Legislature(1997 - 1998)
03/22/1997 10:05 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
March 22, 1997
10:05 a.m.
MEMBERS PRESENT
Representative Jeannette James, Chair
Representative Ethan Berkowitz
Representative Fred Dyson
Representative Kim Elton
Representative Ivan Ivan
Representative Al Vezey
MEMBERS ABSENT
Representative Mark Hodgins
COMMITTEE CALENDAR
*HOUSE BILL NO. 78
"An Act relating to the definition of certain state receipts; and
providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 84
"An Act limiting the authority to conduct pull-tab charitable
gaming to qualified organizations that are exempt from taxation
under 26 U.S.C. 501(c)(3) or (19); and providing for an effective
date."
- FAILED TO MOVE HB 84 OUT OF COMMITTEE
*HOUSE BILL NO. 155
"An Act relating to hearings before and authorizing fees for the
State Commission for Human Rights; and providing for an effective
date."
- HEARD AND HELD
HOUSE BILL NO. 143
"An Act relating to the art in public places requirements for
state-owned and state-leased buildings and facilities."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 83
"An Act relating to commercial motor vehicle inspections; and
providing for an effective date."
- SCHEDULED BUT NOT HEARD
(* First public hearing)
PREVIOUS ACTION
BILL: HB 78
SHORT TITLE: AMEND DEFINITION OF "PROGRAM RECEIPTS"
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
01/16/97 88 (H) READ THE FIRST TIME - REFERRAL(S)
01/16/97 88 (H) STA, L&C, FINANCE
01/16/97 88 (H) ZERO FISCAL NOTE (GOV\VARIOUS DEPTS)
01/16/97 88 (H) GOVERNOR'S TRANSMITTAL LETTER
03/11/97 (H) STA AT 8:00 AM CAPITOL 102
03/11/97 (H) MINUTE(STA)
03/13/97 (H) STA AT 8:00 AM CAPITOL 102
03/13/97 (H) MINUTE(STA)
03/20/97 (H) STA AT 8:00 AM CAPITOL 102
03/20/97 (H) MINUTE(STA)
03/22/97 (H) STA AT 10:00 AM CAPITOL 102
BILL: HB 84
SHORT TITLE: PULL-TABS LIMITED TO 501(C)(3) OR (19)
SPONSOR(S): REPRESENTATIVE(S) MARTIN
JRN-DATE JRN-PG ACTION
01/22/97 122 (H) READ THE FIRST TIME - REFERRAL(S)
01/22/97 122 (H) STATE AFFAIRS, L&C, FINANCE
03/11/97 (H) STA AT 8:00 AM CAPITOL 102
03/11/97 (H) MINUTE(STA)
03/13/97 (H) STA AT 8:00 AM CAPITOL 102
03/13/97 (H) MINUTE(STA)
03/15/97 (H) STA AT 11:00 AM CAPITOL 102
03/15/97 (H) MINUTE(STA)
03/22/97 (H) STA AT 10:00 AM CAPITOL 102
BILL: HB 155
SHORT TITLE: HUMAN RIGHTS COMMISSION FEES & HEARINGS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
JRN-DATE JRN-PG ACTION
02/24/97 443 (H) READ THE FIRST TIME - REFERRAL(S)
02/24/97 443 (H) STATES AFFAIRS, HES, FINANCE
02/24/97 444 (H) ZERO FISCAL NOTE (GOV)
02/24/97 444 (H) GOVERNOR'S TRANSMITTAL LETTER
03/11/97 (H) STA AT 8:00 AM CAPITOL 102
03/11/97 (H) MINUTE(STA)
03/13/97 (H) STA AT 8:00 AM CAPITOL 102
03/13/97 (H) MINUTE(STA)
03/20/97 (H) STA AT 8:00 AM CAPITOL 102
03/20/97 (H) MINUTE(STA)
03/22/97 (H) STA AT 10:00 AM CAPITOL 102
WITNESS REGISTER
ROYCE WELLER, Budget Analyst
Office of Management and Budget
Office of the Governor
P.O. Box 110020
Juneau, Alaska 99811-0020
Telephone: (907) 465-4694
POSITION STATEMENT: Provided testimony on behalf of the Governor
on HB 78.
ARNOLD BROWER, JR., President
Arctic Slope Region
Native Village of Barrow
P.O. Box 1139
Barrow, Alaska 99723
Telephone: (907) 852-4411
POSITION STATEMENT: Provided testimony on HB 84.
REPRESENTATIVE TERRY MARTIN
Alaska State Legislature
State Capitol, Room 502
Juneau, Alaska 99801-1182
Telephone: (907) 465-3793
POSITION STATEMENT: Sponsor of HB 84.
ALFREDA LORD
Address not provided
Barrow, Alaska 99723
Telephone: Not provided
POSITION STATEMENT: Provided testimony on HB 84.
DENNIS POSHARD, Director
Charitable Gaming Division
Department of Revenue
P.O. Box 110440
Juneau, Alaska 99811-0440
Telephone: (907) 465-2229
POSITION STATEMENT: Provided testimony on HB 84.
PAULA HALEY, Executive Director
Alaska State Commission for Human Rights
800 "A" Street, Suite 204
Anchorage, Alaska 99501-3669
Telephone: (907) 274-4692
POSITION STATEMENT: Provided testimony in support of HB 155.
ACTION NARRATIVE
TAPE 97-31, SIDE A
Number 0001
The House State Affairs Standing Committee was called to order by
Chair Jeannette James at 10:05 a.m. Members present at the call to
order were Representatives James, Berkowitz, Dyson, Elton and
Vezey. Members absent were Hodgins and Ivan. Representative Ivan
arrived at 10:08 a.m.
