Legislature(1995 - 1996)
04/13/1996 10:04 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 13, 1996
10:04 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Scott Ogan, Vice Chair
Representative Joe Green
Representative Ivan Ivan
Representative Brian Porter
Representative Ed Willis
MEMBERS ABSENT
Representative Caren Robinson
COMMITTEE CALENDAR
The confirmation hearing of Michelle Brown as the Commissioner of
the Department of Environmental Conservation.
- CONFIRMATION ADVANCED
HOUSE BILL NO. 545
"An Act relating to the cost-of-living differential for certain
public employees residing in the state and the criteria for
determining eligibility for the differential; and providing for an
effective date."
- HEARD AND HELD
HOUSE BILL NO. 482
"An Act relating to state procurement practices and procedures; and
providing for an effective date."
- PASSED CSHB 482(STA) OUT OF COMMITTEE
(* First public notice)
PREVIOUS ACTION
BILL: HB 545
SHORT TITLE: PUB. EMPLOYEE COST OF LIVING DIFFERENTIAL
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
03/22/96 3269 (H) READ THE FIRST TIME - REFERRAL(S)
03/22/96 3269 (H) STATE AFFAIRS, FINANCE
03/22/96 3269 (H) 3 ZERO FISCAL NOTES (ADM, REV, DOT)
03/22/96 3269 (H) GOVERNOR'S TRANSMITTAL LETTER
04/04/96 (H) STA AT 8:00 AM CAPITOL 102
04/04/96 (H) MINUTE(STA)
04/09/96 (H) STA AT 8:00 AM CAPITOL 102
04/09/96 (H) MINUTE(STA)
04/11/96 (H) STA AT 8:00 AM CAPITOL 102
04/11/96 (H) MINUTE(STA)
04/13/96 (H) STA AT 10:00 AM CAPITOL 102
BILL: HB 482
SHORT TITLE: STATE PROCUREMENT PRACTICES & PROCEDURES
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
02/09/96 2686 (H) READ THE FIRST TIME - REFERRAL(S)
02/09/96 2686 (H) L&C, STATE AFFAIRS, FINANCE
02/09/96 2687 (H) 2 FISCAL NOTES (ADM, DOT)
02/09/96 2687 (H) 5 ZERO FNS (2-ADM, DCED, DCRA, CORR)
02/09/96 2687 (H) 5 ZERO FNS (DOE, DEC, F&G, GOV, DHSS)
02/09/96 2687 (H) 5 ZERO FNS (LABOR, LAW, DMVA, DNR, DPS)
02/09/96 2687 (H) 2 ZERO FNS (REV, UA)
02/09/96 2687 (H) GOVERNOR'S TRANSMITTAL LETTER
03/18/96 (H) L&C AT 3:00 PM CAPITOL 17
03/20/96 (H) L&C AT 3:00 PM CAPITOL 17
03/20/96 (H) MINUTE(L&C)
03/22/96 (H) L&C AT 3:00 PM CAPITOL 17
03/28/96 3429 (H) L&C RPT CS(L&C) 1DP 5NR 1AM
03/28/96 3429 (H) DP: KUBINA
03/28/96 3429 (H) NR: KOTT, SANDERS, MASEK, PORTER
03/28/96 3429 (H) NR: ROKEBERG
03/28/96 3429 (H) AM: ELTON
03/28/96 3429 (H) 2 FISCAL NOTES (ADM, DOT) 2/9/96
03/28/96 3430 (H) 4 ZERO FNS (2-ADM, DCED, DCRA) 2/9/96
03/28/96 3430 (H) 4 ZERO FNS (COR, DOE, DEC, F&G) 2/9/96
03/28/96 3430 (H) 3 ZERO FNS (GOV, DHSS, LABOR) 2/9/96
03/28/96 3430 (H) 4 ZERO FNS (LAW, DMVA, DNR, DPS) 2/9/96
03/28/96 3430 (H) 2 ZERO FNS (REV, UA) 2/9/96
04/09/96 (H) STA AT 8:00 AM CAPITOL 102
04/09/96 (H) MINUTE(STA)
04/11/96 (H) STA AT 8:00 AM CAPITOL 102
04/11/96 (H) MINUTE(STA)
04/13/96 (H) STA AT 10:00 AM CAPITOL 102
WITNESS REGISTER
MICHELLE BROWN, Commissioner-Designee
Department of Environmental Conservation
410 Willoughby Avenue, Suite 105
Juneau, Alaska 99801-1795
Telephone: (907) 465-5066
POSITION STATEMENT: Provided testimony for her confirmation
hearing.
PATRICK GULLUFSEN, Assistant Attorney General
Governmental Affairs Section
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
Telephone: (907) 465-3600
POSITION STATEMENT: Provided testimony on HB 545.
BRUCE CUMMINGS, Labor Relations Specialist
Alaska Marine Highway System
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-3238
POSITION STATEMENT: Provided testimony on HB 545.
DUGAN PETTY, Director
Central Office
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
Telephone: (907) 465-2250
POSITION STATEMENT: Provided testimony on HB 482.
ACTION NARRATIVE
TAPE 96-51, SIDE A
Number 0015
The House State Affairs Committee was called to order by Chair
Jeannette James at 10:04 a.m. Members present at the call to order
were Representatives Willis, Ivan, Porter, Ogan and James. Members
absent were Representatives Robinson and Green.
The first order of business to come before the House State Affairs
Committee was the confirmation hearing of Michelle Brown as
Commissioner of the Department of Environmental Conservation (DEC).
The record reflected the arrival of Representative Joe Green at
10:09 a.m.
CHAIR JEANNETTE JAMES called on Michelle Brown to present her
credentials before the committee members.
Number 0078
MICHELLE BROWN, Commissioner-Designee, Department of Environmental
Conservation, said she would first explain the direction of DEC.
She stated she had been with DEC for a little over one year now.
