Legislature(1993 - 1994)
03/05/1994 08:00 AM House STA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 5, 1994
8:00 a.m.
MEMBERS PRESENT
Representative Al Vezey, Chairman
Representative Pete Kott, Vice Chairman
Representative Gary Davis
Representative Harley Olberg
Representative Fran Ulmer
MEMBERS ABSENT
Representative Bettye Davis
Representative Jerry Sanders
COMMITTEE CALENDAR
HB 400: "An Act relating to administrative
proceedings involving a determination of
eligibility for a permanent fund dividend or
authority to claim a dividend on behalf of
another."
PASSED OUT OF COMMITTEE
*HB 373: "An Act relating to investments of the
permanent fund involving equity interests in
and debt obligations secured by mortgages on
real estate; and providing for an effective
date."
PASSED OUT OF COMMITTEE
HB 483: "An Act relating to payment of permanent fund
dividends of certain individuals who have
been absent from the state; and providing for
an effective date."
PASSED OUT OF COMMITTEE
SB 186: "An Act relating to state agency
publications."
NOT HEARD
HB 328: "An Act relating to motor vehicle
registration and registration fees; to fees
for drivers' licenses and permits; and
providing for an effective date."
FAILED TO PASS FROM THE COMMITTEE
*HB 407: "An Act relating to issuance of commemorative
gold rush motor vehicle license plates."
HELD OVER
*HB 375: "An Act relating to investments of the
permanent fund in certain limited
partnerships each of whose principal purpose
is investment in securities of public or
private companies; and providing for an
effective date."
NOT HEARD
WITNESS REGISTER
WILLIAM H. SCOTT, Executive Director
Alaska Permanent Fund Corporation
P.O. Box 25500
Juneau, AK 99802-5500
Phone: 465-2047
POSITION STATEMENT: Addressed HB 373
PETE JEANS, Real Estate Investment Officer
Alaska Permanent Fund Corporation
P.O. Box 25500
Juneau, AK 99801-5500
Phone: 465-2047
POSITION STATEMENT: Answered questions on HB 373
REPRESENTATIVE PETE KOTT
Alaska State Legislature
Alaska State Capitol, Room 409
Juneau, AK 99811
Phone: 465-3777
POSITION STATEMENT: Prime sponsor of HB 483 and addressed
HB 328
JACK PHELPS, Staff
Representative Pete Kott
Alaska State Capitol, Room 409
Juneau, AK 99811
Phone: 465-3777
POSITION STATEMENT: Outlined CSHB 483
TOM WILLIAMS, Director
Permanent Fund Dividend Division
Department of Revenue
P.O. Box 110460
Juneau, AK 99811-0460
Phone: 465-2323
POSITION STATEMENT: Answered questions on HB 483
JANE BUTLER, Staff
Representative Pete Kott
Alaska State Capitol, Room 409
Juneau, AK 99811
Phone: 465-3777
POSITION STATEMENT: Outlined HB 328
JEANIE LARSON, Staff
Representative Terry Martin
Alaska State Capitol, Room 411
Juneau, AK 99811
Phone: 465-3783
POSITION STATEMENT: Answered questions on HB 328
JUANITA HENSLEY, Chief of Driver Services
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, AK 99802
Phone: 465-2650
POSITION STATEMENT: Answered questions on HB 328 and
HB 407
RON KING
Department of Environmental Conservation
410 Willoughby Ave. #105
Juneau, AK 99801
Phone: 465-5100
POSITION STATEMENT: Addressed HB 407
PREVIOUS ACTION
BILL: HB 400
SHORT TITLE: PFD ADMINISTRATIVE PROCEEDINGS
SPONSOR(S): REPRESENTATIVE(S) GREEN
JRN-DATE JRN-PG ACTION
01/26/94 2154 (H) READ THE FIRST TIME/REFERRAL(S)
01/26/94 2154 (H) STATE AFFAIRS, FINANCE
03/03/94 (H) STA AT 08:00 AM CAPITOL 102
03/03/94 (H) MINUTE(STA)
BILL: HB 373
SHORT TITLE: PERMANENT FUND INVESTMENTS IN REAL ESTATE
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
01/14/94 2065 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/94 2066 (H) STATE AFFAIRS, FINANCE
03/05/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 483
SHORT TITLE: PER. FUND DIVIDENDS OF ABSENT INDIVIDUALS
SPONSOR(S): REPRESENTATIVE(S) KOTT
JRN-DATE JRN-PG ACTION
02/14/94 2378 (H) READ THE FIRST TIME/REFERRAL(S)
02/14/94 2378 (H) STATE AFFAIRS, FINANCE
02/22/94 (H) STA AT 08:00 AM CAPITOL 102
03/05/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: HB 328
SHORT TITLE: BIENNIAL VEHICLE REGISTRATION
SPONSOR(S): REPRESENTATIVE(S) MARTIN,BARNES,Phillips,B.Davis