HB 78 - AMEND DEFINITION OF "PROGRAM RECEIPTS"
The first order of business to come before the House State Affairs
Standing Committee was HB 78, "An Act relating to the definition of
certain state receipts; and providing for an effective date."
CHAIR JEANNETTE JAMES called on Royce Weller, Office of the
Governor, to present the bill.
Number 0060
ROYCE WELLER, Budget Analyst, Office of Management and Budget
(OMB), Office of the Governor, explained HB 78 related to the
definition of certain state receipts. State receipts essentially
came in as general funds or something other than general funds.
The statute that the bill proposed to amend, AS 37.05.146, defined
what was a general fund and what was not a general fund receipt.
MR. WELLER explained the first concern was the constitutional
prohibition against dedicated funds under Article IV, Section 7.
The second concern was that the bill did not take any revenues off
of the book. The third concern was that the receipts did not
impact the fiscal gap.
MR. WELLER explained the bill did not in any way circumvent the
constitutional dedication. In fact, it made it clear that the
revenues would be available and subject to appropriation. In no
way were the revenues off of the book from legislative monitoring
and reviewing. The receipts were collected and restricted by a
gift, grant, request, federal or state law and appropriated for a
specific purpose. Therefore, if the budget was cut, the receipts
coming in would also be cut. It was not like a normal general fund
program receipt where the revenues could be used some other place.
For instance, if the Division of Occupational Licensing's budget
was cut, the division was obligated under statute to reduce its
fees to reduce the revenues coming in.
Number 0284
MR. WELLER further explained that there were three technical and
three substantive changes in the bill.
MR. WELLER explained the first technical change was on page 2, line
11, "(E) corporate receipts earned or managed by a public
corporation or enterprise of the state authorized by law
including." Corporate receipts had been around for some time -
Alaska Housing Finance Corporation, Municipal Bond Bank Authority
and the Alaska Industrial Development and Export Authority - but
they had never been put in statute. There was a reference only;
not a lead-in statement that indicated they were corporate
receipts.
MR. WELLER explained the second technical change was on page 2,
line 24, "(K) public school trust fund." The word "trust" was
being added to make it clear that it was a trust fund.
MR. WELLER explained the third technical change was on page 3, line
5, "(T) Alaska children's trust (AS 37.14.200):" The trust was
identified because for the first time the state was going to have
receipts coming in.
MR. WELLER explained the first substantive change was on page 2,
lines 3-5, "(3) designated program receipts (INDIVIDUAL,
FOUNDATION, OR CORPORATION GIFTS, GRANTS, OR BEQUESTS THAT BY THEIR
TERMS ARE RESTRICTED TO A SPECIFIC PURPOSE);" The deleted language
was being rolled into the definition of a designated program
receipt because there was no reason to have two similar definitions
on the books.
MR. WELLER explained the second substantive change was on page 2,
line 3, "(3) designated program receipts". The definition was on
page 3, line 10-11, "(c) For purposes of this section, `designated
program receipts' means money that is received from a source other
than the state and that is (1) restricted to a specific use under
the terms of a gift, grant, bequest, contract, or federal law; or
(2) subject to appropriation for another purpose, but is designated
by state law as available for a specific use."
MR. WELLER explained the third substantive change was on page 3,
line 8-9, "(6) receipts of commercial fisheries test fishing
operations (AS 16.05.050(15)." It was a specific and unique
receipt established by the legislature so it needed to be included
in the bill.
MR. WELLER further stated that attached to the fiscal note was a
spreadsheet which identified the receipts and their associated
revenues for Fiscal Year (FY) 96 and 98.
Number 0647
CHAIR JAMES stated she had a lot of problems with the bill and a
lot of questions. She understood the definition of program
receipts, but she wanted to know what kind, and where the receipts
would come from. She understood that this was a good tool when it
came to "cutting the budget without cutting the budget." She was
not happy with the way the state measured how it cut the budget.
The general public really wanted the state to downsize government.
The public did not care if the money came from the federal
government, the state general fund, or the program receipts. The
state had been measuring its budget reduction by the general funds.
"This has been an argumentative issue as to what the total state
spending is. We don't tell the people that. We only tell them
that we're trying to keep it down to 2.4." Therefore, this would
be a bigger subterfuge by not including the program receipts in the
column of general funds when they could not be anything except
general funds according to the constitution. It appeared that the
state was trying to take program receipts as another source so that
they would not be counted as general funds. She suggested adding
another column titled "general funds-program receipts" to the
budget process to identify them.
CHAIR JAMES further stated she was concerned about the departments
making applications for permits; such as, the oil companies trying
to get their permits run through at a faster pace when staff was
not available. A designated receipt was taken in allowing for the
hiring of a person in order for the oil company to get its permits.
She was concerned about the little guy who did not have the money
to pay extra to get a permit. She did not see it as fair and
equitable. She had heard stories that the extra money was not on
a list of schedule and fees; it was arbitrary. The state should
not be arbitrarily collecting money from anyone to get a service
that the state was supposed to be providing anyway. She understood
that the Division of Occupational Licensing was supposed to charge
the cost of doing business; so, if the legislature cut its budget,
then the division would have to cut its fees because it was suppose
to be a wash.
Number 0973
REPRESENTATIVE ETHAN BERKOWITZ stated that the legislature did cut
its budget.
