visitor inquiries,
publishing and distributing ["distribution"] information
regarding vacation planning, and establishing and
maintaining Internet sites that provide tourism
information.
"The Division of Tourism will continue to provide inquiry
assistance, administer visitor information centers, and
plan and advocate for tourism and tourism development in
coordination with the private sector, ... municipalities,
and state and federal agencies. They will enter into a
contract with a single, qualified trade organization for
the purpose of planning and executing the state's
destination tourism marketing campaign. The contract may
include promotion of distinct segments of tourism, such
as highway, seasonal, cultural, regional, rural, and
ecotourism. This will take the state out of the business
of marketing and reduce the number of employees required
to carry out the functions of the Division of Tourism.
"A central feature of the contract is that the
organization awarded it will be required to match the
state's effort with 30 percent of its own money in the
initial year. It is expected that the organization will
grow and its membership collections increase. Therefore,
the match will rise to 60 percent in 2002. The benefits
of this are twofold: first, the state will be able to
reduce its contribution without extreme harm to the
industry; second, the private sector will contribute more
of its own funds towards the marketing ["marketed"]
efforts they benefit from.
"The industry is coming forward with more of its own
dollars. Coupled with efficiencies provided by
consolidation, the marketing efforts to bring more
visitors to the state will be more effective. This is a
responsible approach to reduce the state's monetary
contribution without harming the growth of this vital
industry."
Number 1222
REPRESENTATIVE HARRIS questioned where they are currently at as far
as tourism marketing funding goes if this bill becomes law.
MR. BALASH answered that the state will continue the status quo in
the fiscal year (FY) 2000 beginning July 1, 1999, as it transitions
to this new effort. The total funds spent by the state are
approaching $6,700,000. In the year 2000 initial year, the
contract from the state is expected to be $5 million, with the
industry matching at 30 percent.
REPRESENTATIVE HARRIS asked if the New Millennium Plan people have
given fair assurance they will be able to raise that much money at
that period of time.
MR. BALASH answered in the affirmative. He believes cards went out
this week or the past week for the initial charter memberships to
create a board that will begin the fund-raising efforts.
REPRESENTATIVE HARRIS questioned if there is any fall-back plan on
the state's part if the amount of money needed in the following
years is not raised, or if it will be up to that legislature to
decide whether it wishes to provide additional funding.
Number 1323
MR. BALASH replied the match rate will be set in statute. This
will require the organization to come up with a suitable amount of
money if it wishes to retain the full amount appropriated by the
legislature. If the organization does not do this, there are
provisions allowing the division to enter into an additional or
further contract which would not require that same match.
REPRESENTATIVE CISSNA indicated the legislation has come before the
committee suddenly and close examination would be necessary to find
out the differences in the proposed CS from the earlier versions.
She indicated there were some questions already in terms of the
organization to be created. She asked if Mr. Balash had any
explanatory literature or a copy of the card that was sent out.
MR. BALASH pointed to the copies in the bill packets of "The New
Millennium Plan, A Concept for the Future of Tourism in Alaska,"
[Alaska Travel Industry Association Organizational Outline, revised
December 1998] put together by the Alaska Visitors Association
(AVA). Mr. Balash did not have an example of the card. He
indicated he would happy to explain further if Representative
Cissna wished, noting there are industry representatives available
to testify to that as well.
Number 1430
CHAIRMAN ROKEBERG indicated the committee would proceed to
teleconference testimony. He confirmed Allen LeMaster (ph),
Gakona, was no longer on teleconference. The chairman confirmed
Valdez was still participating via teleconference and requested
Lisa VonBargen's testimony.
Number 1462
LISA VonBARGEN, Executive Director, Valdez Convention and Visitors
Bureau (VCVB), stated via teleconference from Valdez that she did
not have comment at this time.
Number 1472
NANCY LETHCOE testified next via teleconference from Valdez. She
spoke from a statement faxed to the committee:
"My name is Nancy Lethcoe. My husband and I are
celebrating 25 years in the Alaskan tourism industry.
... I'm past President of the Alaskan Wilderness
Recreation and Tourism Association [AWRTA], and a member
of the Valdez and Anchorage CVB. However, I am speaking
as a private person.
"I support the work draft of 4/9/99 ["4/4/9"] ...
although I have some reservations about the funding.
Here in Valdez, because of budget constraints, we are
facing the loss of our community hospital. I'm sure you
can appreciate the potential significance of this upon
the community and visitors.
"So, though I would appreciate (indisc.) state funding
tourism as proposed by HB 136, I think as public policy,
the state should fund medical services before allocating
funds to tourism marketing.
"Therefore, I encourage you to consider alternative
sources of funding - such as proposed in Senator Elton's
bill [SB 122] - even though this means our business would
incur increased expenses."
CHAIRMAN ROKEBERG confirmed Valdez had copies of Version K.