She was the Deputy Commissioner to Gene Burden prior to her
Commissioner-designee status. She explained to the staff during
the transition that although there was a new Commissioner the
direction would remain the same. She explained it was clear that
the DEC needed a new approach. The era of command and control was
gone and the DEC needed to move towards a common stewardship of
resources approach. There were some restrains, however. The first
was the need to change the mind-set that had been in place for quit
some time. The second was the need to have an organization that
was conducive to consistency and accountability and that would
allow the changes necessary. There were also many budget problems.
The budget did not accurately capture the cost of running a
program. Furthermore, the budget was also not tied to the public
health objective needs. Therefore, last year the DEC was
reorganized. She explained as part of the reorganization the DEC
went from 22 autonomous management units to 6 autonomous management
units to establish clear management lines and accountability. The
22 units were presenting business problems and regional
inconsistencies. By organizing into six units, the DEC unified
program development and implementations. The employees that were
applying the laws were now also developing them. As a result,
regulations were not being issued that had not been ground tested
by the field staff and the regulated community. The DEC also saved
$1.3 million, and reduced its work force by 5 percent. This was a
result of eliminating redundancies, straightening the lines of
management, and consolidating administrative functions. It was
impossible to tell what it actually cost to run a program when the
22 management units existed. Consequently, the DEC could for the
first time indicate what it would cost to run an air program, for
example, on a statewide basis. Therefore, the department could
turn to the federal government and receive more realistic and
indirect rates for grants. The general fund, therefore, was not
subsidizing the federally funded programs. The department also
reduced its spending from the oil and hazardous substance relief
response fund, and saved hundreds of thousands of dollars because
each program was paying its fair share.
MS. BROWN further said the DEC was moving towards a mission of
compliance and technical assistance. Compliance was necessary, but
the department was now starting with the assumption that the
industries in Alaska had both the technical ability and the
corporate consciousness to work with the DEC for a common and
cooperative environmental management program. She cited the three
operating premises. The first was that the DEC was part of the
state's resource management team. The department believed that
sound environmental management meant assisting in the design and
citing of operations to avoid environmental problems and opposition
to projects. The department wanted to be constructive at the
front-end rather than a "road block at the eleventh hour." The
second was that the DEC was part of the state's economic
development team. The DEC believed that jobs and environmental
protection were not mutually inconsistent. The DEC had been
focusing on customer services that would strengthen the overall
economic development of the state which would create jobs. Air,
water and natural resource quality was needed to attract new
industry by making resources available. Therefore, the DEC would
have to make sure that the state did not exceed the capacity of the
environment and avoid new development. The studies had shown that
economic development was strongest where there was strong
environmental management. She did not mean the most stringent
environmental management. She meant that resources were managed on
an interactive, rational and involved manner. She called it a
hands-on approach to ensure that facilities were cited and operated
in a place that would not cause impact. The studies had also shown
that where there was excessive pollution the economy declined
because the environment was very much like an infrastructure.
Therefore, new economic development could not readily occur if a
single operator was taking up the entire capacity of the
environment. She cited new homes, for example, could not be built
if the area could not absorb more sewage discharge or provide
drinking water. The third was that the DEC was the cornerstone of
the state's public health system. She said close to one-half of
the mission of DEC was for safe food, pure drinking water, proper
waste disposal and better sanitation. In order to implement these
principles the DEC had turned to a management by objective
approach. The result was a permit that provided for a safe
environment. It was a focus on results rather than making people
"jump through hoops." She also instructed the staff to get out
into the field and establish partnerships. The department needed
to form coalitions, plan and avoid environmental problems and be
more creative in problem solving to achieve compliance rather than
just demand it. She cited the Clean Air Act regulations, the
Environmental Protection Agency (EPA) Placer Mining General Permit,
the water quality standards, the clean up of Sitka's Silver Bay and
the military sites at King Salmon as examples of the DEC's new
efforts. She further cited the seafood program. Over 50 percent
of the seafood produced in the United States was processed in
Alaska, and the DEC inspected the bulk of it or the Food and Drug
Administration (FDA) would not allow the products to move from the
state. This was obviously a large part of the state's economy.
The DEC was using data to determine the areas that were at risk in
a timely manner resulting in the products being delivered to the
market faster without a compromise to the health of the public. In
conclusion, the DEC was not completely where it wanted to be right
now. A transition was hard, everyone had to get used to it. It
was a matter of time. However, the DEC had successfully crossed
over to a system of more cooperative environmental management that
brought people to the table to work through the issues. She said
she would be happy to answer any questions.
Number 0948
REPRESENTATIVE JOE GREEN said, he could not think of anybody other
than Michelle Brown, who could cooperate and not lose site of her
duties as a Commissioner. The attitude she brought to the DEC was
stunning. She was also fiscally responsive. He strongly supported
her confirmation.
MS. BROWN thanked Representative Green for his support of the Clean
Air Act regulations.
Number 1020
REPRESENTATIVE BRIAN PORTER said the goals she presented sounded
good. He wished her luck.
Number 1046
REPRESENTATIVE ED WILLIS asked Ms. Brown how involved the DEC was
with working with the military to clean up the bases around the
state?
Number 1058
MS. BROWN replied the DEC was very involved. It received grants
from the Department of Defense to higher staff to supervise the
sites. Those grants were declining, however, as the federal
dollars were declining. She reiterated the DEC was aggressively
involved. She cited in King Salmon the DEC just signed the first,
three party agreement in the country, where the military, the EPA
and the state agreed on a clean up course of action. This avoided
the base from going on the super fund list. The Department of
Defense did not want to put a base on the super fund list otherwise
it stigmatized the property.
Number 1106
REPRESENTATIVE WILLIS asked Ms. Brown the status of the ducks that
died on Fort Richardson in Eagle River?
Number 1121
MS. BROWN replied studies had been conducted. She could not
remember if there was a clean-up plan, however. She would get back
to him with more information.
