Legislature(1993 - 1994)
03/08/1994 08:00 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 8, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Bettye Davis Representative Gary Davis Representative Harley Olberg Representative Jerry Sanders MEMBERS ABSENT Representative Fran Ulmer COMMITTEE CALENDAR HB 328: "An Act relating to motor vehicle registration and registration fees; to fees for drivers' licenses and permits; and providing for an effective date." PASSED OUT OF COMMITTEE SB 186: "An Act relating to state agency publications." PASSED OUT OF COMMITTEE *HJR 60: Relating to an amendment to the Constitution of the United States prohibiting federal courts from ordering a state or a political subdivision of a state to increase or impose taxes. PASSED OUT OF COMMITTEE *HB 402: "An Act requiring that an owner's motor vehicle liability insurance policy used as proof of financial responsibility designate by description or appropriate reference the motor vehicles it covers; and providing for an effective date." PASSED OUT OF COMMITTEE HB 403: "An Act requiring that automobile liability insurance include coverage for uninsured or underinsured motor vehicles and an offer of policy limits for that coverage equal to coverage voluntarily purchased for bodily injury or death; and providing for an effective date." PASSED OUT OF COMMITTEE HB 345: "An Act relating to the preservation of public facilities and to appropriations for annual maintenance and repair, periodic renewal and replacement, and construction of public facilities." HELD OVER HB 405: "An Act establishing and relating to the Alaska Information Network Corporation; relating to the Telecommunications Information Council; and relating to the state's information industry; and providing for an effective date." NOT HEARD *HB 347: An Act relating to long-term plans of certain state agencies." NOT HEARD WITNESS REGISTER REPRESENTATIVE STEVE FRANK Alaska State Legislature Alaska State Capitol, Room 518 Juneau, AK 99811-0460 Phone: 465-3709 POSITION STATEMENT: Prime sponsor of SB 186 REPRESENTATIVE BILL HUDSON Chairman Labor & Commerce Committee Alaska State Legislature Alaska State Capitol, Room 108 Juneau, AK 99811-0460 Phone: 465-3744 POSITION STATEMENT: Sponsor of HB 402 and HB 403 DENNIS BROWN Alaska Independent Insurance Agents & Brokers 1311 Summit Dr. Fairbanks, AK 99712 Phone: 457-3268 POSITION STATEMENT: Testified on HB 402 and HB 403 HOWARD JAEGER Shattuck & Grummett Insurance Member, Independent Insurance Agents & Brokers of Alaska 9110 Mendenhall Mall Rd. Juneau, AK 99801 Phone: 789-3005 POSITION STATEMENT: Supported HB 402 and HB 403 JOHN GEORGE National Association of Independent Insurers 9515 Moraine Way Juneau, AK 99801 Phone: 789-0172 POSITION STATEMENT: Supported HB 402 and HB 403 JEANNETTE JAMES Alaska State Legislature Alaska State Capitol, Room 501 Juneau, AK 99811-0460 Phone: 465-3743 POSITION STATEMENT: Prime sponsor of HB 345 PREVIOUS ACTION BILL: HB 328 SHORT TITLE: BIENNIAL VEHICLE REGISTRATION SPONSOR(S): REPRESENTATIVE(S) MARTIN,BARNES,Phillips,B.Davis JRN-DATE JRN-PG ACTION 01/03/94 2013 (H) PREFILE RELEASED 01/10/94 2013 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2013 (H) STATE AFFAIRS, FINANCE 01/13/94 2054 (H) COSPONSOR(S): B. DAVIS 01/22/94 (H) STA AT 08:00 AM CAPITOL 102 01/22/94 (H) MINUTE(STA) 01/29/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 02/08/94 (H) MINUTE(STA) 03/01/94 (H) STA AT 08:00 AM CAPITOL 102 03/01/94 (H) MINUTE(STA) 03/05/94 (H) MINUTE(STA) 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 186 SHORT TITLE: STATE AGENCY PUBLICATIONS SPONSOR(S): SENATOR(S) FRANK JRN-DATE JRN-PG ACTION 04/07/93 1221 (S) READ THE FIRST TIME/REFERRAL(S) 04/07/93 1221 (S) STATE AFFAIRS 04/14/93 1354 (S) STA RPT 3DP 04/14/93 1354 (S) ZERO FISCAL NOTE (ADM) 04/14/93 (S) STA AT 9:00 AM BUTROVICH RM 205 04/14/93 (S) MINUTE(STA) 04/14/93 (S) MINUTE(RLS) 04/26/93 1761 (S) RULES 4 CALENDAR 4/26/93 04/26/93 1762 (S) READ THE SECOND TIME 04/26/93 1762 (S) AM NO 1 ADOPTED UNAN CONSENT 04/26/93 1763 (S) AM NO 2 ADOPTED UNAN CONSENT 04/26/93 1764 (S) AM NO 3 FAILED Y10 N10 04/26/93 1764 (S) ADVANCE TO THIRD READING FAILED Y11 N9 04/26/93 1764 (S) THIRD READING 4/27 CALENDAR 04/27/93 1842 (S) READ THE THIRD TIME SB 186 AM 04/27/93 1842 (S) PASSED Y20 N- 04/27/93 1842 (S) DONLEY NOTICE OF RECONSIDERATION 04/28/93 1891 (S) RECONSIDERATION NOT TAKEN UP 04/28/93 1893 (S) TRANSMITTED TO (H) 05/06/93 1661 (H) READ THE FIRST TIME/REFERRAL(S) 05/06/93 1661 (H) L&C, STATE AFFAIRS, JUDICIARY, FINANCE 02/17/94 (H) L&C AT 03:00 PM CAPITOL 17 02/17/94 (H) MINUTE(L&C) 02/18/94 2455 (H) L&C RPT 5DP 02/18/94 2455 (H) DP:PORTER,SITTON,MULDER,GREEN, HUDSON 02/18/94 2455 (H) -ZERO FISCAL NOTE (ADM) 2/18/94 03/05/94 (H) STA AT 08:00 AM CAPITOL 102 03/05/94 (H) MINUTE(STA) BILL: HJR 60 SHORT TITLE: AMEND US CONSTIT. TO LIMIT FED. COURTS SPONSOR(S): STATE AFFAIRS JRN-DATE JRN-PG ACTION 02/28/94 2550 (H) READ THE FIRST TIME/REFERRAL(S) 02/28/94 2550 (H) STATE AFFAIRS, JUDICIARY 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 402 SHORT TITLE: PROOF OF MOTOR VEHICLE INSURANCE SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 01/26/94 2155 (H) READ THE FIRST TIME/REFERRAL(S) 01/26/94 2155 (H) STATE AFFAIRS 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 403 SHORT TITLE: AUTOMOTIVE LIABILITY INSURANCE COVERAGE SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 01/26/94 2155 (H) READ THE FIRST TIME/REFERRAL(S) 01/26/94 2155 (H) LABOR & COMMERCE, STATE AFFAIRS 02/03/94 (H) L&C AT 03:00 PM CAPITOL 17 02/03/94 (H) MINUTE(L&C) 02/22/94 (H) L&C AT 03:00 PM CAPITOL 17 02/22/94 (H) MINUTE(L&C) 02/23/94 2494 (H) L&C RPT 4DP 2NR 02/23/94 2494 (H) DP: PORTER, SITTON, MULDER, HUDSON 02/23/94 2494 (H) NR: WILLIAMS, GREEN 02/23/94 2494 (H) -ZERO FISCAL NOTE (DCED) 2/23/94 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 345 SHORT TITLE: PRESERVATION OF PUBLIC FACILITIES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 01/07/94 2018 (H) PREFILE RELEASED 01/10/94 2018 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2018 (H) STATE AFFAIRS, FINANCE 01/25/94 (H) STA AT 08:00 AM CAPITOL 102 01/25/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 02/08/94 (H) MINUTE(STA) 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 405 SHORT TITLE: CREATE ALASKA INFORMATION NETWORK CORP SPONSOR(S): REPRESENTATIVE(S) KOTT,Hudson,Brown, Hoffman,Davies,Williams JRN-DATE JRN-PG ACTION 01/26/94 2155 (H) READ THE FIRST TIME/REFERRAL(S) 01/26/94 2156 (H) STATE AFFAIRS, JUDICIARY 02/22/94 2485 (H) COSPONSOR DELETED: GREEN 03/01/94 (H) STA AT 08:00 AM CAPITOL 102 03/02/94 2588 (H) COSPONSOR(S): WILLIAMS 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 347 SHORT TITLE: STATE LONG-TERM PLANNING SPONSOR(S):REPRESENTATIVE(S) PARNELL,Hanley,Therriault, B.Davis,James JRN-DATE JRN-PG ACTION 01/07/94 2018 (H) PREFILE RELEASED 01/10/94 2018 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2019 (H) STATE AFFAIRS, FINANCE 01/12/94 2043 (H) COSPONSOR(S): THERRIAULT 01/13/94 2056 (H) COSPONSOR(S): B. DAVIS 01/14/94 2084 (H) COSPONSOR(S): JAMES 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-24, SIDE A Number 000 CHAIRMAN VEZEY called the meeting to order and 8:00 a.m. Members present were REPRESENTATIVES KOTT, SANDERS, and OLBERG. Number 016 HB 328 - BIENNIAL VEHICLE REGISTRATION CHAIRMAN VEZEY opened discussion on HB 328 under bills previously heard. REPRESENTATIVE PETE KOTT moved that previous action on HB 328 be rescinded, and be taken up for immediate consideration. Hearing no objection, CHAIRMAN VEZEY rescinded the previous action on HB 328. He announced the committee had before them CSHB 328, version R, which the committee had already adopted. The committee amended version R on page 6, line 22, and on page 10, line 24, to read "biennial", instead of "annual." CSHB 328: "An Act relating to motor vehicle registration and registration fees, and to the optional municipal motor vehicle registration tax; to fees for drivers' licenses and permits; to fees related to inspection and control of motor vehicle emissions; and providing for an effective date." REPRESENTATIVE KOTT felt CSHB 328, version R, was a good bill and it should not be held up by the State Affairs Committee. The financial ramifications would be taken up by the Finance Committee. REPRESENTATIVE KOTT moved CSHB 328, version R, be passed from committee with individual recommendations. Number 053 CHAIRMAN VEZEY asked the committee secretary to call the roll and CSHB 328, version R, passed from the House State Affairs Committee with individual recommendations. (REPRESENTATIVE G. DAVIS joined the meeting at 8:03 a.m.) SB 186 - STATE AGENCY PUBLICATIONS CHAIRMAN VEZEY opened SB 186 for discussion under bills previously heard. Number 070 SENATOR STEVE FRANK, PRIME SPONSOR OF SB 186, addressed the bill. He stated a few years ago there was a bill which would have required agencies to put the cost of their publications on the publications. This procedure was intended to discourage those agencies from printing expensive high gloss publications, and return them to the use of a copier. He stated the amended bill, however, returned