Number 1548
MS. VonBARGEN asked to briefly add one item. Mentioning the
existence of legislation which suggested all tourism marketing
funding should cease at the end of this fiscal year, Ms. VonBargen
emphasized the need to have reduction in state funding come at a
graduated level. She indicated complete sudden elimination of
funding could be seriously detrimental to the state's efforts to
gain momentum in tourism marketing and she noted the necessity of
a backup plan. The proposed New Millennium Plan would go through
three fiscal years before the goal of $10 million in terms of
funding is reached. Ms. VonBargen indicated the gradual funding
reduction she thinks is important is represented in the legislation
and was outlined after Representative Harris's comments.
CHAIRMAN ROKEBERG confirmed there were no other witnesses on
teleconference. The chairman indicated Ms. Fay should come forward
to explain the changes in the very recent Version K.
Number 1642
GINNY FAY, Legislative Liaison and Acting Director of the Division
of Tourism, Department of Commerce and Economic Development(DCED),
came forward. She highlighted the most significant changes in
Version K from the original bill, as introduced. Ms. Fay indicated
there have been some change in section order from the original
bill; this could make it difficult to compare the two versions.
Section 1, findings and intent, has been simplified to say the
intent is that the private and public sectors cooperate and
condense it into one marketing effort. Section 2 is unchanged.
Section 3 is an exemption from procurement. In the original bill
this exemption was only extended to the contract with the qualified
trade association (QTA). So that it would be clearer to all the
contracted parties, it was decided that even if the QTA chooses not
take a portion of the contract with the state and DCED contracts
elsewhere, those other contracts would also be exempt from
procurement.
CHAIRMAN ROKEBERG asked, "Has the ATMC [Alaska Tourism Marketing
Council] exempt -- (indisc.) exempt (indisc.)?"
MS. FAY replied it is her understanding that they are.
CHAIRMAN ROKEBERG questioned if that was in the repealer.
MS. FAY responded that all the ATMC statute is repealed. She
questioned in an aside if ATMC is exempted.
TINA LINDGREN, Executive Director, Alaska Visitors Association,
answered that ATMC is not exempted; ASMI [Alaska Seafood Marketing
Institute] is exempt.
Number 1756
MS. FAY referred to Section 4, purposes. She indicated the
original bill had deleted purposes (2), (3) and the current (5)
from the existing statute, but these have been returned in Version
K. These were primarily concerning the purposes to retain benefits
in Alaska and to residents of the state. In Section 5, Ms. Fay
indicated the primary change was to ensure that research for
tourism development, and also assessing the contract, could be
done. Section 6 has been the most difficult to reach agreement on.
Section 6 of Version K read:
* Sec. 6. AS 44.33.120 is amended by adding a new
subsection to read:
(d) During the term of a contract with a qualified
trade association under AS 44.33.125(a), the Department
of Commerce and Economic Development may not execute
another tourism marketing campaign except as provided
under AS 44.33.125(b), (c), or (d).
MS. FAY indicated this section was changed from the original bill
by adding (b), (c) and (d) to allow the exceptions in the statute
for other contracting provisions. Ms. Fay further indicated the
portion of this section in the original bill prohibiting promotion
of Alaska travel by the department was deleted; the department
would be able to continue activities with the contract in place
like encouraging "Iceland Air" [Air Iceland?] to land in Anchorage.
Number 1833
MS. FAY noted the main changes in Section 7 of Version K. If a
contract is to be awarded, the department can review and has to
approve the marketing plan before the contract is executed. The
department can indicate important components of the contract; those
are contained in subsections (a) and (b). If the QTA does not want
to do a portion of the contract the department feels is essential,
the department can contract with another entity as long as the
terms of that contract are essentially the same as what was offered
to the QTA. Subsection (c) allows the QTA to have first right of
refusal on all subsequent contracts while the contract is in place.
The only change here is that this applies to marketing contracts,
not to all of the division's contracts. Subsection (c) also
basically requires that the terms not be materially different.
Subsection (e) is essentially unchanged.
Number 1927
MS. FAY explained that subsection (f) relates to use of the
materials that would be the joint property of the QTA and the
state. If these materials are sold or leased, they have to be used
for the promotion of Alaska. Subsection (i) requires the
contracted QTA to provide notice of availability and consider the
responses when it goes to subcontract. This new subsection was
requested by the House Special Committee on Economic Development
and Tourism (EDT) subcommittee. Ms. Fay indicated the list of
major sectors of the visitor industry had been expanded to include
some of the smaller operations. This was by the addition of "bed
and breakfast enterprises, wilderness lodges and outfitters, and
charter operations" in subsection (j), which was subsection (h) in
the original bill. Ms. Fay indicated Section 8 is the same as
Section 7, subsection (a), but the percentage has been increased to
60 percent. Ms. Fay continued, "Section 9 adds an amendment that
was agreed upon by the parties but did not get addressed earlier in
Senate Labor and Commerce that makes it so in the granting
provisions that the Division of Tourism has, that those grants
cannot be used for tourism marketing."
CHAIRMAN ROKEBERG asked for clarification on the effects of Section
9.