Number 1140
REPRESENTATIVE SCOTT OGAN said he had not heard anything bad about
Ms. Brown from the industry or other legislators. He did have two
constituents, however, who feared and loathed the DEC. The DEC
invoked a love-hate relationship for some. He explained it was
hard to get some people to speak against the DEC for fear of
repercussions.
REPRESENTATIVE OGAN further said the legislature had the power to
regulate and adjudicate problems. The general problem with
government bureaucracy was that there was not enough separation of
powers. It was more efficient for the DEC to adjudicate a problem,
for example, than to use the court system. Therefore, the people
had a tremendous amount of power. He cited an individual that had
a problem with a septic system and would not fix it. As a result,
the DEC held up his food license. He asked Ms. Brown to comment on
the power that the DEC had to enforce the regulations.
Number 1309
MS. BROWN replied she understood the fear surrounding the DEC. She
said people were afraid in general to say to a regulatory agency
"this can't be done" for fear of reprisals when there were
problems. It was important to engage in a discussion of
alternatives without fear. She called it a balancing act. It was
important that the industry felt comfortable enough to engage in
creative solution problem solving dialogue with the DEC. Moreover,
the DEC rarely engaged in enforcement, but rather it tried to solve
problems. It did have the authority to issue a notice of
violation, but there was no enforcement power behind it. If the
problem was not corrected, the DEC would then have to decide if
enforcement action was necessary. It did not have administrative
powers to take any administrative action, except for the issuance
of a compliance order.
Number 1432
REPRESENTATIVE OGAN said the DEC did have the power, however, to
shut down a business, for example, and possibly impoverish people.
Number 1438
MS. BROWN replied the DEC did not have the power without a court
order. The DEC had the power to not give a permit, however, and
the individual had the right to appeal. She reiterated the DEC
could not shut down a business once a permit was issued without a
court order.
Number 1470
REPRESENTATIVE OGAN said it was hard to pay lawyer fees when the
money was not coming in. He suggested they discuss this issue
further at some other time.
MS. BROWN said she would like to discuss with Representative Ogan
some of his concerns regarding the Mat-Su area. She explained she
tried earlier but their schedules kept conflicting.
Number 1479
CHAIR JAMES said she was extremely impressed with the presentation
of Ms. Brown. She subscribed to the same focus that she mentioned
for the DEC regarding regulatory reform. She was particularly
interested in the goal orientation compared to the process
orientation of the department. Furthermore, she explained "over
reach" was needed to make things happen. In the past that had been
accomplished with environmental issues in all areas. She cited the
protection areas had been over reached to the extend that many
businesses had been destroyed. She agreed business was needed for
environmental control because it cost money. If environmental
control was insisted to the point that there was not any business
then the control "went out the window." The healthy communities
were the ones that had the best environmental controls.
Furthermore, she agreed that the right people were not writing the
regulations. She agreed with the approach of Ms. Brown and the
DEC. She further agreed with the goal orientation approach for
more focus and creativity. She urged Ms. Brown to not get
discouraged. The old habits would be around for a long time.
Number 1726
REPRESENTATIVE GREEN said he commiserated with the concerns of
Representative Ogan's constituents. He said three years ago he was
the biggest adversary of the DEC. He thought it was mismanaged.
Ms. Brown had proven otherwise. He said it was often forgotten
that the DEC was caught between federal edict and the locals that
wanted to do something. He was grateful that the DEC was there to
act as a buffer. Furthermore, the attitude of a department
permeates downwards and he welcomed the attitude of Ms. Brown. He
said it would be impossible for all of Representative Ogan's
constituents to agree with the appointment because they have either
been burned or knew somebody that had been burned by the
DEC. That attitude would probably not go away for decades.
Number 1817
REPRESENTATIVE IVAN IVAN said he had not heard any complaints so
far against the DEC. He cited small business owners were sometimes
frustrated because of all the restraints in his district. He
stated he represented one of the poorest regions in the state as
far as resource development was concerned. He believed the
environmentalists controlled the developmental efforts through big
organizations. The folks from his area were conservationists
because they recycled what they could from the environment and
lived with it.
REPRESENTATIVE IVAN further stated his district was looking at
mining development in the middle-Kuskokwin area. He asked Ms.
Brown how his area would be affected by the changes in the DEC? He
further asked Ms. Brown how the DEC handled mining?
Number 1936
MS. BROWN replied the DEC created a public service division as a
part of the reorganization. The easiest solution would have been
to implement a straight line management approach by program.
However, the communities called for generalists to answer questions
and to help the public move through the system. Therefore, a
statewide public services division was created. The division was
to help the small businesses while others could focus on the
permits. In two areas the DEC had asked the managers to advocate
for certain industries creating a workable schedule for everybody
involved. The compliance assistance officer, the hazardous waste
hot line, and the hazardous waste program were also part of the
public service division.
Number 2077
MS. BROWN further replied regarding mining the DEC had tried to
work with people for permit avoidance. If they could avoid waste
water discharges they could avoid the entire National Pollution
Discharge Elimination System (NPDES) permit process. Furthermore,
memorandums of agreement had been established with the EPA, the
applicant, and the DEC to set a time frame.
MS. BROWN further addressed the coal bed methane issue that
affected Representative Ogan. She called it a wonderful energy
source and could eliminate a lot of the problems with the bulk fuel
tanks. She explained she had asked each of the divisions to report
if there was sufficient regulatory authority to analyze the
program. It was discovered that they were shallow wells,
therefore, there was not a likelihood that oil would be encountered
creating little risk. As a result of the efforts of each division,
the DEC would be ready when the program was ready to advance.
Number 2168
REPRESENTATIVE OGAN said he was straying from the issue of the
confirmation of Ms. Brown. However, it was recently brought to his
attention that methane gas was also used for the disposal of human
waste. That development would be helpful in Bethel, for example,
where disposal was a problem.
Number 2204
MS. BROWN replied the DEC wanted to facilitate the program rather
than be in the way. The DEC saw it as a great potential.