CHAIR JAMES replied she did not cut its budget. Nevertheless, the
public did not want to pay any taxes until the legislature reduced
governmental spending and every time a charge or fee was added
"you're taxing the people." The issue should be black and white so
that the ordinary person could understand it. Right now, the
ordinary person could not understand this because it was a
subterfuge.
Number 1024
REPRESENTATIVE KIM ELTON stated that the bill would help the public
understand because it would establish categories and identify
different funding sources. For example, a bill was introduced that
would allow dive fishermen to assess themselves a tax and the
proceeds would be given by statute to the Division of Fish and Game
for the purpose of hiring the management and enforcement of that
fishery. The dive fishermen were doing that because the department
did not have the money to manage the fishery. According to HB 78,
the funds would not be identified as general fund dollars, but as
dollars collected for a specific purpose.
REPRESENTATIVE ELTON further stated that there was a public that
needed governmental services. Thus, it was important to
distinguish between voluntary funds for a specific purpose and
general funds. In addition, an advantage to the little guy - big
guy permitting process would be that the money would not go into
the pot causing the little guy to wait longer. The new money was
incremented for the purpose of permitting for the big guy only
which would include the staff.
Number 1217
CHAIR JAMES replied she now understood what the Governor meant by
"open for business." "We have a store front and if you can come in
and pay for our services you can have some. If you don't have any
money you don't get any." It was a question of what the private
and public sectors should do. She wondered why the dive fishermen
did not put their money into a pot and hire somebody from the
private sector. The expertise was out there and they could even
get it for less. "By doing it this way, we're totally changing the
face of government and what's it here for. It's here to provide
services that the public needs and not those that it doesn't need."
Therefore, she saw the bill as a crossing of the lines and a
blurring of the edges between what the people should be doing and
what the government should be doing.
Number 1300
REPRESENTATIVE ELTON replied the difference was that the state was
constitutionally mandated to manage its natural resources for the
benefit of all the people. Furthermore, the legislature had -
collectively - created the store front Chair James mentioned. The
Department of Fish and Game, for example, had fewer scientists and
managers now than in 1979 before the oil money when now there were
more complex fisheries and user groups. Thus, the bill allowed for
the opportunity of the industry to help itself and the state
entities as well.
Number 1356
CHAIR JAMES replied the state entity, Department of Fish and Game,
was not mandated to do research which was what the money for the
dive fishermen would be used for; not management.
Number 1367
REPRESENTATIVE ELTON replied research was necessary to determine
the size of the bio-mass to determine the limits of the harvest,
for example.
Number 1380
CHAIR JAMES replied she understood but it could be done by a
private individual as well.
Number 1392
REPRESENTATIVE FRED DYSON stated he agreed with the limits of what
Representative Elton and Chair James were saying. There was reason
to be concerned about losing control of the cost. In addition,
there was a difference between a tax and a fee for service. He was
in favor of the bill, but the list of designated program receipts
was long and he felt intimidated that he would not get enough
information about each program. The principle argument -
historically - was to keep police officers from pinching tourists
to raise the local police budget. Thus, it was important to ensure
that there was a mechanism to prohibit misuse.
REPRESENTATIVE DYSON declared a conflict of interest with the test
fisheries because he had tried for several years to bid for that
project. He was concerned that the Department of Fish and Game
would shut down the entire fishery and contract with just fishermen
and put half of the catch or all of it into the budget. "I don't
foresee that happening but that's the kind of thing we worry about
that is possible."
REPRESENTATIVE DYSON further stated that the next bill - HB 155 -
was his idea three or four years ago. It was the other side that
was very valuable and needed to be done.
Number 1554
CHAIR JAMES asked Mr. Weller if the figures in the spreadsheet
would not be measured as general funds in the budget process?
Number 1584
MR. WELLER replied, "That's correct." The figures in the
spreadsheet would be defined as designated program receipts and
they would not roll up as general funds.
Number 1600
CHAIR JAMES asked Mr. Weller if the bill was passed would there be
a $53 million budget cut in general funds - automatically?
Number 1611
MR. WELLER replied the Governor did not intent to portray it in
that way. The budget plan as submitted by the Governor showed
three columns: general funds, general funds with designated
program receipts and other funds. Representative Terry Martin
wanted all revenues appropriated by the legislature to be shown and
we intend to do that. The programs in the spreadsheet would not
roll up as a general fund appropriation but, they would roll up as
a designated program receipt appropriation.
Number 1657
CHAIR JAMES replied they were already being designated. Generally,
the legislature authorized money to be spent according to the fees.
For example, the marine highway revenues went into an account that
was used for its budget. It was considered part of the "sweep" at
the end of the budget process.
Number 1693
MR. WELLER replied the issue she was addressing was the self-
sufficiency requirement where the programs were required to cover
their full cost of operation in statute, such as, the Division of
Insurance. Every year the legislature appropriated the balance of
funds for those programs into the carry-forward so that there was
no leakage into the General Fund. In other words, it was swept and
put back into the programs because they were funded by the users.
MR. WELLER further stated that the legislature required in statute
that OMB submit a fee report every year in January that showed any
regulatory changes to the program receipts. In addition, general
fund program receipts were not included in HB 78. The bill only
addressed designated program receipts and there was a big
difference between them. For example, the parks levied a fee, but
it only covered a small portion of the cost of managing and
operating them. The rest of their budget was funded through the
General Fund; there was not a one-to-one relationship.
Number 1779
CHAIR JAMES replied the Salcha River property owners in her area
organized to take care of its park because it was going to be
closed. "So don't tell me it's not out there. It is being done."