MS. FAY answered that the repealer section, now Section 10, had
originally repealed AS 44.33.135 because of AVA's concern that the
matching grant provision would be used a means to provide tourism
marketing money to competing entities. However, that repeal would
have removed the department's ability to provide its matching grant
to the Rural Tourism Center. Ms. Fay indicated AVA realized it
wanted to restrict the Division of Tourism from providing marketing
grants, not delete the division's granting ability.
Number 2067
REPRESENTATIVE CISSNA questioned that there is no specific entity
which would really supervise, monitor and evaluate this.
MS. FAY explained, "Currently what happens with our contract with
the AVA that is used to - for the matching grants for the matching
- the required match for the ATMC program, is the contract is
between the department and the AVA. In this situation, ... the
Division of Tourism would be involved in administering this but the
actual contract would be between the department through the
commissioner and the qualified trade association."
REPRESENTATIVE BETH KERTTULA questioned if they were currently
going out under competitive bid, under contract, and if they still
had procurement code requirements in that contract.
MS. FAY replied their contract with the AVA is not covered under
procurement.
REPRESENTATIVE KERTTULA indicated that was something the special
committee had been concerned about. Referring to subsection (i) on
page 6 of Version K, Representative Kerttula asked if that is the
same as a competitive bid or in what way does the department
envision that working. Subsection (i) read:
(i) A qualified trade association may, pursuant to
the performance of a tourism marketing contract awarded
under (a) or (c) of this section, award a subcontract
only on a competitive basis after providing adequate
notice of the availability of the subcontract and
considering all responses.
MS. FAY answered that this entity would not fall under state
procurement. She thinks a private right of action would occur if
someone protested this; the probable remedy would be legal action
if they did not feel there was adequate notice. Ms. Fay indicated
it would be the responsibility of the qualified trade association
to set a standard it felt reflected the legislature's intent in
requesting this.
CHAIRMAN ROKEBERG confirmed Ms. Lindgren had to leave soon.
REPRESENTATIVE HALCRO expressed the wish to have Ms. Lindgren join
the committee at the table, noting this might assist Representative
Kerttula. Representative Halcro indicated there are certain
functions the QTA would perform, as does the current organization
now, that would be difficult to bid. He indicated it was the
subcommittee's intent with subsection (i) to require the QTA to
provide notice of subcontracts and have a competitive format
criteria so that subcontracts would be open to more than one
bidding party, without tying the QTA's hands with regards to
weighing proposals differently for creativity. Representative
Halcro provided an example concerning advertising. Advertising
agency A's proposal for a television commercial using a star would
be more expensive than advertising agency B's proposal using an
unknown actor. He indicated Ms. Lindgren should comment where she
felt necessary.
Number 2249
TINA LINDGREN, Executive Director, Alaska Visitors Association,
answered that Representative Halcro is exactly right. She indicated
"bid" was interpreted to mean that the only weighting would be for
price. In the marketing field there are some things where price is
not the only consideration. However, the subcommittee had wished
to make sure it was done competitively and that that was spelled
out in the legislation.
REPRESENTATIVE KERTTULA asked if this is the only place in the
statute where competitive basis and adequate notice is discussed.
She questioned if there is any attempt to "flesh it out at all,"
noting she did not recall if there is any discussion in the New
Millennium Plan itself about how that would work. Her underlying
concern is still the large amount of state money coming in and
ensuring that it is monitored.
MS. LINDGREN responded that "competitive basis" does not appear
anywhere else in the statute. Ms. Lindgren indicated another way
to achieve this monitoring is through the contract. The
department's responsibility to oversee the contract and terms gives
it a lot of leeway to examine how the QTA is operating. However,
it is necessary to keep in mind the entire attempt was to privatize
this effort and work with the private sector, as opposed to it
remaining a state agency. She understands the concern.
CHAIRMAN ROKEBERG asked Ms. Lindgren if she wished to make any
general comments at this juncture.
Number 2342
MS. LINDGREN indicated many of the members present were on the EDT
subcommittee which reviewed the legislation on April 6, 1999. She
emphasized the years' worth of work that has gone into bringing the
plan forward at the request of the legislature, and the
approximately two years it took to bring the legislation itself
forward. Ms. Lindgren noted Version K is supported by the AVA and
the Administration. She added she believes AWRTA [Alaska
Wilderness Recreation and Tourism Association] has not seen the
competitive bid clause but, with that exception, supports the bill
as written. Ms. Lindgren, therefore, does not think they will ever
be able to do much better than this. She hopes the committee will
pass the legislation out as written to the House Finance Standing
Committee, indicating it is the result of serious effort and has
been closely examined. The legislation sets up a mechanism for the
new organization to contract with the state; it does not contain
other items that are part of what the new organization will have to
create. In addition, there are funding challenges ahead for that
organization.
REPRESENTATIVE HALCRO thanked Ms. Fay and Ms. Lindgren for their
patience and efforts on this.