Number 2216
CHAIR JAMES said there were many small and old subdivisions in her
district using a well and a septic system. The subdivisions were
concerned about being shut down because of tri-chloro-ethelene
(TCE). The DEC knew there was contamination in a near area. She
was concerned about the panic if an unacceptable level of TCE was
discovered.
Number 2354
MS. BROWN said the DEC did know years ago that some of the wells
were contaminated and informed the individual well owners, but the
neighbors were not informed. Moreover, tests indicated that the
plume was moving. The DEC was caught between telling the people it
was moving, or wait until it had more information. The DEC decided
it was necessary to inform the people so that they could make an
informed decision. The people panicked so the DEC worked with the
city to form a water district. Moreover, there was not a lot of
attention surrounding subdivision growth and many people took
advantage of by digging shallow wells and causing contamination.
It took the cooperation of the community and the DEC to work
together to identify and solve the problems.
TAPE 96-51, SIDE B
Number 0000
CHAIR JAMES replied the people in her district were most affected
by the first meeting when the properties of TCE were not explained.
As a result, the people were concerned to even water their gardens.
Number 0059
MS. BROWN replied she agreed with Chair James regarding the first
meeting. The DEC was working on an agreement with the Department
of Health and Social Services to include a representative to
address the health issues. The DEC had a lot of engineers that
focused on the properties of TCE, but that did not address the
health concerns of the public.
Number 0078
CHAIR JAMES said because of the confusion her office employed a
private laboratory to analyze the properties of TCE. The people
did no want to believe those results either, however.
CHAIR JAMES said this was the best confirmation hearing that the
House State Affairs Committee had ever heard. It was clear why the
members would vote to accept Ms. Brown. More importantly, the
information learned today could be delivered back to the
constituents.
CHAIR JAMES thanked Ms. Brown for her presentation today.
Number 0175
REPRESENTATIVE PORTER moved to adopt the name of Michelle Brown for
the position of the Commissioner of the Department of Environmental
Conservation. Hearing no objection, it was so adopted.
HB 545 - PUB. EMPLOYEE COST OF LIVING DIFFERENTIAL
The next order of business to come before the House State Affairs
Committee was CSHB 545(STA) (9-GH2067/C).
CHAIR JAMES explained the committee substitute incorporated the
provisions of the allowable absences and the determination of state
residency of the permanent fund dividend (PFD) program.
CHAIR JAMES called on Patrick Gullufsen, Department of Law, to
further explain the committee substitute.
PATRICK GULLUFSEN, Assistant Attorney General, Government Affairs
Section, Civil Division, Department of Law, explained the
department liked the original bill better. The department wanted
in regulation clarity to decide who was entitled to the cost-of-
living differential (COLD). The committee substitute did give
clarity. However, the department also wanted flexibility to allow
the Department of Administration to refine and adjust by regulation
in the event the PFD criteria did not fit the needs of the marine
highway system. The committee substitute did not allow that
flexibility. The department, therefore, crafted an amendment to
establish that flexibility. He explained the department could not
regulate away the provisions in a statute, but only clarify the
provisions in a statute. There was a basic philosophical
difference here that might or might not be worked out.
Number 0442
CHAIR JAMES said she expected the department to announce certain
provisions did not work today. She was willing to engage in that
type of a discussion and remove the provisions that did not work
from the committee substitute.
Number 0473
REPRESENTATIVE GREEN moved that CSHB 545(STA) (9-GH2067/C) be
adopted for consideration. Hearing no objection, it was so
adopted.
CHAIR JAMES asked Mr. Gullufsen to identify the areas of concern in
the committee substitute.
MR. GULLUFSEN referred the committee members to page 8 and page 9,
subsections (e), (f), and (g). The subsections discussed an
absence of five years with no intent to return to Alaska. This
regulation obviously pertained to the PFD worth millions of dollars
and a situation where an individual might or might not be working.
The COLD on the other hand involved employees of the state and
whether of not they should receive the COLD because they were
living in Alaska. The department suggested deleting the
subsections entirely.
Number 0568
REPRESENTATIVE PORTER moved that subsections (e), (f), and (g) on
page 8 and page 9 be deleted. Hearing no objection, they were so
deleted.
Number 0598
MR. GULLUFSEN referred the committee members to page 10, subsection
(e). The subsection discussed an individual employed by the state
while maintaining a home outside of Alaska. The COLD was designed
to compensate for the higher cost of living in Alaska. Therefore,
the department suggested deleting the subsection entirely.
Furthermore, it would cause problems administering the COLD.
Number 0628
REPRESENTATIVE WILLIS moved that subsection (e) on page 10 be
deleted. Hearing no objection, it was so deleted.
Number 0638
REPRESENTATIVE PORTER asked if the COLD applied to other
occupations within the state.
MR. GULLUFSEN replied it applied to very few other occupations.
Mr. Cummings, Department of Transportation and Public Facilities,
could answer that question better, however. He explained it was
originally passed and designed to apply to the marine highway
system employees.
Number 0672
CHAIR JAMES said there was no way of knowing if other employees
were considered for the COLD when it was established. Therefore,
any employee that received a COLD would be affected by this bill.
REPRESENTATIVE PORTER said the bill referred to AS 23.40.010.
MR. GULLUFSEN stated AS 23.40.010 did not identify which employees
qualified for a COLD.
CHAIR JAMES said the COLD pertained to Alaskan residents. There
was discussion that the COLD was an incentive for individuals to
move to Alaska. That was not the case anymore, however. She
questioned if the COLD was even needed. Nevertheless, it was part
of a union agreement and there would be a lot of objection if it
was removed.
MR. GULLUFSEN said the department was not suggesting the COLD be
removed.
Number 0742
REPRESENTATIVE IVAN asked Mr. Gullufsen if there were any penalties
for receiving a COLD when a person knew he was not entitled to it?
Number 0766
CHAIR JAMES replied there were no penalties addressed in the
provisions in the committee substitute. The department was trying
to tighten the criteria, however, so that there was not the
opportunity to receive a COLD when a person was not entitled to it.