JRN-DATE JRN-PG ACTION
01/03/94 2013 (H) PREFILE RELEASED
01/10/94 2013 (H) READ THE FIRST TIME/REFERRAL(S)
01/10/94 2013 (H) STATE AFFAIRS, FINANCE
01/13/94 2054 (H) COSPONSOR(S): B. DAVIS
01/22/94 (H) STA AT 08:00 AM CAPITOL 102
01/22/94 (H) MINUTE(STA)
01/29/94 (H) MINUTE(STA)
02/08/94 (H) STA AT 08:00 AM CAPITOL 102
02/08/94 (H) MINUTE(STA)
03/01/94 (H) STA AT 08:00 AM CAPITOL 102
03/01/94 (H) MINUTE(STA)
BILL: HB 407
SHORT TITLE: COMMEMORATIVE GOLD RUSH LICENSE PLATES
SPONSOR(S): REPRESENTATIVE(S) FOSTER,Toohey
JRN-DATE JRN-PG ACTION
01/27/94 2166 (H) READ THE FIRST TIME/REFERRAL(S)
01/27/94 2166 (H) STATE AFFAIRS, FINANCE
01/31/94 2207 (H) COSPONSOR(S): TOOHEY
03/01/94 (H) STA AT 08:00 AM CAPITOL 102
03/01/94 (H) MINUTE(STA)
BILL: HB 375
SHORT TITLE: PERMANENT FUND INVESTMENTS - LTD PARTNERS
SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT
JRN-DATE JRN-PG ACTION
01/14/94 2066 (H) READ THE FIRST TIME/REFERRAL(S)
01/14/94 2066 (H) STATE AFFAIRS, FINANCE
03/05/94 (H) STA AT 08:00 AM CAPITOL 102
BILL: SB 186
SHORT TITLE: STATE AGENCY PUBLICATIONS
SPONSOR(S): SENATOR(S) FRANK
JRN-DATE JRN-PG ACTION
04/07/93 1221 (S) READ THE FIRST TIME/REFERRAL(S)
04/07/93 1221 (S) STATE AFFAIRS
04/14/93 1354 (S) STA RPT 3DP
04/14/93 1354 (S) ZERO FISCAL NOTE (ADM)
04/14/93 (S) STA AT 9:00 AM BUTRVICH RM 205
04/14/93 (S) MINUTE(STA)
04/14/93 (S) MINUTE(RLS)
04/26/93 1761 (S) RULES 4 CALENDAR 4/26/93
04/26/93 1762 (S) READ THE SECOND TIME
04/26/93 1762 (S) AM NO 1 ADOPTED UNAN CONSENT
04/26/93 1763 (S) AM NO 2 ADOPTED UNAN CONSENT
04/26/93 1764 (S) AM NO 3 FAILED Y10 N10
04/26/93 1764 (S) ADVANCE TO THIRD READING FAILED
Y11 N9
04/26/93 1764 (S) THIRD READING 4/27 CALENDAR
04/27/93 1842 (S) READ THE THIRD TIME SB 186 AM
04/27/93 1842 (S) PASSED Y20 N-
04/27/93 1842 (S) DONLEY NOTICE OF
RECONSIDERATION
04/28/93 1891 (S) RECONSIDERATION NOT TAKEN UP
04/28/93 1893 (S) TRANSMITTED TO (H)
05/06/93 1661 (H) READ THE FIRST TIME/REFERRAL(S)
05/06/93 1661 (H) L&C,STATE AFFAIRS,JUDICIARY,
FINANCE
02/17/94 (H) L&C AT 03:00 PM CAPITOL 17
02/17/94 (H) MINUTE(L&C)
02/18/94 2455 (H) L&C RPT 5DP
02/18/94 2455 (H) DP: PORTER,SITTON,MULDER,
GREEN,HUDSON
02/18/94 2455 (H) -ZERO FISCAL NOTE (ADM) 2/18/94
03/05/94 (H) STA AT 08:00 AM CAPITOL 102
ACTION NARRATIVE
TAPE 94-22, SIDE A
Number 000
CHAIRMAN AL VEZEY called the meeting to order at 8:00 a.m.
Members present were REPRESENTATIVES ULMER, G. DAVIS, KOTT
and OLBERG. A quorum was present.
HB 400 - PFD ADMINISTRATIVE PROCEEDINGS
CHAIRMAN VEZEY announced the committee had passed HB 400 out
of committee on Thursday, March 3, 1994; however, the
Clerk's Office informed him the fiscal note was not in
proper order. Therefore, HB 400 has been brought back into
committee to adopt a proper fiscal note.
CHAIRMAN VEZEY took an at ease at 8:02 a.m. for the
committee to examine the new fiscal note. The meeting
reconvened at 8:05 a.m.
CHAIRMAN VEZEY moved the committee's previous action, which
passed HB 400 from the House State Affairs Committee, be
rescinded. The committee secretary called the roll, and the
passage of HB 400 by the House State Affairs Committee was
rescinded.
Number 071
REPRESENTATIVE HARLEY OLBERG moved the new fiscal note for
HB 400 be adopted.
Number 072
CHAIRMAN VEZEY recognized the motion and asked the committee
secretary to call the roll. The new fiscal note for HB 400
was adopted.
Number 085
REPRESENTATIVE GARY DAVIS moved that HB 400 be passed out of
committee with individual recommendations.
Number 095
CHAIRMAN VEZEY recognized the motion and asked the committee
secretary to call the roll. HB 400 passed from the House
State Affairs Committee with individual recommendations.
HB 373 - PERMANENT FUND INVESTMENTS IN REAL ESTATE
CHAIRMAN VEZEY opened HB 373 for discussion.
Number 127
WILLIAM H. SCOTT, EXECUTIVE DIRECTOR, ALASKA PERMANENT FUND
CORPORATION (APFC), asked if PETE JEANS could join the table
with him.
CHAIRMAN VEZEY allowed his request.
MR. SCOTT introduced himself.
PETE JEANS, REAL ESTATE INVESTMENT OFFICER, ALASKA PERMANENT
FUND CORPORATION introduced himself.