REPRESENTATIVE MURKOWSKI indicated she understands the legislation
provides a right of first refusal for every other tourism marketing
contract offered by the department. However, she believed Ms. Fay
had commented this would not include something like encouraging Air
Iceland to come in. Representative Murkowski sought clarification
on what the QTA has the full right of refusal to.
Number 2434
MS. FAY answered that the QTA would have had the first right of
refusal on every other tourism contract offered by the department
in the earlier draft, in what is now subsection 125(c) [Section 7].
She noted, for example, the organization would have had to be
offered first right of refusal for printing letterhead. Ms. Fay
said, "We requested and they accepted changing it to marketing
because the idea behind the bill is to consolidate tourism
marketing, not to consolidate all the tourism-related functions..."
[TESTIMONY INTERRUPTED BY TAPE CHANGE]
[From tape log notes: 'government to government' 'in terms of
airline routes']
TAPE 99-36, SIDE B
Number 0001
MS. FAY continued, "...(indisc.) things of that nature that are not
marketing, but they're maintaining sort of the foundation of the
tourism industry and tourism development, especially on public
lands in Alaska, and we wanted to be able to maintain our ability
to do that."
CHAIRMAN ROKEBERG commented it was approaching 6:00 p.m., inviting
the last witness forward. The chairman announced the committee
would not be moving the legislation at this hearing because the
fiscal note has not been received and because of the chairman's
commitment to Representative Kerttula. The committee will take up
HB 136 as the first order of business at the next meeting.
Number 0048
PHIL GREENEY came forward to testify. He is a bed and breakfast
(B&B) operator in Juneau and his wife is past president of the
Alaska Bed and Breakfast Association, chair of the INNside Passage
Chapter. He is present on his own behalf, indicating he also
speaks for some of the many people in his business who are
extremely concerned with the effects of the most current version of
HB 136. Mr. Greeney stated, "Mr. Chairman, if you're going to
completely change the process of destination marketing for the
state of Alaska, I suggest you must do so only with a concrete
plan, and certainly with secure funding. And so far, with HB 136,
it appears you cannot guarantee the level of funding, if any at all
from the state. ... What then happens to marketing if all the
funding's coming from the industry? Doesn't this then invite the
question of why the industry should allow any controls under that
scenario? And please ask yourselves where that then leaves the
thousands upon thousands of smaller tourism businesses. B&Bs were
mentioned frequently in earlier testimony as representative of one
end of the economic scale in the tourism industry."
MR. GREENEY continued, "As a representative of that component, I
can confirm that it appears that AVA has already begun to march
away from small businesses and their needs and concerns, pricing
themselves, perhaps out of necessity, out of our market. There are
signs that JCVB [Juneau Convention and Visitors Bureau] is
following, and, according to a spreadsheet I believe compiled by
JCVB, we can see some of the reasons for that concern. They're
projecting some near future increases in the participation, say
from Anchorage CVB [Anchorage Convention and Visitors Bureau] -
that would increase, I believe, 830 percent. Juneau's increase is
projected at 541 percent, and Homer's increase ... will be 4,445
percent."
CHAIRMAN ROKEBERG confirmed this was from the spreadsheet in front
of the committee and he asked if Mr. Greeney was referring to the
figure of $135,000 from Homer.
Number 0141
MR. GREENEY indicated the bottom of the spreadsheet gives the
dollar amounts and the percentage increases they represent. Mr.
Greeney further indicated all of the increases are substantial - in
the three and four digit range - with the possible exception of
Wrangell at 9 percent.
CHAIRMAN ROKEBERG noted the spreadsheet is from the Alaska Society
of Convention and Visitors Bureaus. He sought clarification as to
whether these percentage increases are the budget projections to
meet the commitment.
MR. GREENEY replied he believes so.
CHAIRMAN ROKEBERG requested assistance from Ms. Lindgren.
MS. LINDGREN indicated this spreadsheet was prepared by all of the
convention and visitors bureaus at the AVA's request. It was
prepared for a board meeting where the CVBs could discuss current
programs, expenditures, and the relationship of this to some of the
budget numbers in the plan. Homer is in support of the plan; it
has mentioned it knows the city has been receiving a "free ride"
for a long time and is very willing to come to the table with more
money. Ms. Lindgren indicated the amounts on the spreadsheet are
not necessarily reflective of what these organizations will end up
paying; it was against one set of numbers. She explained this was
an informational piece and there were problems with some of the
information because different CVBs reported differently. Ms.
Lindgren noted many of these organizations currently use the
statewide program and marketing to fulfill their own information:
in other words, these organizations receive names generated by the
statewide program and base their own entire programs on this. She
indicated the lack of a statewide program puts some of these
organizations in serious trouble because, with the possible
exception of Anchorage, they cannot generate visitors on their own.
Ms. Lindgren noted, therefore, this is very useful information in
speaking with the CVBs but it is ongoing discussion.
Number 0253
MR. GREENEY continued his testimony, commenting that their concern
with these figures is higher convention and visitor bureau fees
because of the increased necessity for participation from these
organizations.