Number 1800
MR. WELLER replied - generically - park fees funded only a small
portion of its total cost, therefore, they were not included in the
bill. The Division of Motor Vehicles was another example. It was
not in statute that the collected revenues would be appropriated
back to the program, yet it raised some $31 million. The examples
in the spreadsheet were programs with a one-to-one relationship.
He cited the Alaska Tourism Marketing Council whereby the
legislature appropriated a certain amount of general funds and the
industry was mandated to raise at least 25 percent. Therefore, if
the budget was cut in this area, the receipts that were being
matched would also be cut from the industry. There were no
receipts that were deposited into the General Fund that could be
used for something else or to close the fiscal gap. Some programs
received funds from the federal government that could only be used
for that particular program, and if the receipts were cut, it would
violate the federal law.
Number 1882
CHAIR JAMES replied the state did not cut those programs because
there were other funds.
MR. WELLER responded because - currently - they were general fund
program receipts. He reiterated they were unique receipts, they
were not the same as general fund program receipts and should be
treated differently. The intent was not to let those with money
"go to the head of the line" per se. The intent was to separate
the line and treat all those involved the same, except for the
private parties that were willing to pay for their programs.
Number 1986
CHAIR JAMES replied it did not seem like the way government should
be doing business. The government was here to provide a service.
If something extra was needed to be paid for it seemed unfair that
the government was the only place to get the service. In addition,
she believed it was already being accounted for so she did not see
how the bill would make it any easier. Mr. Weller first said that
the budget process would reduce the amount of general funds and now
he said that they would all be counted as general funds. The issue
here was whether or not it should be a legislative decision as
opposed to an agency decision; a designation allowed to make these
types of deals and to collect funds without authorization of the
legislature.
Number 2112
MR. WELLER replied, if the bill passed, the program receipts would
be treated as non-general fund program receipts.
Number 2119
CHAIR JAMES asked Mr. Weller if the $53 million reduction was
actual?
MR. WELLER replied it was actual as a General Fund reduction. It
would not be calculated as part of the FY 97 to FY 98 reduction;
but, it would be calculated as part of the overall spending. In
other words, there would not be a $53 million drop in total
spending.
CHAIR JAMES wondered how the public would understand a reduction in
the General Fund and a corresponding increase in other general
funds.
MR. WELLER stated the budget plan as submitted showed general
funds, general funds with designated program receipts, and other
funds. Therefore, a person could see the total expenditures. The
program receipts would not be hidden, and that would not change
with the passage of HB 78.
CHAIR JAMES asked Mr. Weller if this was the first year that there
was a column that indicated the designated program receipts?
MR. WELLER replied it was used last year as well. Last year, he
explained, was the first year that there were designated program
receipts as an account.
Number 2188
CHAIR JAMES wondered, therefore, why a statute was needed because
it was already being done.
Number 2196
MR. WELLER replied a statute was needed for budgeting and
accounting purposes. Thus, a budget could be submitted that
pointed to the accounting code and no matter what was done on the
accounting side it could not be made a non-general fund, without
the approval of the legislature.
Number 2236
REPRESENTATIVE ELTON stated to change or clarify what in practice
was happening gave a certain sense of comfort to those who were
paying for a fee. If the oil industry, for example, wanted to give
$2 million to help on the Badami Project, it would be comforting to
know that the money was designated by statute. It would also help
the legislators explain to the public what was going on. He did
not want to be in a position to explain how the $2 million from the
oil company affected the budget.
Number 2321
CHAIR JAMES replied HB 78 would not change that process.
REPRESENTATIVE ELTON further stated that the bill provided an
education for the legislators and the public because there was a
large segment of the population that believed there was too much
government so "let's cut it." But, even that portion would not say
"let's cut government that the industry was willing to pay extra
for."
Number 2365
CHAIR JAMES replied, if she was an oil company, she would not give
the state $2 million dollars without a contract that said how the
state would spent the money. She asked Mr. Weller if there was a
written contract?
Number 2410
MR. WELLER replied the spreadsheet broke the program receipts by
their type: contract, assessment, restricted fee, legal, third
party billing, and test fishery.
CHAIR JAMES asked Mr. Weller how a contract was measured?
Number 2451
MR. WELLER replied he could not answer the question. A contract
was entered into by two parties and he assumed that the parties
worked out the conditions.
TAPE 97-31, SIDE B
Number 0001
MR. WELLER further stated that the money did not just go to the
General Fund to help close the fiscal gap. There was a contract
that backed up the service. He reiterated there were fees that
were restricted by: contract, federal law, state law, and third
party travel situations.
Number 0021
CHAIR JAMES wondered if there would be a profit associated with the
$2 million charged for the Badami Project as an example mentioned
earlier. She asked Mr. Weller if the department would use existing
personnel already authorized in the budget, or if the department
would hire new personnel in addition to the already authorized
budget to spend the money?
Number 0061
MR. WELLER replied he did not know every case, but he did know that
new people were not hired in other cases. There could be
subcontracting with the university, for example, if the project was
highly scientific. In addition, there were only situations where
the state had the data base, such as, labor statistics (Department
of Labor). He was not sure, however, if it was similar in the
resource development agencies as well.
Number 0112
REPRESENTATIVE VEZEY replied the data from the Department of Labor
was available to anyone who wanted it for $100 - the Geographical
Information Management System (GIS). There was also a big private
sector that was providing GIS services.
Number 0135
CHAIR JAMES stated the issue of not hiring new personnel bothered
her. It appeared that the customer would be paying extra if the
state used its existing personnel to provide the service rather
than hiring new personnel to work on the contract.