Number 0825
MR. GULLUFSEN said, if the department had clear criteria, it would
have the authority to discipline an employee who abused it. There
was also the ability to take criminal action as long as there was
clear criteria for the submission of false information.
Number 0855
REPRESENTATIVE OGAN said the department might have the authority,
but it was still at the discretion of the department to exercise
that authority. He said it would be prudent to include a penalty
of some type in statute.
CHAIR JAMES said the committee would deal with that suggestion
later. She asked Mr. Gullufsen to explain the proposed amendment.
Number 0880
MR. GULLUFSEN explained the amendment would be added to Section 2
as subsection (c). "(c) The Department of Administration may adopt
regulations under AS 44.62 (Administrative Procedure Act) to the
extent necessary to clarify and implement the criteria set out in
AS 23.40.195, 23.40.197, and 23.40.198 as applied to employees of
the Alaska Marine Highway System."
Number 0888
REPRESENTATIVE PORTER wondered what the amendment would achieve.
Number 0902
MR. GULLUFSEN said the three subsections that were just deleted
would have been removed.
CHAIR JAMES asked Mr. Gullufsen if the amendment was necessary now
that they had been deleted?
MR. GULLUFSEN replied, "I think so." There were still going to be
questions when applying the PFD criteria to the COLD, therefore,
the authority was still needed to adopt regulations when necessary.
Number 0930
REPRESENTATIVE GREEN wondered if by adopting the amendment it
returned the committee substitute back to the original bill.
Number 948
CHAIR JAMES said it could be construed that way. However, the
committee substitute tightened the bill so that the Department of
Administration could not undue the specifics in statute. The
department could, however, adopt regulations to delineate the
process. She did not agree with writing regulations to clarify the
laws, but she did admit there were a certain amount of regulations
that were needed to establish a process.
Number 1022
REPRESENTATIVE GREEN said he thought the intent of the bill was to
address the marine highway system. He was concerned about
including a caveat to write regulations. He reiterated he wondered
if anything had really changed if the amendment was included.
CHAIR JAMES asked Mr. Gullufsen to respond to the concerns of
Representative Green.
Number 1062
MR. GULLUFSEN said the Department of Administration would look at
the PFD regulations and apply them accordingly. However, over time
the regulations might need to be changed to meet the purpose of the
COLD. He cited the 180 days of allowable absence might now work
for a marine highway system employee that was gone for six months,
for example. Therefore, the department wanted the ability to fix
that provision through a regulation. If the provision was
established in law, that ability was taken away, requiring further
approval from the legislature. The department wanted the ability
to adopt the PFD regulations to fit the COLD without having to come
back to the legislature. The department was not asking for
regulatory authority over a private business enterprise or a
business activity. It was asking for broad regulatory authority to
increase the salary of those that qualified.
Number 1195
REPRESENTATIVE PORTER asserted, "lets do one or the other." Either
provide a caveat to allow the Department of Administration to
change the provisions, or cite specifics. He did not agree with
including both.
Number 1221
CHAIR JAMES replied the Department of Administration would not have
the authority to change a provision if it was in statute.
Therefore, if the department did not want it in the bill it needed
to be removed now.
Number 1237
MR. GULLUFSEN said the committee substitute would put the 180 days
PFD requirement, for example, into statute. The original bill was
short and sweat. It gave the authority to the Department of
Administration to adopt the PFD regulations to the COLD. The
committee substitute would put the criteria into statute with no
authority to change them through a regulation. They could only be
clarified through a regulation.
Number 1328
CHAIR JAMES referred the committee members to page 3, line 18 and
suggested completing the blank. She read, "(f) An individual has
taken action inconsistent with establishing or maintaining state
residency if at any time in the last _____ months, the
individual..."
MR. GULLUFSEN proposed completing the blank with the number "12."
There was no objection.
CHAIR JAMES reiterated her intent today was to allow the department
to identify those areas of concern in the committee substitute.
She stated the language in the original bill was too broad. It did
not define the criteria. It left it up to the Department of
Administration to define. She understood if it was left to
regulations it would return to union negotiations for
clarification.
Number 1466
MR. GULLUFSEN said the original bill made it clear that the
Department of Administration would not bargain the issue any more.
He confessed Chair James made a good argument, however. It boiled
down to an argument of whether or not the legislature wanted the
Administration to have the authority and flexibility, or did it
want it to be specified in statute. The department would prefer to
have the flexibility and authority.
Number 1496
REPRESENTATIVE GREEN asked Mr. Gullufsen how the department would
handle an employee's time spent away from home?
Number 1536
MR. GULLUFSEN said the state took the position that if while off
the ferry one left the state he was not a resident. On the other
hand, the individual was actually present in Alaska while on the
ferry and that time should be counted towards residency. The issue
was in court right now. A decision had yet to be made, however.
Number 1602
REPRESENTATIVE PORTER responded this was why the legislature should
not try to write a bill to cover all the contingencies. He
reiterated the bill should go one way or the other. He preferred
the original bill because it gave specific criteria for the interim
period while preparing to adopt the regulations.
Number 1652
CHAIR JAMES said the original bill did not include specifics
either. She would prefer the department outline the criteria
needed. If there was a state income tax, it would be very simple
to determine who was a resident and who qualified for the cost-of-
living differential. She believed the department did not know what
criteria it needed. Therefore, she did not want to pass a bill
that would allow the Administration to draft regulations. It was
too wide open.
Number 1753
MR. GULLUFSEN said he understood the concerns of Chair James. He
reiterated the original bill allowed the Department of
Administration to adopt the PFD regulations and work with them.
Therefore, the legislature would have to trust its ability to
identify the proper purpose and write regulations that accurately
reflected that purpose. If someone did not like them, he could go
to the legislature to change them. He explained Chair James
preferred the opposite approach of starting with a definite and
using the legislature to change the statute to fix the problem.