CHAIRMAN ROKEBERG questioned if that means bed tax.
MR. GREENEY answered not necessarily, indicating he was speaking of
the fees to belong to these organizations. He related he had
recently had a conversation with two other small business
operators, one the operator of a flying service and the other a
guide service operator. Mr. Greeney commented all three of them
had had to drop out of AVA because AVA had priced itself out of
their market. He noted advertising in the state planner has become
prohibitively expensive as well. Mr. Greeney said, "These things
are very, very difficult, and we're looking at a time when only big
business will be able to afford these organizations, and receive
the benefits of these organizations."
CHAIRMAN ROKEBERG asked how the JCVB is funded, questioning if it
is a bed tax, a percentage of sale tax, or what.
Number 0306
MR. GREENEY answered that Juneau has a 7 percent bed tax in
addition to a 5 percent sales tax, equaling 12 percent on every
room night they sell. In response to the chairman's further
question, Mr. Greeney confirmed the 7 percent goes into the CVB,
noting he believes much of that goes to finance Centennial Hall and
the other JCVB functions.
CHAIRMAN ROKEBERG noted, then, it is an allocation formula.
MR. GREENEY replied to the best of his knowledge, commenting he is
not fairly versed in that.
REPRESENTATIVE HALCRO indicated the breakdown shows none of the
sales tax Mr. Greeney's customers pay goes to support the JCVB.
MR. GREENEY noted he does not believe that is the case.
REPRESENTATIVE HALCRO indicated the spreadsheet shows 70 percent of
JCVB's budget comes from the bed tax and 0 percent comes from sales
tax. He asked if the 7 percent bed tax all went into JCVB and some
to Centennial Hall.
MR. GREENEY replied to the best of his knowledge.
REPRESENTATIVE HALCRO noted, then, the 5 percent would go to the
city for roads, tourism, (indisc.).
Number 0368
MR. GREENEY continued his testimony, stating, "Our fears [are] that
if HB 136 passes without a secure funding source, we can anticipate
that within a relatively short time funding may well dry up due to
lack of matched industry funds or state funding, and we'll be back
to square one, leaving Alaska with no tourism marketing for a few
years while those involved try to put something else in place ...
Meanwhile, the state's second largest industry will be left with no
destination marketing. The impact would be devastating. And, on
a personal note, I mean I have to struggle to comprehend the
reasoning of those who want to take the state out of the business
of tourism marketing, marketing the cleanest industry we could
have. ... Whether or not we like the idea, we must compete with
states and nations who have the foresight to vigorously promote
their own tourist industries, and in view of that, I have to ask
you, Mr. Chairman and the committee, to please put the brakes on HB
136. ... At least give us time to review the different committee
substitutes, which I believe we're now up to Version K, and put the
brakes on long enough to firm up a stable and secure funding
source. I have to ask, 'What is the rush?' I mean, true, the New
Millennium Plan has been discussed for years, but HB 136 has not
and I - and certainly the committee revisions have not. And I ask
you to allow this bill to follow due process, take it off the fast
track, and let the system work. And again, I thank you for your
time."
Number 0438
REPRESENTATIVE HALCRO commented HB 136 does have another committee
of referral so he would not say the legislation is rushed.
However, he explained the reason for the legislation's pace is that
tourism funding has been zeroed out, and the only funding the state
is going to provide for tourism is with a fiscal note attached to
this bill. To Representative Halcro's knowledge, if this
legislation does not pass, there will not be any tourism dollars
for FY 2000. He indicated the legislation's intent is to reduce
the state's contribution to tourism marketing in the next three
years while gaining contributions from the private sector.
Representative Halcro asked Mr. Greeney to expand on the request to
slow HB 136's progress to shore up funding sources. He commented,
"If you're a company and I'm going to come to you say I have this
plan, you're going to need to make an investment, that to my
knowledge that would be how you'd shore up funds, but it sounds
like it's a concern to you and I just wanted to know..."
MR. GREENEY noted it was a concern, certainly in his own thought
and in what he heard expressed at, he believes, the previous
meeting. Mr. Greeney indicated there are two current pieces of
legislation on this topic, HB 136 and SB 122. He commented, "We
need some solid funding and certainly Senator Elton's bill provides
some mechanism for that."
CHAIRMAN ROKEBERG commented, "On top of your 12 percent?"
Number 0528
REPRESENTATIVE HALCRO requested to follow up. Noting he is in the
tourism industry, he said, "When I saw SB 122, I immediately
started crunching the numbers in ... the estimates - and I know
that's not the bill we're discussing here - but his revenue
estimates are way out of line. ... His forecasts for tax revenue
are so overly optimistic there is no way you're gonna achieve 14
and a 1/2 million dollars in three years. (Indisc.) there's just
no way. I come from Anchorage, we have an 8 percent bed tax. Last
year ... there was $100 million in room and bed revenue in 12
months, so 8 percent of that was split 50/50 between the ACVB and
the city, out of 100 million. With his projections you'd have to
do - I think it is - it came out to like $280 million in 6 months.