Number 0180
REPRESENTATIVE DYSON stated that it would be wise to outline a path
for a solution to this issue because there were some programs that
everybody would agree on, there were a few programs where assurance
would be needed, and for some programs more information would be
needed. He suggested moving forward after deciding a course of
action.
Number 0231
REPRESENTATIVE ELTON stated he also believed that extra program
receipts meant additional resources applied to the project and,
that the strongest argument to accept the extra receipts was to not
hurt the little guy. He assumed that extra personnel would be
hired with the money to accomplish the specific purpose.
Number 0264
CHAIR JAMES stated it would be a good idea if the Legislative
Finance Division would be here to answer some questions.
Number 0285
REPRESENTATIVE VEZEY asked Mr. Weller what did HB 78 enable the
legislature to do that it could not do without it?
Number 0295
MR. WELLER replied HB 78 would clearly define that program receipts
were different and unique from general funds; that the program
receipts would not close the fiscal gap; and that if the budget was
cut for these programs, the receipts would also be cut.
Number 0319
REPRESENTATIVE VEZEY wondered if that was an answer to his
question.
CHAIR JAMES replied, "No."
REPRESENTATIVE ELTON stated, actually, it was a good answer.
Number 0335
REPRESENTATIVE VEZEY asked Mr. Weller what did the statute enable
the legislature to do that it could not do - now - with internal
procedures?
Number 0344
MR. WELLER replied the statute - AS Sec. 37.05.146 - stated that
program receipts were presumed to be for the general fund, minus
the programs identified in statute as the exceptions. The bill,
therefore, amended the statute to add the children's trust fund,
for example. He reiterated that the program receipts for the
exceptions should not be considered as general funds when
addressing the budget because they were unique receipts and should
be treated differently.
CHAIR JAMES asked Mr. Weller if the budget was presented like this
last year?
MR. WELLER replied, "No."
CHAIR JAMES asked Mr. Weller if the Administration accounted for
the program receipts like this last year?
MR. WELLER replied, "Yes." They were presented in the budget as
designated program receipts, but they were the general fund
designated receipts. House Bill 78 would amend the statute so that
the funds from the programs would be designated as program receipts
and not as general fund program receipts.
Number 0413
CHAIR JAMES replied it would then affect the bottom-line spending
of the General Fund.
Number 0419
MR. WELLER replied, "Correct." It would affect the bottom line.
The budget plan presented would show everything - total state
spending. It would show all of the revenue sources and receipts
which would still be subject to the committee and appropriation
processes. They would also be subject to reduction. He reiterated
the bill tried to identify them as unique, and that they did not
impact the fiscal gap.
Number 0447
CHAIR JAMES asked Mr. Weller where the $53 million would be
reflected?
Number 0499
MR. WELLER replied, if the bill passed, the program receipts would
not show as general funds. The total spending of FY 97 to FY 98
would show the total expenditures. The program receipts would not
be taken off of the books. The programs would be reflected
separately as: general fund program receipts and designated
program receipts for FY 97 and FY 98. It was clear that there
would not be a $53 million reduction in FY 98. That was not the
intent of the bill at all.
Number 0555
CHAIR JAMES explained the bill would be rolled over to Tuesday,
March 25, 1997.
Number 0558
MR. WELLER replied that the Legislative Finance Division had a
listing of the program receipts and how they rolled up in the back
of the budget either as a general fund, a federal fund, or another
fund.
Number 0584
CHAIR JAMES replied that the rolling over of the money bothered
her. She asked Mr. Weller, if the legislature authorized
something, would it continue to be authorized into the next year?
Number 0593
MR. WELLER replied, "No." They were operating expenditures,
therefore, subject to an annual appropriation. The Auke licensing
mentioned earlier contained carry-forward provisions in the
operating budget so that the balance of one year was appropriated
into the next year. That required legislative approval, there was
no automatic carry forward.
CHAIR JAMES reiterated the bill would be held over to Tuesday,
March 25, 1997.
HB 84 - PULL-TABS LIMITED TO 501(C)(3) OR (19)
The next order of business to come before the House State Affairs
Standing Committee was HB 84, "An Act limiting the authority to
conduct pull-tab charitable gaming to qualified organizations that
are exempt from taxation under 26 U.S.C. 501(c)(3) or (19); and
providing for an effective date."
Number 0793
ARNOLD BROWER, JR., President, Native Village of Barrow, was the
first person to testify via the telephone in Barrow. He explained
from time to time the Native Village of Barrow requested a permit
from the state for pull-tabs. It was required to disband the
permit, however, because it could not exceed a $1 million payout.
The Native Village of Barrow had worked with the Charitable Gaming
Division to increase the payout. In addition, there were groups,
such as, dance groups that had to create their own things to get a
permit. Therefore, he saw the bill as restrictive. The tribal
governments that operated under a 638 Contract had been gutted and
the appropriations had been cut so badly that it only paid for
staff and oversight. He asked for a higher payout rate to provide
better service.
Number 1046
CHAIR JAMES stated that some of the concerns of Mr. Brower, Jr.
were not affected by HB 84. The only entity that would be affected
by the bill currently was Barrow Search and Rescue, Inc. However,
if the bill was to pass any other entity in Barrow would not be
able to have a permit to sell pull-tabs.
Number 1092
MR. BROWER, JR. replied he was not speaking for the Barrow Search
and Rescue, Inc. He was speaking for the Native Village of Barrow.
CHAIR JAMES replied she understood and suggested that Mr. Brower,
Jr. contact Mr. Dennis Poshard from the Charitable Gaming Division
to discuss his concerns further.