Number 1813
CHAIR JAMES replied the Administration just wanted the authority to
fix something unprepared. She reiterated that was too broad for
her. She agreed there were serious concerns involved and the
legislature should be involved in the process as opposed to just
giving the authority to the Administration.
Number 1862
REPRESENTATIVE GREEN said he was curious to see the draft
regulations. The legislature wanted to streamline the regulatory
process and yet the committee substitute just added a lot of pages
to the Alaska Statutes. He wondered if the committee substitute
fixed the problem or exacerbated it.
Number 1910
CHAIR JAMES said she could write the criteria to meet the COLD in
two pages.
Number 1932
REPRESENTATIVE GREEN asked Mr. Gullufsen what he anticipated the
regulations would look like?
Number 1938
MR. GULLUFSEN replied the PFD regulations would be used over a
period of time to see how they worked. The Administration would
immediately look at the 180 days provision and determine how that
would affect the COLD program.
Number 2011
REPRESENTATIVE GREEN said the Administration could through
regulations establish criteria now. He asked Mr. Gullufsen if the
Administration really wanted legislative clout to back up the
criteria?
MR. GULLUFSEN replied, "that's right." There was the argument that
the Administration did not have the regulatory authority to
establish criteria now, however.
Number 2058
REPRESENTATIVE GREEN asked Mr. Gullufsen where would the
legislative clout be once the regulations were changed by the
Administration?
Number 2077
MR. GULLUFSEN replied the clout would be because the legislature
told the Administration it could change the regulations.
Number 2116
CHAIR JAMES said there was also a time frame issue involved. If
the original bill was moved an entire year would pass before the
Administration decided how to implement the regulations. She
reiterated the more simple approach would be to define the criteria
in statute. She cited, as an example of a criterion, an employee
was expected to live in the state when he was not working on the
ferry. The reasons for an absence would also need to be defined.
Number 2218
MR. GULLUFSEN replied the original bill said the Department of
Administration adopted the PFD regulations immediately. Over time,
it would determine how to change the regulations to fit the COLD.
Therefore, there was not a waiting period. Furthermore, the PFD
criteria had been tested in application and in court. It was also
hoped that they would not be controversial. The Administration
would expect controversy if it was to adopt a new definition of
residency.
Number 2347
CHAIR JAMES replied one of the most controversial issues around
were the PFD regulations. The Director, Nanci Jones, said they
needed to be fixed because they were not working. She further said
it was not clear to her that the PFD regulations would apply to the
COLD because an employment benefit and a residency benefit were not
the same. Furthermore, she wondered how the program would be
affected, if the PFD regulations were changed.
TAPE 96-52, SIDE A
Number 0000
CHAIR JAMES wondered again if the PFD regulations were the correct
ones to be considering.
MR. GULLUFSEN said most of the PFD criteria applied to eligibility
for the COLD.
CHAIR JAMES wondered if the original bill allowed the Department of
Administration to adopt regulations that would fit the COLD so that
this would not be an arbitrated issue again.
MR. GULLUFSEN replied, "yes."
CHAIR JAMES said the real criteria was to write regulations so that
they were not negotiable.
MR. GULLUFSEN replied, "yes." The Administration anticipated that
the regulations for the COLD would be similar to the PFD
regulations. He reiterated the original bill did ask for the
authority to establish criteria for the COLD.
Number 0163
CHAIR JAMES said she was concerned about fixing the problem. She
wondered if the original bill fixed the problem by giving the
Administration the authority to write regulations.
Number 0183
REPRESENTATIVE PORTER said that was not exactly correct. It was
established upon passage of the original bill that the PFD
regulations would be applied immediately. While over time, the
Administration would have the ability to craft those regulations to
apply specifically to the marine highway system, and to those that
it would affect in the future.
Number 0236
REPRESENTATIVE OGAN said the issue had been dissected enough. It
was time to "fish or cut bait."
CHAIR JAMES called on the first witness in Juneau, Bruce Cummings,
Department of Transportation and Public Facilities.
Number 0292
BRUCE CUMMINGS, Labor Relations Specialist, Alaska Marine Highway
System, Department of Transportation and Public Facilities, said he
was here to answer any questions of the committee members.
Number 0308
REPRESENTATIVE PORTER asked Mr. Cummings who the COLD applied to
besides the marine highway system employees?
Number 0313
MR. CUMMINGS replied the state paid most employees based on where
they worked rather than where they lived. There was legislation
before the legislature that addressed an employee's duty location,
such as, Anchorage or Fairbanks. In the past there were employees
that were stationed in Seattle, for example, that were not
necessarily state residents. However, the current collective
bargaining law required a pay rate for those residing outside of
Alaska for every contract. The other contracts tied pay into where
a person worked rather than where a person lived. The vessel
employees did not have a fixed duty station, so where they lived
was considered their duty station. For everybody else it was
assumed they lived and worked in the same place. That was not
always true for the vessel employees, however.
Number 0439
CHAIR JAMES responded the COLD was to augment the cost of living
based on where a person lived. Therefore, that would only be for
those that did not qualify for a geographic differential. They
were not the same.
Number 0467
MR. CUMMINGS replied the intent of the geographic differential and
what was in the collective bargaining law was the same. The
premise was that the employees would be paid at a rate based on
where they lived to compensate them for the cost of living in that
geographic area. He cited some of the vessel employees lived down
south even though they worked in Alaska. He further cited AS
23.40.210 required a COLD.
Number 0552
REPRESENTATIVE PORTER asked Mr. Cummings what body of law covered
a state employee that was transferred to Washington D.C., for
example?
Number 0572
MR. CUMMINGS replied AS 39.27.020, the geographic differential
provision. It stated the employee would receive six steps below
the rate of pay for those living in Alaska. It was different for
a temporary relocation assignment, however.
Number 0636
REPRESENTATIVE PORTER asked if there was anything in statute that
would affect the official determination of residency in those
circumstances?