I mean, there's absolutely no way that those figures would work.
And what his bill does, is his bill simply shifts the costs to the
larger hotels and larger operators, so they're gonna be paying ...
more of the share. And so, it's not a pay as you play, it's if
you're a big hotel with 600 rooms, you pay more. And to me, ...
that seems unfair rather than going out and saying, if your - if
you want to invest in tourism, you're gonna have to invest in
tourism. So I mean, and I've heard a lot of testimony on this ...
and a lot of comments over two public hearings over this SB 122,
and I'm gonna tell you, I've run the numbers and they don't work
out at all."
CHAIRMAN ROKEBERG confirmed that concluded Mr. Greeney's testimony
and thanked him for his patience. The chairman indicated to both
Ms. Fay and Ms. Lindgren that he is concerned over the concept of
the first right of refusal. He has used this concept in business
for many years and it is not a favorite of his. He mentioned
another method, a first right of offer. The chairman expressed
that his concern with the first right of refusal is it requires a
bonafide third party. He commented, "Because when you have a first
right of refusal, you have to have a bonafide third party that's
standing in place. (Indisc.) which -- in this instant, the
department would say to the qualified trade association, 'If you
want to do this,' and I'm not sure they would do that - they'd have
to go out and find a third party, do an RFP [request for proposal]
and then go back to the qualified trade association to say
(indisc.) give you the first right of refusal after they have
already made the deal out over here, and then you have to say yes
or no. So, ... under a first right of offer, they would just
offer, 'Do you want to do this deal?' and you say, 'No,' and then
they go get somebody else. ... That may be a problem because of
the concern about what the substantially similar terms are, and
that may have been part of the history of the problems of reaching
an agreement, so, I'm just kind of curious about some feedback from
both of you around the concept of what you mean and how the first
right of refusal would operate."
Number 0664
MS. LINDGREN responded she believes their intent is to consolidate
marketing, as Ms. Fay had said. The reason that was added was in
the event of a serious disagreement about what should be done to
promote Alaska. It is the hope that clause never "kicks in."
However, Ms. Lindgren indicated this would, if there is a
disagreement, provide another option besides complete refusal of
the contract by the QTA or complete refusal to contract by the
department. Ms. Lindgren further indicated the concern and part of
the difficulty with the previous year's bill had been that if it
was offered to other organizations, these organizations were not on
the same terms - there wasn't a level playing field. Therefore,
that language was added so that if there was a component and there
was a disagreement, the department had the latitude of contracting
elsewhere as long as the terms were the same, so that one
organization wasn't penalized compared to others.
CHAIRMAN ROKEBERG indicated he wanted the record to reflect that if
one goes through a traditional first right of refusal, there has to
be a bonafide third party. He noted there is an avenue (indisc.)
that but he thinks in this instance using the traditional
interpretation of first right of refusal may be most beneficial.
He noted, "Because it would smoke out the basic terms that you'd
have to live with, and I think that was part of point of contention
... in the previous negotiations, is that not correct? That's what
you just testified to, so rather than try to tweak with this ... I
think we should leave the first right of refusal in there, but ...
I want to make sure everybody understands what that means in having
the bonafide third party. " He asked Ms. Fay if that was her
understanding of Ms. Lindgren's comments.
Number 0753
MS. FAY answered in the affirmative. She indicated she thinks the
department was actually the one that came up with the notion of
first right of refusal. Ms. Fay commented on the recognition that
the industry has to raise funds if it is to receive this match and
that it is not a very homogeneous industry. It is probably worse
than the fishing industry in terms of different sizes and
interests. Ms. Fay indicated the department understood the
industry's concern about splinter groups that would not want to
contribute to the whole well-being. She further indicated giving
the qualified trade association the first opportunity on a contract
offered by the department was intended to be an encouragement, an
incentive for all the players to work together in their industry to
reach an agreement on things that satisfied everyone's needs.
Number 0815
CHAIRMAN ROKEBERG requested that Ms. Lindgren and Ms. Fay each
explain what Section 6 means to them. [Both Ms. Fay's and Ms.
Lindgren's responses were transcribed verbatim per the chairman's
request.]
MS. FAY answered, "What Section 6 means, okay. I think this is --
I think throughout - throughout the bill in almost every single
section that you have in here is the intent that tourism marketing
be consolidated and conducted primarily by - or entirely by one
contract that the department has with a single qualified trade
association. I think that's in the findings and intent, and as you
work through, every - all signs are pointing you to Rome, and I
think this is one more place where it's basically saying that while
this contract is in effect, you cannot execute any other tourism
marketing campaign except for these exceptions that we've allowed
for you. And that's our understanding of it, and so if we want to
do tourism marketing, we will contract with the qualified trade
association in order to do it, unless there's something they don't
want to do."
CHAIRMAN ROKEBERG addressed the question to Ms. Lindgren.
MS. LINDGREN responded, "Our intent in this section is that while
there is a contract in place for tourism marketing - if there's no
contract the department does it - but while there is a contract,
the department is not doing tourism marketing."