Number 142
MR. SCOTT said, the APFC was not requesting the legislature
do something that changes the investments the APFC already
has, but actually to provide for better management of the
real estate portion of APFC's assets and to improve the
investment ability of these assets.
MR. JEANS gave a background of the APFC and its acquisition
of assets. APFC began investing 10 years ago, and the
legislation that was passed allowed APFC to do 40 percent of
any one real estate deal. The legislature then felt the
APFC was inexperienced in dealing with real estate, and only
40 percent would force the APFC to "piggyback" on the major
pension funds and institutional investors around the
country. APFC started off in real estate doing comingled
funds, the same as most of the pension funds around the
country. They had very little control, and a lot of the
properties they bought were in blind pools, so they didn't
even know what they were buying.
MR. JEANS said, after about a year or a year and one-half,
APFC began separated account investments, co-investing with
other major pension funds around the country. This worked
well for APFC. There weren't that many pension funds
investing in real estate, and APFC was able to negotiate
some controls in the deals; although, they were always in
the minority possession. The APFC would always ensure they
had a "shoot out clause" or a "buy/sell arrangement," so
they could get out of a particular investment.
MR. JEANS commented money is now returning to the real
estate markets, after their decline in the 1980s, as are
pension funds; therefore, the APFC is competing with a lot
of money to try to get decent real estate investments. The
current statutes do not provide the APFC with the ability to
negotiate for the controls they were able to get around five
years ago. APFC has had to turn down deals because they
could not get any kind of controls.
MR. JEANS said, APFC has become a major investor in real
estate markets, with smaller pension funds willing to co-
invest with APFC; however, not having control of the real
estate is very limiting.
MR. JEANS stated the APFC Board did unanimously support
Resolution 93-11. If HB 373 were to pass, the APFC would
still co-invest on major deals, however, they would
negotiate to have controls. With smaller properties they
would choose to retain 100 percent control.
MR. JEANS commented that APFC has become one of the top 10
major real estate holders of all the pension funds in the
country.
Number 254
REPRESENTATIVE OLBERG asked what took the APFC so long to
introduce these changes.
MR. JEANS replied, the APFC had been able to get their
desired controls until the last couple of years. APFC is
now losing out to co-investors, who are choosing to take
over the whole deal. Other investors no longer need the
funds of the APFC because of the recent influx of money in
the markets.
CHAIRMAN VEZEY asked if REPRESENTATIVE OLBERG was in favor
of the concept of HB 373.
REPRESENTATIVE OLBERG responded he was very much in favor of
HB 373.
CHAIRMAN VEZEY went through the contents of the packet. He
questioned the Morrison & Foerster letter which frequently
mentions the 1974 ERISA statute. He asked MR. JEANS to
explain the letter.
Number 314
MR. JEANS responded, the Morrison & Foerster outlined the
legal points of the control issues, specifically the
controls the APFC would no longer be able to acquire in a
minority position. He noted the problems in negotiations
are leading to enormous legal costs.
Number 324
CHAIRMAN VEZEY quoted the Morrison & Foerster letter (on
file), "We believe that this proposed amendment would be
beneficial in carrying out the investment policies of the
APFC for several reasons." He assumed the proposed
amendment refers to the suggested statutory changes.
Number 330
MR. JEANS confirmed CHAIRMAN VEZEY. He stated the APFC had
been accepted in the real estate industry as the leader in
co-investment. The APFC is written up almost monthly in
different national magazines about co-investing. He
referred to "The Institute in Real Estate" letter (on file),
which covers the disadvantages of co-investment, and he
stated it relates to some of the difficulties the APFC has
come across.
Number 348
REPRESENTATIVE FRAN ULMER pointed out the phrase she found
in Resolution 93-11 adopted by the APFC Board which states,
"The Alaska Permanent Fund Corporation has lost
opportunities to acquire high return, low risk real estate."
She stated the issue is, the risk is being changed by
changing the percentage of ownership by the APFC. She
assumed the previous legislature's debate over APFC controls
was probably more over what level of risk was acceptable,
and at what point would the permanent fund be put in a
unacceptable higher risk category. REPRESENTATIVE ULMER
asked, if HB 373 were to pass, what sort of risk limiting
strategies does the APFC plan to employ.
MR. JEANS responded, once a year, when the APFC has their
asset allocation for the permanent fund, the APFC Board
passes a resolution that governs the real estate
investments. The resolution is rather specific regarding
what APFC can do as far as property type and amounts to
about 20 pages.
Number 391
MR. SCOTT continued, the APFC is also restricted, whereby
they cannot buy a property which is not at least
substantially leased, meaning 75-80 percent occupied. With
HB 373, the APFC will continue to co-invest; however, with
the ability to have more than 40 percent, they can easily
put together 50/50, or 2/3 and 1/3 deals. APFC would like
equal or complete control.
REPRESENTATIVE OLBERG did not think the degree of risk would
change, as compared to the degree of exposure. Risk is
inherent in an investment.
Number 413
MR. JEANS believed some of the risk would be eliminated with
the gain in control of the property deals. He gave an
example of property found by the APFC, introduced to
Colorado for co-investment with the APFC's commitment to
fund the property when it was leased, and Colorado took over
the whole deal when the APFC kept vying unsuccessfully for
controls. In 1993, the APFC had almost four deals fall out
in this manner.
Number 433
MR. SCOTT pointed out APFC exposure is limited by their
asset allocation percentage.