Number 1135
REPRESENTATIVE TERRY MARTIN, Alaska State Legislature, stated there
were six permits in Barrow that pooled together. If they could
prove to the committee what they did was charitable then they
should be added to the bill. The concern of Mr. Brower, Jr. was of
gross receipts and net receipts. His second bill addressed gross
receipts. He wondered if the payoff mentioned was to increase
gambling or to raise money for charitable purposes, however.
CHAIR JAMES replied Mr. Brower, Jr. needed to talk to Mr. Poshard
or to testify again when the other bill was before the committee.
She did not want to muddy the water today. She was also not
interested in adding any people to the bill; it would be too
complicated.
Number 1215
MR. BROWER, JR. stated he appreciated the comments of
Representative Martin and he would be in contact with Mr. Poshard.
Number 1255
ALFREDA LORD was the next person to testify via the telephone in
Barrow. She just wanted to track the bill so that no other changes
were made to affect the 501(c)(3)'s.
CHAIR JAMES asked Ms. Lord if she had a 501(c)(3) that she wanted
to protect?
MS. LORD replied, "Yes." She reiterated that she wanted to make
sure that if there were any changes in the wording, such as,
"and/or", it would not throw the whole thing out.
Number 1370
DENNIS POSHARD, Director, Charitable Gaming Division, Department of
Revenue, was the next person to testify in Juneau. He distributed
to the committee members three lists titled: "Pull-Tab Permittees
that were 501(c)(3) or (19)", "Pull-Tab Permittees that were not
501(c)(3) or (19)", and "501(c)(19) and (3) Organizations Without
Pull-Tab Permits". They were not easy to compile because they were
prepared by hand. There was no compatibility between the data base
from the IRS and the data base from the division. The list of
"Pull-tab Permittees that are 501(c)(3) or (19)" was five pages of
organizations that currently had pull-tab permits and would qualify
because of their status with the IRS. The list of "Pull-tab
permittees that are not 501(c)(3) or (19)" was 11 pages of
organizations that currently had pull-tab permits that were not
listed with the IRS as 501(c)(3) or (19). Their current IRS status
was also included. The list of "501(c)(19) and (3) Organizations
Without Pull-Tab Permits" was substantial compared to the other two
lists. The financial data was not included.
CHAIR JAMES replied the lists were very helpful. She wondered how
many exactly would be excluded if the bill was to pass.
Number 1524
MR. POSHARD further stated that he had talked to Mr. Brower, Jr.
already regarding his concerns. He explained that the Native
Village of Barrow did not have a permit and conducted illegal
gambling activities by bringing in pull-tabs from out of the state
and from non-licensed distributors. The division had encouraged
him to get a permit. But, he did not want to do it because he
would be limited to awarding $1 million in prizes annually. The
Native Village of Barrow typically reached that limit within four
to five months so a permit would significantly reduce the amount of
money it made. He was able to get around this because it claimed
sovereignty and no one had challenged the claim. The Department of
Public Safety had chosen not to place illegal gambling as a
priority. He reiterated Mr. Brower, Jr. was concerned about the
limit on the amount of activity raised. He would gladly come under
state jurisdiction if the limit was raised.
Number 1655
REPRESENTATIVE VEZEY thanked Mr. Poshard for providing the lists
and pointing out the size of the businesses involved. "Sometimes
we think of these as nickel and dime operations."
Number 1671
REPRESENTATIVE BERKOWITZ referred to AS Sec. 05.15.150, "Limitation
on use of proceeds", and asked Mr. Poshard how the section would be
impacted by the bill?
Number 1687
MR. POSHARD replied the bill did not make any statutory change to
the section. It affected it, however, in that 501(c)(3) and (19)
organizations were limited by the IRS as to how they spent their
funds and that the IRS could narrow the section and then the state
would have to enforce it.
Number 1737
REPRESENTATIVE BERKOWITZ asked Mr. Poshard if 501(c)(3)
organizations were the only ones authorized for pull-tabs?
MR. POSHARD replied, "No." A 501(c) status had nothing to do with
who was or who was not qualified for a permit - currently. Alaska
Statute Sec. 05.15.690 defined a qualifying organization; it did
not have to be incorporated, however.
REPRESENTATIVE BERKOWITZ asked Mr. Poshard if an organization did
not go through its 501(c) paperwork it would be precluded from
running a charitable game.
MR. POSHARD replied, "Correct."
REPRESENTATIVE BERKOWITZ asked Mr. Poshard if the bill required
that the federal government dictate who would be allowed to do
charitable gaming in Alaska?
MR. POSHARD replied essentially that was correct because nobody
could make a 501(c)(3) or (19) designation except the IRS.
Number 1846
REPRESENTATIVE ELTON explained a Juneau Montessori and a Fairbanks
Montessori schools were on different lists. He asked Mr. Poshard
if the Juneau Montessori, for example, would have to apply for a
501(c)(3) status if the bill passed?
MR. POSHARD replied it could apply and receive a 501(c)(3) status.
He declared a conflict of interest in answering the question,
however, because his daughter attended the Juneau Montessori
school.
REPRESENTATIVE ELTON declared a conflict of interest because he was
a members of the House Democratic Campaign Committee that had a
pull-tab permit which would be disallowed if the bill passed.
REPRESENTATIVE BERKOWITZ declared a conflict because he had
received funds from the House Democratic Campaign Committee.
REPRESENTATIVE ELTON replied that he had not receive any funds but
he did help determine who received them.