Number 0650
MR. CUMMINGS replied, "no." The other labor agreements addressed
where a person was working versus where a person was residing.
Therefore, one could work in Seattle, for example, and still
qualify for the PFD because he worked for a state of Alaska field
office.
Number 0700
REPRESENTATIVE GREEN asked Mr. Cummings, if a person that worked in
Seattle then moved to Alaska and received the COLD, would he
receive a higher rate of pay compared to a person already working
and living in Alaska?
Number 0729
MR. CUMMINGS replied they would receive the same rate of pay at the
time they both lived in Alaska. The person that started working in
Alaska would start at a higher rate of pay, however.
Number 0741
CHAIR JAMES thanked Mr. Cummings for his testimony. She announced
she wanted to talk to the department further before taking any
action. She would reschedule the bill for Tuesday, April 16, 1996,
for further action.
Number 0766
REPRESENTATIVE OGAN said he agreed with Representative Porter after
listing to the deliberations. He also shared the same aversion
towards regulations as Chair James. However, due to the limited
amount of time and the limited amount of information, the
Administration would be better off handling the issues involved.
Number 0814
CHAIR JAMES said she was not as concerned about the regulations the
bill would create. She was concerned because the original bill was
not specific enough. The bill should give the Administration
guidelines to help write regulations.
HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES
The next order of business to come before the House State Affairs
Committee was CSHB 482(L&C) (9-GH2020/C).
Number 0900
CHAIR JAMES explained her biggest concern regarding HB 482 was the
single-source procurement practice. She was concerned about
eliminating the chance for competition.
Number 0959
DUGAN PETTY, Director, Central Office, Division of General
Services, Department of Administration, explained current law
required that there was clear and convincing evidence that only one
source was available, and that evidence had to be cleared by the
chief procurement officer. A strict interpretation of that
provision in some cases required an agency to expend a lot of time
to demonstrate that there was only one source. The provision
allowed for accountability and a public process. It further
allowed for a determination to be made using criteria that was less
stringent than in current law. In other words, it would streamline
the process.
Number 1111
CHAIR JAMES asked Mr. Petty to respond to the additional provision
inserted by the Senate. She read, "(e) except for procurement of
supply services, professional services, or construction services
that do not exceed the amount for small procurement under AS
36.33.20(a) as applicable. The authority to make a determination
required by this section may not be delegated even if the authority
is to contract is delegated." She asked Mr. Petty if he had a
problem with that language?
Number 1145
MR. PETTY replied the department accepted the language in the
Senate version, and would find that language acceptable in the
House version as well. He explained the House version barred the
chief procurement officer from delegating that determination,
except for small procurement.
Number 1200
REPRESENTATIVE PORTER explained a consideration surrounding the
single-source procurement issue was, if the state had a large
investment in a particular manufacturing brand, it could have to
change brands. He wondered if there was enough justification to
stay with the initial brand or to change.
Number 1245
REPRESENTATIVE WILLIS said he agreed with Representative Porter.
Number 1253
REPRESENTATIVE GREEN asked Mr. Petty if the determination of why a
single-source was chosen would be available to the public?
Number 1271
MR. PETTY replied that determination would be available as public
information. A report was kept of alternative procurement.
Number 1311
CHAIR JAMES asked Mr. Petty how the department would handle the
concerns of Representative Porter?
Number 1325
MR. PETTY said Representative Porter made a good point. His
concerns were seen more in the leasing arena. A competitive
process would be initiated even though there was a clear indication
of a single-source. Unfortunately, this could result in higher
prices than what could be negotiated.
Number 1416
CHAIR JAMES said she understood that process. She wondered how HB
482 would change that process.
MR. PETTY replied HB 482 would allow for the interjection of common
sense. It would allow for the determination if a bid process was
not practical in written format. The information would be a matter
of the public record.
Number 1463
CHAIR JAMES said she had seen many times people manipulate the
system to get what they wanted. There was a problem when the
public perceived a transaction that benefited a friend, for
example. According to Mr. Petty there would be documentation on
file to clear any mis-perception, however.
Number 1535
MR. PETTY stated the language in the Senate version held the chief
procurement officer accountable for that determination. If he
knowingly made a false statement, he was guilty of a class A
misdemeanor. The intent was to include accountability.
Number 1595
CHAIR JAMES said it was important that the state get the best deal
possible while at the same time protect the public process.
CHAIR JAMES asked the committee members if the same provision that
the Senate included should also be included in the House bill?
Number 1628
REPRESENTATIVE PORTER said it was not an unreasonable requirement
to have the person in charge of the process be accountable.
Number 1678
REPRESENTATIVE PORTER moved to inserted the same language as in the
Senate bill as subsection (e). Hearing no objection, it was so
inserted. (Amendment 1)
Number 1737
CHAIR JAMES announced she had one more concern. She referred the
committee members to Sections 6 and 7, the lease-purchase option.
She said a lease-purchase would cost the state more money because
it would pay over a period of time for the purchase of the
property. Therefore, she suggested including a length of time
provision. She was not concerned about the maintenance during the
lease, but rather after the purchase. The state was not willing to
fund deferred maintenance.
Number 1808
MR. PETTY said he shared the concerns of Chair James regarding the
deferred maintenance situation in the state. The Administration
was working on a solution. It was beyond the scope of HB 482,
however. He also believed the state did not handle leasing well.
He cited the Department of Labor building was leased in 1982 at
$1.95 per s.f., and in 1996 at $2.32 per s.f., including full
service. The state had paid in total in excess of $22,000,000 for
the building. Moreover, in Juneau a new school would cost
approximately $165 per s.f., and the capital cost would be
$9,811,000. Therefore, the state could have bought the Department
of Labor building a couple of times. The state could have owned
that building and saved money. If a lease-purchase agreement was
entered into appropriately, it could save the state money.
Number 1986
CHAIR JAMES said she agreed with everything Mr. Petty said.
However, no one wanted to pay the on-going maintenance charges.