Number 438
CHAIRMAN VEZEY thought the legislature would be concerned
that fiducial standards would not be decreased. Without
controls, the APFC would establish less fiducial
responsibility, than with controls.
MR. JEANS replied CHAIRMAN VEZEY was correct.
Number 449
CHAIRMAN VEZEY clarified the APFC Board has policies intact
which preclude it from investing in development properties.
MR. JEANS confirmed CHAIRMAN VEZEY.
Number 454
CHAIRMAN VEZEY continued the APFC would also be precluded
from investing in speculative properties without reasonable
assurance of positive cash flow.
MR. JEANS responded that provision would remain in statute.
Number 460
CHAIRMAN VEZEY asked what degree of public scrutiny would
any policy change by the Board receive.
MR. JEANS said proposed changes are advertised for Board
meetings and the resolution passed every year is done at a
public meetings.
Number 467
CHAIRMAN VEZEY stated the actions of the APFC Board are
reviewed by both the Governor's Office and the legislature.
The APFC is subject to frequent audits by the Legislative
Budget and Audit Committee.
Number 473
REPRESENTATIVE PETE KOTT pointed out to the committee there
is a companion bill to HB 373 in the Senate with four
committee referrals. This companion bill already had a
committee substitute offered in the Senate State Affairs
Committee. HB 373 only has two committee referrals.
Number 478
REPRESENTATIVE OLBERG moved HB 373 be passed from committee
with individual recommendations.
Number 480
CHAIRMAN VEZEY recognized the motion, the committee
secretary called the roll, and HB 373 passed from the House
State Affairs Committee with individual recommendations.
HB 483 - PERMANENT FUND DIVIDEND FOR ABSENT INDIVIDUALS
CHAIRMAN VEZEY opened HB 483 for discussion.
Number 497
REPRESENTATIVE PETE KOTT, prime sponsor of HB 483, addressed
his bill. He felt HB 483 conforms to the original intent of
the permanent fund dividend (PFD) program. He stated HB 483
would provide a dividend check for those who intend to
remain in Alaska. This was challenged in the U.S. District
Court in 1986, and confirmed. The intent of HB 483 is to
place into trust accounts within the dividend, or general
fund, dividends for those individuals who remain out of
state for more than 181 consecutive days in a permanent fund
calendar year. Individuals would not receive their check
for that year, instead they would continue to apply and the
money would be appropriated into an account by the Permanent
Fund Division. This money would be provided to the
individuals, once they return to the state and have met the
existing requirements. REPRESENTATIVE KOTT felt HB 483
would help prevent potential fraud. He brought version E of
the committee substitute, before the committee.
Number 528
REPRESENTATIVE OLBERG moved to adopt version E of the
committee substitute for HB 483.
Number 529
CHAIRMAN VEZEY recognized the motion and asked the committee
secretary to call roll. The version E of the committee
substitute for HB 483 was adopted.
Number 533
REPRESENTATIVE KOTT announced there had been changes from
the original bill which are essentially conforming changes
to the existing policy.
Number 535
JACK PHELPS, REPRESENTATIVE PETE KOTT'S STAFF, outlined the
changes made by the CS for HB 483. The changes made were
primarily technical, recommended by the Department of
Revenue, to make the PFD program easier to operate. They
had suggested the language in CSHB 483, relating to the
amount of days absent, conform to existing regulations. He
referenced paragraph 1, lines 10-11, the allowable absence
was increased in the returning year from 30 days to 90 days.
Currently, the state allows for an unexplained absence up to
90 days, and if a stricter standard in the requalifying year
was applied, an equal protection problem could arise. A
stricter standard would also have required additional
oversight by the Department of Revenue to review those
individuals with a 30 day absence limit separately from
individuals with a 90 day absence limit.
MR. PHELPS noted the change in paragraph 2 is strictly
technical, not changing the intent the HB 483.
MR. PHELPS stated subsection (D), lines 8-9 of HB 483 became
unnecessary once the other changes had been made; therefore
it was deleted.
Number 566
CHAIRMAN VEZEY pointed out paragraph C, section 1, dealing
with the subject of probate, and asked if REPRESENTATIVE
ULMER concurred with the wording. He felt it was the wrong
approach to pay part of an estate to an appropriate person,
rather than paying the money the estate.
Number 574
MR. PHELPS responded subsection C is included in CSHB 483 to
cause the bill to be consistent with its purpose. One of
the stated purposes of the dividend program, affirmed by
court decision, is to encourage people to maintain their
residence in Alaska. CSHB 483 provides a mechanism for
people to demonstrate their intention to maintain their
residency in Alaska. Subsection C is included to account
for those individuals who die before they can demonstrate
their intent.
Number 593
CHAIRMAN VEZEY asked how the PFD Division could determine
who the appropriate person would be to distribute money.
REPRESENTATIVE ULMER replied she would have drafted CSHB 483
"to the estate of the individual", as opposed to "the
person."
REPRESENTATIVE G. DAVIS felt, after listening to MR. PHELPS'
statement, that it would be up to someone else to show the
intent of the deceased person. He did not believe this
would be possible.
Number 605
CHAIRMAN VEZEY interpreted the statute as to someone who has
applied, expressing their intent, however, died in the
process. He thought the PFD would automatically be paid.
CHAIRMAN VEZEY wanted to know how the funds would be issued.
A tremendous responsibility may be lifted from the PFD
Division if the funds were paid to the estate, plus the
funds would capitalize the estate when capital for the
estate may be needed. CHAIRMAN VEZEY mentioned estate
litigation can continue for several years.