CHAIR JAMES stated that she did know if she had a conflict of
interest.
Number 1973
REPRESENTATIVE IVAN IVAN declared a huge conflict of interest
because most of his communities that he represented were on the
lists. The bill would impact a lot of good work that was being
done in his communities. The city of Akiak operated with a permit
and it was three years behind in its accounting. He did not
support the bill.
Number 2073
REPRESENTATIVE ELTON stated the testimony indicated that charitable
organizations should be allowed access to a gaming permit and non-
charitable organizations should not be allowed access to a gaming
permit. There were 11 pages of organizations that would not be
allowed, and 5 pages of organizations that would be allowed. He
suggested changing AS Sec. 05.15.150 to ensure that charities would
get the money. That would allow for 16 pages of organizations that
could benefit charities. It appeared that the bill almost hurt
charities by limiting the number of groups. If the goal was to
help charities, "Don't say who could sell, just say who could get."
Number 2190
CHAIR JAMES replied the bill tried to define what was a charity -
a 501(c)(3) and (19). Generally, an organization wanted to be a
501(c)(3) because of the tax deduction. She disagreed that
501(c)(3)'s and (19)'s were the only charities, however.
Number 2319
REPRESENTATIVE ELTON replied that they would be able to sell pull-
tabs but then give the money to a politician, for example.
CHAIR JAMES replied a 501(c)(3) could not be involved in political
activities or affect legislation.
Number 2361
REPRESENTATIVE BERKOWITZ explained that a charitable organization
was already defined in statute as "an organization, not for
pecuniary profit, that is operated for the relief of poverty,
distress, or other condition of public concern in the state;"
CHAIR JAMES replied Representative Martin wanted a different
definition.
Number 2401
MR. POSHARD replied a charitable organization was defined in
statute. But also look at who the division was allowed to issue
permits to under "qualified organizations" in the same section -
educational, religious and political organizations.
TAPE 97-32, SIDE A
Number 0001
MR. POSHARD stated there was confusion amongst the charities
because of the unrelated business income tax provision in Alaska.
The money could be used for administrative expenses or for their
own organizations, while other states required that the money be
donated to a 501(c)(3) in order not be taxed. In other words,
every penny that was made was donated to a non-profit 501(c)(3)
organization. In Alaska, any pull-tab money was taxable under the
unrelated business income tax.
Number 0126
REPRESENTATIVE MARTIN stated there was no doubt that many, many
organizations were bringing in more money than a true charitable
organization. He cited the Home Builders Association. "Man that
group is slick as can be in raising money - the Anchorage Home
Builders Association, the Fairbanks Home Builders, the Kenai Home
Builders, and the statewide home builders association - they've all
got permits and a lot of money coming in. And I think relatively
little is for charity." Charity begins at home.
Number 0192
CHAIR JAMES replied that was where charity was supposed to begin.
REPRESENTATIVE MARTIN replied if you want that concept then fine.
The organizations were doing very well. Maybe, we should change
the bill so that all of the money went to a designated true
charity.
Number 0286
REPRESENTATIVE BERKOWITZ stated that he would hate to give the IRS
any more power than it already had. He was concerned about
allowing it to define the designations because "once they get in
your business they never get out."
Number 0324
REPRESENTATIVE MARTIN replied the IRS now realized how much money
Alaska was making on pull-tabs. Therefore, it was going back to
the organizations and analyzing their accounts. The state had
misled these organization into thinking that they would get away
with it.
Number 0356
CHAIR JAMES replied the state had not misled the organizations.
CHAIR JAMES asked the committee members if anybody was interested
in making a motion to move the bill forward.
REPRESENTATIVE VEZEY replied he would make a motion but he did not
want to waste the time of the committee members.
Number 0380
REPRESENTATIVE ELTON replied the committee could put this to rest
by moving the bill and recommending a "no" vote.
Number 0398
REPRESENTATIVE VEZEY moved that HB 84 move from the committee with
individual recommendations and the attached fiscal note(s).
REPRESENTATIVE IVAN objected. A roll call vote was taken.
Representatives James, Dyson and Vezey voted in favor of the
motion. Representatives Berkowitz, Elton and Ivan voted against
the motion. House Bill 84 failed to move from the House State
Affairs Standing Committee.
Number 0483
CHAIR JAMES introduced from the audience, Michelle Jenkins from
North Pole. She was a visiting Page in the House and the Senate.
REPRESENTATIVE ELTON stated that Ms. Jenkins was the most pleasant
person on the floor of the House of Representatives this week.
HB 155 - HUMAN RIGHTS COMMISSION FEES & HEARINGS
The next order of business to come before the House State Affairs
Standing Committee was HB 155, "An Act relating to hearings before
and authorizing fees for the State Commission for Human Rights; and
providing for an effective date."
Number 0575
PAULA HALEY, Executive Director, Alaska State Commission for Human
Rights, was the first person to testify via the telephone in
Anchorage. The bill was part of the agency's response to increased
demand for services from the Alaskan public in the wake of
diminished resources. Over the past 15 years complaints of
discriminations filed had nearly tripled while at the same time the
agency had lost 35 percent of its staff. As a result, the agency
had been working to increase its efficiency but because of the
increase in filings it had not been able to bring its inventory
down. In fact, the filings had burgeoned to an all time high. The
commission realized that seeking additional resources alone was not
enough so to better face the work load challenge it had reviewed
and revised its internal processes and procedures, amended its
regulations, and proposed HB 155. The bill would allow for both a
cost-saving measure and would give the authority to charge fees for
certain services. Any fees generated or money saved, from holding
hearings at the agency's office, and by not transcribing every
hearing would be used towards the investigation and enforcement of
the law. The money would allow the agency to use temporary staff,
for processing, investigations, pay overtime, and quicker
investigations. The public was not satisfied with the time it took
to complete an investigation. At this moment, there were over 360
cases that were not assigned to an investigator and could stay on
hold for up to nine months. Therefore, HB 155 would be an
essential piece of the commission's effort to grapple with the
delays by saving money, streamlining its process, and allowing for
the collection of fees. She and the commissioners urged the
support of the committee members.