CHAIRMAN ROKEBERG requested both responses and the follow-up
questions on this issue be transcribed verbatim for the record. He
asked, "If I might then - to both of you - one of the points of
contention as I understand it, has been the fear that if you do go
out, or if the department's allowed to go out after the (indisc.)
right of refusal provision is denied by the qualified trade
association and the department awards another contract which
requires the contractor to - the contractee to go out and get
additional funding from various other tourism-related businesses in
that particular niche, let's say, it's been my understand that was
one of the fears, that there'd be competition for funding outside
of the depart[ment] -- in other words, non-state funds. Is - is
that a fear? And I direct this question to Ms. Lindgren. Was that
- was that one of your fears (indisc.)?"
Number 0961
MS. LINDGREN replied, "Mr. Chairman, I'm not maybe - I'm not
following quite the way you're stating it, but one of the fears was
that in an effort to consolidate what we didn't want to do was
start breaking it up into lots of pieces and many contracts. The
intent language now still reads a tourism contract with the ability
if there's a disagreement to have some other contracts, but, as
Ginny said, the intent is to have a single contract. There is a
fear that if - exactly as you stated - that if it's split up into
multiple contracts, this new organization will not be able to raise
these kinds of funds because many people will be out there trying
to raise funds for different purposes, and also, rather than having
a cohesive tourism marketing program for the state, we'll have
different people doing different things, so that is a concern that
we both have, I think."
CHAIRMAN ROKEBERG noted, "And Ms. Fay, do you think the department
on July first of this coming year will go out - assuming this bill
passes - and be interested in expanding beyond the single
contractor out of the get-go?"
MS. FAY questioned, "I'm not sure I understand (indisc.) - would we
[be] interested in expanding beyond a single contractor?"
CHAIRMAN ROKEBERG replied, "Right, initially. In other words - in
other words we're - you're going - the department will generate the
actual contract with the specific discrete elements of it - of
different marketing goals, and if - if I take it correctly, the
qualified trade association would then bid on it and then if they
refused to do or did not want to do a certain provision of that
contract, could they turn down a portion of that contract?"
Number 1060
MS. FAY answered, "That's correct, the - if - if there was an
element that the department perceived to be essential in marketing
Alaska as a destination, and the qualified trade association did
not want to do that portion of it, or did not want to provide match
for that portion of it, then we would have the option of going out
and letting a contract for that component. I think, though, it is
still, when you -- as an example, if there was a group of
sportfishing lodges in Western Alaska who thought there should be
more marketing towards rural sportfishing in Alaska and they were
ready - they were willing to put up match for it, then it would
still probably work better for them to work through this new trade
association to let them know that this is an area of niche
marketing that's critical for the industry, and work with them to
get this money leverage, and have it be part of an overall
coordinated package. In a sense though this - this bill contains
a safety valve that if - if they - if it was really considered to
be important, people were willing to pay for it and the qualified
trade association was not willing to be responsive to the needs of
those businesses, then we could potentially contract with them. I
think our interest as a department, though, is when this
legislation passes is to - is to encourage every single business in
Alaska to become a member of this organization because every single
business will have a vote on who the - who the - will be on the
board of directors and how the marketing plan will unfold and so it
would be -- if we want it to be truly representative of all the
needs in Alaska, the best thing that could happen is all the
businesses who are - who stand to benefit from this organization
would join and become involved in it."
Number 1183
Chairman Rokeberg asked, "And then, if you'll allow me, if - if
this contract and this bill had passed last year and it was already
in place, and we had a circumstance like we have with the
unfortunate situation in the Mediterranean, which to me seems to be
a - a marketing opportunity here, where you wanted to appeal to
Mediterranean cruise passengers who are canceling their trips and
the potentiality of the cruise lines to relocate vessels that were
going to Mediterranean cruises into the Alaska traffic, how would
you be able to generate any funding? Or how would that work?
Would you have a - an additional addendum to the contract with the
qualified group or would you go out your own or how would you
handle it under this bill?"
MS. FAY answered, "Well, my understanding that the - the bill
allows for us under section d to be - to be able to allocate
additional funds for that kind of special situation - this is page
5, d, - and that we could amend the contract and specify the work
that would be done, but that we would not have to have the matching
requirements be identical to the original contract. In the case in
point that you're talking about now, I'm not sure there would be
any problem getting the cruise industry to put in extra money to
take advantage of the situation, there -- we wanted to have this be
flexible because there may be circumstances like similar to when
the Malaspina blockade occurred, that it might not be possible for
the - for those funds to be immediately generated because the
people who see the most benefit from that might not be able to - to
put in - raise that additional funds on - on that quick a basis."
Number 1290
CHAIRMAN ROKEBERG noted, "And finally from the Chair, one of the
key problems, or one of the key things that always seems to
(indisc.) have been control of the - the finances and the whole
process. Is the department satisfied with their level of control
over this legislation, and I'll ask the same question to the - to
Miss Lindgren. Miss Fay?"