MR. PHELPS clarified CHAIRMAN VEZEY's point was that the
funds could be paid to the estate, and not a particular
person.
Number 620
CHAIRMAN VEZEY stated the legal definition of "person" would
include an estate.
REPRESENTATIVE OLBERG questioned how many dividends an
individual could receive after being out of the state for a
period of time. If, for example, an individual has been out
of the state for 20 years, and had the dividend denied
because of not visiting enough, would CSHB 483 apply.
Number 628
REPRESENTATIVE KOTT replied if they were originally going to
get the dividend check, they would continue to be allowed to
receive the dividend check with CSHB 483. CSHB 483 would
place their money into an account.
Number 631
REPRESENTATIVE OLBERG clarified the individual had been
disallowed in his example.
Number 632
REPRESENTATIVE KOTT responded if the individual had been
disallowed he/she would have been disallowed under CSHB 483.
Number 633
REPRESENTATIVE OLBERG asked the benefit of CSHB 483.
REPRESENTATIVE KOTT answered, under current practice,
individuals with uncertain intent are receiving dividends.
CSHB 483 closes this loophole. An individual has to return
for over a year.
Number 645
MR. PHELPS pointed out subsection (B) clearly states any
time during that period, if a person fails to apply or fails
to qualify, they have disallowed themselves for the
dividends. A person cannot leave for three years, not
qualify for one year, and expect to return and collect those
three previous years.
Number 654
REPRESENTATIVE OLBERG asked how Congressman Don Young would
respond to CSHB 483.
REPRESENTATIVE ULMER thought Congressman Don Young would
receive a dividend check, anyway.
CHAIRMAN VEZEY introduced TOM WILLIAMS as the next to
testify.
Number 662
TOM WILLIAMS, DIRECTOR, PERMANENT FUND DIVIDEND DIVISION,
DEPARTMENT OF REVENUE, answered questions on CSHB 483. The
PFD Division did supply zero fiscal notes for both the
original HB 483 and CSHB 483. He felt it would be simple to
administer the program under CSHB 483. The PFD Division
does currently issue dividends to the estate of a deceased
individual, if the individual had qualified and applied for
the dividend before they died. He did not see a problem
with the current language in CSHB 483 regarding this. MR.
WILLIAMS stated the changes in CSHB 483 minimize the impact
on the PFD Division, whereby additional forms would not have
to be created. All those who were eligible would be
included in the calculation of the dividend so there would
not be an effect on the amount of the dividend. He pointed
out the only difference would be, when it came time for
payment, those specific individuals would be put in a
special pending status, and the PFD Division would not issue
their checks until they met the requirements of returning to
Alaska and staying for all 90 days. Individuals would be
sent a notice when the dividend would normally come up for
payment.
TAPE 94-22, SIDE B
Number 000
MR. WILLIAMS continued, the first year in which the
individual, with dividends on account, indicated on the
application they had not been absent for more than 90 days
would trigger the release of all prior year dividends. The
PFD Division did not see any problems in administering the
program.
Number 020
REPRESENTATIVE ULMER clarified CSHB 483 would include all
those individuals out of state on an allowable absence.
MR. WILLIAMS confirmed REPRESENTATIVE ULMER.
Number 028
REPRESENTATIVE ULMER asked if the money not paid out of the
PFD every year the individual is absent would be kept in
separate accounts, for example, a separate account for FY
95, FY 96, FY 97 or will it be kept in the one big dividend
pool.
MR. WILLIAMS answered there is one dividend fund. Every
year, the money left over, the PFD Division transfers in
earnings from the APFC, deducting administrative costs and
prior year dividends. The remaining money is used to
calculate the current year dividends. He said there was no
need for a separate account and prior year obligations would
be reserved in the fund itself.
Number 059
REPRESENTATIVE ULMER inquired if CSHB 483 would have any
impact on the calculation of the dividend level in the
future. She felt if an individual collects their dividends
after ten years, and the money has been kept in the fund for
all of those years, it may offset the new calculations.
MR. WILLIAMS responded the only effect would be if someone
who previously claimed a dividend, and had been included in
the calculation with a portion of funds set aside to pay
their dividend, at some later point did not qualify for a
dividend. Those funds would then be released and are
included in a subsequent year's calculation. There would be
a small incremental increase. There would not be a
detrimental effect on the dividend.
Number 107
REPRESENTATIVE ULMER clarified the excess money would be put
aside so the PFD would always be able to be paid.
Number 109
MR. WILLIAMS noted there is no provision in the dividend
fund for setting something aside and paying interest on it.
Therefore, the money would not accrue interest, because the
funds are not set aside separately.
Number 119
REPRESENTATIVE G. DAVIS stated he understood CSHB 483 would
include college students, also. Students would not receive
their dividends until they returned for a year from college.
Number 125
MR. WILLIAMS corrected CSHB 483 states "181 consecutive
days" and any college student returning in the summer would
not have their dividend withheld. The qualifying year would
be a calendar year. Most students would not be absent for a
straight 181 day consecutive period.
Number 147
REPRESENTATIVE G. DAVIS stated most students attend school
from September-June and he thought they would be required to
come home for Christmas.
CHAIRMAN VEZEY clarified the calendar year begins January 1
and ends December 31.
Number 165
REPRESENTATIVE OLBERG asked if the committee wanted to amend
paragraph C, line 7, deleting the words,"the appropriate
person on behalf of," and just pay the dividend to the
estate of the individual.