Number 0762
REPRESENTATIVE IVAN asked Ms. Haley if she had a breakdown of the
cases for the whole state?
Number 0814
MS. HALEY stated that the agency would hold hearings only in
instances where there was substantial evidence. And if the
employer, for example, did not wish to fly to the commission's
office, the hearing would be heard telephonically. If it was
important to see the chief witness, for example, he or she would be
brought to the hearing site. However, often the complaining party
in rural Alaska moved from the area and the state. Therefore,
telephonic communication would help deal with the problem. She
also hoped that the impact on the non-urban areas would be very
limited.
CHAIR JAMES asked Ms. Haley to provide to Representative Ivan a
recap of where the majority of the cases came from in Alaska.
Number 0930
REPRESENTATIVE DYSON said he could provide to Representative Ivan
the annual report that gave the information today.
Number 0941
MS. HALEY replied in the annual report there was pie-shape chart of
the areas where the cases came from around the state.
Number 0963
REPRESENTATIVE VEZEY asked Ms. Haley who the fees would be assessed
to?
Number 0971
MS. HALEY replied the commissioners had not spent a great deal of
time discussing the particulars of the assessment. It would have
to be done by regulation. The initial reaction was in response to
the educational aspect of the commission. She did a fair amount of
training, as resources allowed, hoping that the training would
prevent complaints from being filed. And many that approached the
commission were willing to pay for the seminars or the materials
prepared but it was unable to accept the money. If those fees
could be secured, they could go to the enforcement aspect of the
commission.
Number 1035
REPRESENTATIVE VEZEY asked Ms. Haley if there was intent to assess
a fee from those that filed a complaint?
Number 1045
MS. HALEY replied the commissioners could look at that under the
bill. However, the Equal Employment Opportunity Commission that
gave $100,000 to $120,000 to support its efforts strongly
discouraged and had indicated by letter that it would terminate its
contract if the agency was to charge a fee for filing a claim.
Number 1099
REPRESENTATIVE VEZEY stated he would be even more concerned if we
were looking at assessing a fee for those who were required to
defend themselves.
REPRESENTATIVE VEZEY asked Ms. Haley why the entire sentence was
not deleted on page 2, lines 19-21? By deleting the entire
language, it reverted to the Open Meetings Act.
Number 1124
MS. HALEY replied the requirement for a transcript had been in the
statute for a long time. The hearings were sometimes very short
and informal and sometimes they were like mini-trials lasting up to
a week. It was very expensive to contract for those services. The
agency wanted to just be able to record the hearings and to make
the tapes available rather than transcribing every hearing. She
did not fully understand his reference to the Open Meetings Act
because the hearing process was already open to the public, except
for the deliberations.
Number 1181
REPRESENTATIVE VEZEY wondered why the entire sentence was not
deleted because the commission was required to follow the Open
Meetings Act by law anyway.
Number 1203
MS. HALEY replied she was not sure about the applicability of the
Open Meetings Act. In other words, these were administrative
hearings on cases presented under the Human Rights Law. They were
not meetings of the commissioners as public policy makers that
would be bound by the Open Meetings Act, for example.
Number 1247
REPRESENTATIVE DYSON explained he had a part in getting this going
when he was on the Human Rights Commission. The dilemma that the
commission faced was a huge back log of investigations and
complaints of untimely investigations. As a result, the
commissioners found themselves directing the activity of the staff.
For instance, when Ms. Haley conducted a training, time was spent
away from the job. He wondered, therefore, if the commission could
be reimbursed for her expenses. The answer was, no, under existing
law. Thus, he suggested a bill that would allow the commission to
be reimbursed for the out of pocket expenses incurred.
REPRESENTATIVE DYSON further explained the second step was to
eliminate the mindless obedience of the law on where the meetings
were held when it did not serve the purpose of justice and the
complainant. This allowed for more flexibility, cost
effectiveness, and effectiveness for the complainant and the
defendant.
Number 1368
MS. HALEY replied she had been allowed to be reimbursed for the
cost of an airplane ticket but not for the time away from the
agency or for the value of the training in terms of preparations
and materials. It was time to look for cost effective measures and
if telephonic hearings would save money then that was the way to go
and the bill would allow for that. It also allowed for people to
request a change of venue for good cause.
Number 1449
REPRESENTATIVE VEZEY stated he was concerned about the broad nature
of Section 1. The bill would give the agency the regulatory
authority to assess fees for investigations, complaints and
hearings.
CHAIR JAMES asked Representative Vezey if he was proposing a change
to the bill?
Number 1492
MS. HALEY replied the commissioners would not be opposed to a
change. The original version had the word "educational" included
for clarification.
Number 1524
REPRESENTATIVE IVAN explained he also had the same concern as
Representative Vezey.
CHAIR JAMES announced the bill would be held until Tuesday, March
25, 1997 in order to look at Section 1 further.
ADJOURNMENT
Number 1566
CHAIR JAMES adjourned the House State Affairs Standing Committee
meeting at 12:07 p.m.
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