She was willing to move the bill forward, however. She stated
there was over $1 billion of deferred maintenance for public
facilities that was not being addressed.
Number 2027
REPRESENTATIVE GREEN asked if the problem could be avoided if the
language "including maintenance" was added?
Number 2038
CHAIR JAMES said the language was not necessary because lease-
purchase agreements almost always included maintenance.
REPRESENTATIVE GREEN said the language would do away with the term
"almost."
CHAIR JAMES said the issue could not be fixed in HB 482. It was a
problem after the state purchased the facility.
Number 2077
REPRESENTATIVE OGAN asked Mr. Petty how the bill changed the
authority of the department regarding the lease-purchase authority?
Number 2087
MR. PETTY replied the Department of Administration was currently
granted authority under AS 36.30.085 to enter into a lease-purchase
agreement. The amount was not restricted, except for real property
that required the Administration to notify the legislature.
Number 2129
REPRESENTATIVE OGAN said he was the author of a lease-purchase bill
this year, therefore, he was hesitant to stray from the current
policy. He did not want to lose the legislative approval. The
language was included for good reasons. Otherwise it was a capital
expenditure without the vote of the people.
Number 2161
REPRESENTATIVE GREEN asked Mr. Petty if the state had ever
exercised a lease option?
Number 2168
MR. PETTY replied, "yes." He cited the Seward Skill Center, the
Spring Creek Prison, the Court Plaza Building, and the Anchorage
Times Building.
REPRESENTATIVE GREEN asked Mr. Petty if the state had purchased any
of the above cited buildings of which repair maintenance was
required?
Number 2197
MR. PETTY replied the Court Plaza Building was under lease to the
state of which a portion was transferred to the Department of
Transportation and Public Facilities to maintain it.
Number 2228
REPRESENTATIVE GREEN said liability was another issue to address
before purchasing a facility.
Number 2243
REPRESENTATIVE PORTER wondered if the state was precluded from
entering into an agreement if it was based on legislative approval
during the interim.
Number 2264
MR. PETTY replied the state was not precluded from entering into a
congenial purchase agreement. There was the possibility of loosing
a lease due to timing, however. It would turn into a political
issue.
Number 2289
CHAIR JAMES said there were always two parties in a lease-purchase
agreement. Timing was critical so it was possible that legislative
approval would stall a deal. Moreover, if the state was ever going
to control its spending, a cooperative effort between the
Administration and the legislature was necessary. She did not want
to give up everything, however.
Number 2355
REPRESENTATIVE GREEN wondered if the rent would be higher to the
state in a lease-purchase option.
Number 2379
MR. PETTY replied that was not always the case. A lessor could
take advantage of tax exemptions if the state occupied most of the
building, for example.
Number 2400
REPRESENTATIVE GREEN said he was concerned about the state entering
into a lease-purchase option during the interim.
MR. PETTY said a contingent offer was not popular for a seller.
There were some that would work and probably some that would not
work. It was hard to say, however.
Number 2461
REPRESENTATIVE OGAN moved to delete the underlined language in
Sections 6 and 7, "with an annual rent to the department,
University of Alaska, legislative council, or supreme court that is
anticipated to exceed $500,000, or with total lease payments that
exceed $2,500,000 for the full term of the lease-purchase
agreement." He was not comfortable giving the department, Board of
Regents, legislative council, or supreme court a "blank check" to
purchase property without legislative approval.
Number 2494
MR. PETTY said the Sections gave the Administration the ability to
take advantage of a good business opportunity. The motion would
restrict the Administration and the opportunity to reduce the cost
of government operations.
TAPE 96-52, SIDE B
Number 0023
REPRESENTATIVE GREEN said he opposed the motion.
Number 0030
REPRESENTATIVE OGAN reiterated he was the author of a lease-
purchase bill this year. It passed the House and was now in the
Senate. He explained the bill was committing this legislature and
the budget in the future to spend a certain amount of money on a
capital purchase. He was not against the state entering into a
good deal. He reiterated the legislature should not be left out of
the approval process.
Number 0096
REPRESENTATIVE IVAN wondered if the Department of Administration
would notify the legislature through the budget process if it was
to enter into a purchase agreement.
Number 0111
CHAIR JAMES said the state would enter into a lease-purchase
agreement to obtain different space, for example, of which would be
presented in the budget process. The state would also enter into
a lease-purchase agreement to obtain additional space, of which
would also be presented in the budget process. However, there were
times when the legislature was not included in the decision. She
visualized there would be times that an opportunity would be missed
during the interim period. She also agreed with the concerns of
Representative Ogan. She could see both sides.
Number 0240
REPRESENTATIVE PORTER wondered if by reducing the numbers the issue
would be resolved.
Number 0251
MR. PETTY said the Administration selected the numbers because they
were the threshold requirements for notice on the operating side.
They were on the minimal side now. The larger lease-purchase
agreements would still come to the legislature for approval.
Number 0316
MR. PETTY further stated that any lease-purchase transaction must
have a subject to funding clause included.
CHAIR JAMES replied that clause had a different meaning for
different people. A subject to funding clause scared some, and for
others it was considered a boiler plate.
CHAIR JAMES called for a roll call vote. Representatives Green,
Ivan, Porter and Willis voted against the motion. Representatives
Ogan and James voted in favor of the motion. The motion failed.
Number 0396
REPRESENTATIVE PORTER moved to adopt CSHB 482(L&C) (9-GH2020/C) for
consideration. Hearing no objection, it was so adopted. The
previous Amendment was included creating CSHB (STA).
Number 0412
REPRESENTATIVE IVAN moved that CSHB 482(STA) move from the
committee with individual recommendations and attached fiscal
notes. Hearing no objection, it was so moved from the House State
Affairs Committee.
CHAIR JAMES asked that HB 490 be waived from the House State
Affairs Committee. Hearing no objection, it was so waived.
Number 0433
ADJOURNMENT
CHAIR JAMES adjourned the House State Affairs Committee meeting at
12:37 p.m.
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