CHAIRMAN VEZEY responded MR. WILLIAMS indicated the wording
was not a problem. He asked REPRESENTATIVE ULMER if the
wording troubled her.
Number 176
REPRESENTATIVE ULMER felt the wording was fine, as long as
MR. WILLIAMS was comfortable with it. She note saying "to
the estate" would be cleaner.
REPRESENTATIVE G. DAVIS moved to pass CSHB 483 from
committee with attached fiscal notes.
Number 200
CHAIRMAN VEZEY recognized the motion and asked the committee
secretary to call the roll. CSHB 483 passed from HOuse
State Affairs Committee.
CHAIRMAN VEZEY called a recess at 8:59 a.m. The meeting
resumed at 9:10 a.m.
SB 186 - STATE AGENCY PUBLICATIONS
CHAIRMAN VEZEY said SB 186 by Senator Steve Frank was before
the committee. CHAIRMAN VEZEY asked if anyone from Senator
Frank's office was there to give a sponsor statement.
Seeing no one from Senator Frank's office, the committee
moved on to HB 328.
HB 328 - BIENNIAL VEHICLE REGISTRATION
CHAIRMAN VEZEY opened HB 328 for discussion.
Number 228
REPRESENTATIVE KOTT, HB 328 subcommittee chair, moved that
version R of committee substitute for HB 328 be adopted.
Number 236
CHAIRMAN VEZEY recognized the motion and hearing no
objection, version R of CS for HB 328, was adopted by the
committee for discussion.
Number 237
REPRESENTATIVE KOTT noted there were two major changes made
to HB 328 which deal with policy. First, who'll be
collecting the emission taxes. Secondly, the fee structure.
Number 250
JANE BUTLER, REPRESENTATIVE PETE KOTT'S STAFF, outlined the
changes made by CSHB 328. She indicated on page 8, line 26,
"except for as provided under (d) of this section," and then
"(d)". This does not require the municipality to collect
the tax. If the municipality and a commissioner of Public
Safety agree, upon their agreement, that is how they decide
who collects the tax. She stated this would be the major
change in CSHB 328.
Number 265
CHAIRMAN VEZEY thought subsection (c) and (d) read
differently; however, he understood MR. BUTLER'S intent.
MS. BUTLER replied the change is basically that who collects
the tax will be decided between the two parties.
Number 277
REPRESENTATIVE KOTT confirmed CHAIRMAN VEZEY's
interpretation.
Number 280
REPRESENTATIVE ULMER asked how the eight percent tax rate
was chosen.
REPRESENTATIVE KOTT responded eight percent is currently in
statute.
REPRESENTATIVE ULMER inquired if the eight percent reflected
what the program actually costs.
CHAIRMAN VEZEY believed MS. HENSLEY had previously testified
the Department of Public Safety was satisfied with the eight
percent.
Number 286
REPRESENTATIVE ULMER thought the percentage ought to be
revenue neutral. The program should not cost the state.
REPRESENTATIVE KOTT responded the state is currently
collecting the tax and it has had a positive effect.
Number 298
MS. BUTLER stated CSHB 328 needs to be changed on page 6,
line 22, and on page 10, line 24, to read "biennial",
instead of "annual." She also mentioned the fee structure
on page 7, section 16, had been questioned as to whether or
not CSHB 328 needed to dictate it. If the municipalities
were allowed to collect their own taxes, she noted, then a
fee structure would not have to be present in CSHB 328. DMV
and the sponsor would rather have this issue taken up in the
Finance Committee.
Number 332
REPRESENTATIVE G. DAVIS asked what REPRESENTATIVE TERRY
MARTIN's rationale is in reducing the fee lower than $35.
JEANIE LARSON, REPRESENTATIVE TERRY MARTIN'S STAFF,
responded that REPRESENTATIVE MARTIN, CSHB 328 SPONSOR,
wanted to encourage people to adopt the biennial
registration by lowering fees. He also felt making the fees
less would make people more likely to register their cars.
She noted there is an approximate 10 percent reduction in
cost to the DMV. There will also be less need to hire new
staff.
Number 354
REPRESENTATIVE ULMER thought the intent of biennial
registration was to save the state money and time. She
noted CSHB 328 may save the state some staff time; however,
at the price of $4.5 million, CSHB 328 did not sound like a
good deal. She asked what the purpose of CSHB 328 would be.
MS. LARSON responded REPRESENTATIVE MARTIN felt savings
should be passed on to the consumer, and CSHB 328 would be a
trade off with the decrease in staff time and new hires.
Number 369
REPRESENTATIVE OLBERG asked why there was a difference in
fees for pick-ups and mobile homes.
MS. LARSON stated those fees were in current statute.
JUANITA HENSLEY, CHIEF OF DRIVER SERVICES, DIVISION OF MOTOR
VEHICLES, DEPARTMENT OF PUBLIC SAFETY, answered questions on
CSHB 328.
Number 393
REPRESENTATIVE ULMER inquired what the fees would have to be
to keep CSHB 328 revenue neutral.
Number 395
CHAIRMAN VEZEY responded HB 328 had been discussed
thoroughly at previous meetings she did not attend, and
answered the existing fees would have to be doubled to make
the bill revenue neutral. He thought the proposed fees in
CSHB 328 are 1.5 times the existing fee, rounded off to the
highest dollar. To be revenue neutral, the fee would have
to be two times the existing fee.
Number 402
REPRESENTATIVE ULMER asked why the committee chose not to
make CSHB 328 revenue neutral.