MS. FAY responded, "Well, I think that throughout our whole
negotiations we have been doing a very balancing act between -- I
mean I think some of our obstacles have been in balancing out that
- that level of control because both parties will come to the table
with substantial investments of resources and want to have - each
of us want to make sure that the other side can't, you know, blow
the money, (indisc.) sense. I think I feel fairly comfortable now
with - with the - the terms that we recently worked out, where even
though we're limited to only having one contract, being able to
approve the marketing plan and to be able to specify what needs to
be in it is helpful for us because we didn't feel - without those
provisions we didn't feel that we really could -- if you can only
negotiate with one party and you can't say what's the terms of the
contract, then you aren't really negotiating a contract, but now
that we have a little more leeway about being able to specify some
of the terms of the contract we feel fairly comfortable with that."
CHAIRMAN ROKEBERG asked, "Tina?"
Number 1382
MS. LINDGREN answered, "Mr. Chairman, I - I would have to believe
that the - the members of the tourism industry have the most to
gain or lose by what happens, I don't think that - that the
Department of Commerce probably has any more at stake than members
do of the industry, and so there's a - there is a concern that they
have enough control over their destiny to use the funds that they
see fit and that they not be regulated as to how those funds are
used, but they also recognize that there are substantial state
dollars involved, and that that money comes with strings and that
what you see in the bill are the strings that are attached to
those."
REPRESENTATIVE MURKOWSKI asked, "... The qualified trade
association has the right to refuse - or not - not the right to
refuse, but if there's a component in the contract that they don't
want to do -- let's say we (indisc.) are handling it, they can opt
out of that and the state goes somewhere else. Is there any
provision that the state could say, 'We don't want you as the
qualified trade association to do this aspect of it.'"
MS. LINDGREN replied, "Yes there is because they approved the
marketing plan in advance."
REPRESENTATIVE MURKOWSKI noted, "So that's where it is at the very
get-go. And then, let's see what else was I going to ask you?"
Number 1472
REPRESENTATIVE KERTTULA commented, "Could - could I ask a question
about that, though in my mind it kind of raises - but they can't
then..."
CHAIRMAN ROKEBERG recognized Representative Kerttula.
REPRESENTATIVE KERTTULA replied, "Pardon me, thank you, yeah, just
on that point. But if they don't have it in the plan to begin with
they can't just go out to another group to do something, right? I
mean, it's either in the plan or it's not, and if it's not in the
plan, they can't go to another group to market, it has -- all the
marketing has to be through this one group unless you refuse it, is
that right?"
AN UNIDENTIFIED SPEAKER responded very softly, "Correct."
REPRESENTATIVE MURKOWSKI commented, "And then, if in fact..."
CHAIRMAN ROKEBERG recognized Representative Murkowski
REPRESENTATIVE MURKOWSKI continued, "Thank you - and this is my
last question - if in fact your - your - your QTA says, 'I don't
want this component, I don't want this component, I don't want this
component,' at what point do you say, 'Wait a minute, this contract
isn't working because we're having to look elsewhere to handle all
these aspects of what we had agreed to be our - our plan. I - I
don't know enough about this to say how do you get out of it if it
- if it's not working."
Number 1532
MS. FAY confirmed Representative Murkowski was referring to either
party and answered, "Well, I think the way this whole system is set
up - and I think it's a good thing - is that we both have a great
deal of incentive to work these things out with each other. I
mean, ultimately, both of our objectives is to support and promote
tourism in Alaska. Where - I would guess that where our
differences might come in is that our mission at the Department of
Commerce is especially directed towards Alaska-based businesses,
Alaska jobs and protecting small businesses in Alaska. So, I think
from our standpoint, as long as their marketing plan addresses
those basic elements and missions that Department of Commerce has,
we probably should - we probably won't have very many
disagreements. That's - that's where we see our - sort of our
oversight role (indisc.)."
CHAIRMAN ROKEBERG asked if there were further questions from
committee, recognizing Representative Cissna.
REPRESENTATIVE CISSNA responded, "Thank you, Mr. Chair. And I
guess that - for either of you - there is, in at least what I saw,
was no specified time of the contract. Is there a standard time
period that contracts are normally let for with the state, or how
does that work?"
MS. FAY replied, "Through the Chair, Representative Cissna,
(indisc.) basically the - the legislation states that on August 1
of each year, so we - there would be one-year contracts."
Number 1646
CHAIRMAN ROKEBERG confirmed there were no more questions from the
committee. He complimented the department, the industry members,
and the House Special Committee on Economic Development and Tourism
subcommittee for their work on the legislation. He personally is
much more comfortable with this now. The chairman indicated the
public hearing would be kept open and the legislation taken up as
the first item of business on April 12, with the intention being to
move the legislation at that time.
ADJOURNMENT
Number 1727
CHAIRMAN ROKEBERG adjourned the House Labor and Commerce Standing
Committee meeting at 6:36 p.m.
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