CHAIRMAN VEZEY replied the committee had referred HB 328 to
a subcommittee and had asked them to report back.
Number 408
REPRESENTATIVE KOTT, HB 328 subcommittee chair, answered the
subcommittee worked with the sponsor and he felt there
should be savings passed on to the consumer. He emphasized
CSHB 328 did have a Finance referral and he was sure they
would take care of the problem if there was a negative
fiscal effect. He noted the committee had passed an earlier
motor vehicle registration bill which increased registration
fees. He felt the Finance Committee would take both bills
into consideration.
Number 427
REPRESENTATIVE G. DAVIS asked if the subcommittee had
discussed with the sponsor that it would still be a benefit
to the public to have the opportunity for biennial
registration, even at the same rate.
Number 434
REPRESENTATIVE KOTT replied it had been discussed, but the
sponsor disagreed and the subcommittee succumbed to the
sponsor.
Number 438
REPRESENTATIVE OLBERG suggested CSHB 328 penalized people
for requiring them to produce $70, instead of $35.
Number 444
MS. HENSLEY stated CSHB 328 would allow individuals to also
use credit cards if the DMV were to obtain the funding to
pay the credit card fees. The $70 could be paid off over a
period of time.
REPRESENTATIVE OLBERG responded it did not cost anything to
use a credit card, but it would be an additional revenue
loss. He thought the state of Alaska would probably get a
discount rate of one-two percent.
Number 453
CHAIRMAN VEZEY thought this would account for certainly less
than the time value of the money involved.
MS. HENSLEY directed comments toward REPRESENTATIVE ULMER'S
previous question regarding the eight percent administrative
fees the state collects. She responded the fees would be
deposited into the general fund. The DMV collects
approximately $5.9 million from the municipalities, which
would be would percent. She noted deleting the
administration tax from DMV would also incur a several
hundred thousand dollar loss to the state.
Number 462
CHAIRMAN VEZEY believed approximately $400,000 would be lost
as he remembered from previous testimony.
Number 464
REPRESENTATIVE ULMER asked why the state would want to
delete the administration tax from the DMV.
Number 465
MS. HENSLEY replied some tax structure would have to be
changed to allow municipalities to go to a biennial tax
collection, as well as the DMV. The current tax structure
corresponds with an annual registration and collection of
fees.
Number 473
REPRESENTATIVE OLBERG asked if CSHB 328 would be phased in.
He was concerned about the following year, having no one to
register, after the first year biennial registration begins.
Number 477
MS. HENSLEY replied CSHB 328 does allow half the
registrations to be done one year, and half the
registrations to be done the next.
Number 483
CHAIRMAN VEZEY moved to the Anchorage teleconference site.
Number 485
RON KING, DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC),
answered questions on CSHB 328.
Number 490
REPRESENTATIVE ULMER asked if MR. KING had reviewed the new
CSHB 328 and if he had any problems with it.
MR. KING responded DEC was preparing a fiscal note with an
explanation of the impact of CSHB 328. Anchorage and
Fairbanks staff for the vehicle inspection program are very
concerned about the loss of effectiveness by changing to
biennial registration. Annual inspections and annual
registration provide the strongest enforcement mechanism
available. Fairbanks feels the biennial program will be
difficult to enforce and the additional work force will have
a limited enforcement mechanism.
MR. KING stated there were two areas which DEC felt were
crucial for their ability to implement the program. First,
a fee structure would have to include 4.5 positions, 3.5
within the DEC and 1 within the DMV. This addition would
cost approximately $450,000. Secondly, a bailable offense
would have to be added, which would take violators to either
civil or criminal court. With a bailable offense, DEC would
be able to hold additional employees at 4.5. Without a
bailable offense, in Anchorage an additional five positions
would have to be added costing approximately $100,000 more.
Number 528
CHAIRMAN VEZEY asked MR. KING to explain his large fiscal
note position.
Number 532
MR. KING answered there would be two investigators in the
Fairbanks regional office, combining equipment, utilities,
supplies, and commodities, it would cost approximately
$85,000 per position. The half time district attorney would
cost approximately $68,000. The remainder of the fees pay
for stationary mail outs, postage at approximately $50,000.
In Anchorage there would be four principal investigators,
each costing approximately $85,000, with a full-time
district attorney, costing approximately $110,000. The
commodities and supplies would be contractual. He noted the
additional court costs.
MR. KING noted, with a bailable offense, additional funds
and positions would not be needed within the municipality of
Anchorage. The Anchorage Parking Authority would take over
representations, in agreement with the municipalities, of
the violators.
Number 566
CHAIRMAN VEZEY asked the pleasure of the committee.
Number 569
REPRESENTATIVE ULMER believed CSHB 328 should return to the
subcommittee.
Number 571
REPRESENTATIVE OLBERG did not like CSHB 328, but wanted to
pass it on.
Number 572
REPRESENTATIVE G. DAVIS asked if the committee would have to
wait for the additional fiscal notes.
CHAIRMAN VEZEY replied CSHB 328 could be passed with the
current fiscal notes; however, there are new fiscal notes
coming to the committee.
Number 579
REPRESENTATIVE KOTT moved to amend CSHB 328 on page 6, line
22, and page 10, line 24, to change "annual" to read
"biennial."
CHAIRMAN VEZEY recognized the motion and hearing no
objection, REPRESENTATIVE KOTT'S amendment was adopted.
Number 591
REPRESENTATIVE OLBERG felt the fees should be amended, but
they would probably be taken care of in the Finance
Committee.
Number 597
REPRESENTATIVE KOTT moved CSHB 328 be passed from committee
with individual recommendations. He felt Finance should
deal with the technical aspects such as funding. He noted
the money for the extra positions, as mentioned by the DEC,
would not come from the general fund. The positions would
be covered by the program receipts.
Number 605
REPRESENTATIVE ULMER objected to REPRESENTATIVE KOTT's
motion. She felt passing CSHB 328 would not be responsible
action by the committee as it costs almost $5 million and
does not achieve very much. The small amount of less work
is not worth the money that will have to be spent on CSHB
328.
REPRESENTATIVE G. DAVIS also objected to the motion. He
asked if there was the possibility of an optional biennial
program, for those who may have the fees to pay biennially
and others may pay annually. He would not vote to pass CSHB
328 from committee.
REPRESENTATIVE OLBERG objected to the fee structure, and he
would not want CSHB 328 to pass if it were to allow DEC to
have that many positions.
Number 625
MS. HENSLEY responded DMV has considered a biennial
registration, and regardless of the passage of CSHB 328,
they would consider it in locations where they did not have
to collect the emissions testing certificate and the
municipal taxes. DMV collects taxes for approximately 10
municipalities and they do already have biennial
registration as an option.
CHAIRMAN VEZEY asked the committee secretary to call the
roll, and with 3 YEAS and 2 NAYS, CSHB 328 failed to pass
from the House State Affairs Committee.
HB 407 - COMMEMORATIVE GOLD RUSH LICENSE PLATES
CHAIRMAN VEZEY opened HB 407 for discussion under bills
previously heard. He stated a proposed committee
substitute, version J, for HB 407 was before the committee.
CHAIRMAN VEZEY asked if there was a motion before the
committee to adopt version J of committee substitute for HB
407.
Number 651
REPRESENTATIVE G. DAVIS so moved.
Number 652
Hearing no objection, CHAIRMAN VEZEY announced CSHB 407,
version J, was adopted.
MS. HENSLEY, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF
PUBLIC SAFETY, addressed CSHB 407. She stated
REPRESENTATIVE RICHARD FOSTER, introduced the first
committee substitute, version E, which basically allowed the
commemorative Gold Rush license plate to be displayed for a
four year period. After the four year period, the Alaska
flag plates would resume.
MS. HENSLEY stated CSHB 407, version J, deletes the four
year provision and the commemorative Gold Rush license plate
would become Alaska's standard issue license plate,
effective January 1, 1996. DMV is neutral on this version.
There would be 25 percent of the public requesting the new
plate and everyone would not be required to obtain a new
plate.
MS. HENSLEY noted the total operating cost to the state
would be $45,000 for the first year, because it would only
be for half of that year, $90,000 the next year, and $45,000
for every year thereafter. Revenued generated from CSHB 407
would be $67,000 the first year, $135,000 the second year,
and $67,000 every year thereafter. CSHB 407 would generate
revenue with program receipts.
Number 688
CHAIRMAN VEZEY questioned if CSHB 407 could be phased in so
existing stock of Alaska flag plates could be used before
the new plates were issued.
Number 691
MS. HENSLEY said yes, the DMV would use the current supply
and be able to order specific amounts through capital funds.
TAPE 94-23, SIDE A
Number 000
(REPRESENTATIVE OLBERG left the meeting at 9:50 a.m.)
REPRESENTATIVE ULMER inquired about the design and choice
process the DMV goes through to pick a new license plate.
Number 014
MS. HENSLEY replied the process flows through a developed
committee comprised of interested individuals who review
designs which are submitted by the public. For example, a
car club designed a special car plate and the committee had
final say over the appropriateness of the design. In terms
of the Alaska flag plate, the committee was very involved in
the actual design.
REPRESENTATIVE ULMER asked if there was a cost associated
with the design process.
MS. HENSLEY answered there has not been a cost in the past.
Artists usually submit their work and then they work with 3M
Company on the paint and coverings required.
CHAIRMAN VEZEY commented selecting a design using the Alaska
flag involved a series of artistic decisions.
REPRESENTATIVE ULMER had trouble visualizing a Gold Rush
license plate.
MS. HENSLEY stated the committee on the Gold Rush
Commemorative plate has already submitted a sample design of
a drawing they would like. The state of Alaska is outlined
and then it has a miner with a pick and a gold pan in the
middle. She commented that a sample could be made available
for committees to see within a couple of weeks.
(REPRESENTATIVE OLBERG returned at 9:52 a.m.)
Number 076
CHAIRMAN VEZEY stated CSHB 407 would be held in committee
pending transmittal of a fiscal note. He asked if the
committee would be interested in an amendment which would
allow the plates to be phased in as existing stock is used
up. He thought it may produce a very minor cost savings.
REPRESENTATIVE G. DAVIS believed CSHB 407 would end up
phasing in the plates, anyway.
Number 096
MS. HENSLEY stated she would provide the fiscal note to the
Governor's Office on Monday morning.
Number 102
Hearing no more business before the committee, CHAIRMAN
VEZEY adjourned the meeting at 9:53 a.m.
ANNOUNCEMENTS
Alaska Railroad Subcommittee will meet at 10:30 a.m., March
5, 1994, to review the final draft of the Alaska Railroad
Report.
OTHER BILLS NOT HEARD
HB 375 - PERMANENT FUND INVESTMENTS - LTD PARTNERS
| Document Name | Date/Time | Subjects |
|---|