to the Senate from the House stating there should be a preference for printing materials in state operated facilities. He stated this provision upset the private sector because the University and the state would now be providing services that should be provided by the private sector. The language found in SB 186 is from former REPRESENTATIVE DAVE CHOQUETTE's bill which did not make it through the system. He felt SB 186 would correct the wrong doing by the past amended bill. (REPRESENTATIVE B. DAVIS joined the meeting at 8:05 a.m.) Number 111 CHAIRMAN VEZEY announced the arrival of REPRESENTATIVES G. DAVIS and B. DAVIS, and asked if they would like to sign the committee report on CSHB 328. CHAIRMAN VEZEY stated he had requested a House committee substitute to SB 186 which he had discussed with SENATOR FRANK. From the original SB 186, all of the language on line 11, page 1, would be deleted. The House committee substitute would read on page 1, beginning on line 10, "The standards shall also be designed to promote the maximum use of private sector printing facilities located in the state." Number 158 REPRESENTATIVE HARLEY OLBERG asked the letter designation of the House Committee Substitute. CHAIRMAN VEZEY clarified the House CS for SB 186 was version J. He pointed out another change to page 1, line 5 to SB 186. After the word "practicable", the clause,"or if at least three businesses in the state are capable of producing the publication," was added. This addition helps delineate the definition of "practicable." Number 180 SENATOR FRANK commented he did not have a problem with this amendment when first mentioned; however, he did now believe there were printing facilities in the state, with unique capabilities, with only one or two competitors. He felt the requirement of three may be too much. CHAIRMAN VEZEY stated three would not be a minimum, but if there were three facilities it would be determined practicable to contract the printing out. SENATOR FRANK explained that for the high quality work, there may be only one or two facilities in the state capable of producing it. Number 193 CHAIRMAN VEZEY emphasized the wording states, "when practicable, OR if at least three businesses in the state are capable..." He interpreted the House CS to mean if there are three facilities capable of doing the work, it will be de facto, determined to be practicable. Number 202 SENATOR FRANK wanted to make sure the language was clear. Number 207 REPRESENTATIVE JERRY SANDERS felt if there were three bids the state would get a fair price, and if there is only one, the contract needs to be bid outside the state. Number 214 SENATOR FRANK felt he and the committee had the same intent; however, the language must be correct. Number 220 CHAIRMAN VEZEY commented SB 186 could be brought back up later if SENATOR FRANK would like more time. Number 221 SENATOR FRANK felt the House CS was fine, as long as the approach would be the maximum use of the private sector. CHAIRMAN VEZEY responded it was not the intent of the House CS to distort the intent of the original SB 186. SENATOR FRANK wanted to be careful the House CS did not end up being confusing. Number 277 CHAIRMAN VEZEY believed SB 186 had a Judiciary Committee referral and REPRESENTATIVE KOTT would be on that committee to follow the bill and correct any mistakes if found. CHAIRMAN VEZEY asked if there was a motion to adopt the House committee substitute for SB 186. REPRESENTATIVE SANDERS so moved. Number 283 Hearing no objection, CHAIRMAN VEZEY announced the House committee substitute to SB 186 was adopted. Number 285 REPRESENTATIVE GARY DAVIS moved to pass House Committee Substitute for SB 186 from committee with individual recommendations. CHAIRMAN VEZEY recognized the motion and asked the committee secretary to call the roll. Hearing no objection, HCSSB 186 passed from the House State Affairs Committee. HJR 60 - AMEND U.S. CONSTITUTION TO LIMIT FEDERAL COURTS CHAIRMAN VEZEY opened HJR 60, sponsored by the State Affairs Committee, for discussion. REPRESENTATIVE SKAGGS, HOUSE OF REPRESENTATIVES in MISSOURI, requested HJR 60. CHAIRMAN VEZEY addressed HJR 60 as a resolution asking the Congress of the Unites States to prepare and present to the legislature of all the states, an amendment to the Constitution of the United States. This amendment would prohibit a federal court from ordering a state or political subdivision of a state, to increase or impose taxes. He noted HJR 60 would not have the power of law; it is simply a resolution. Number 334 REPRESENTATIVE KOTT felt HJR 60 was a good resolution. The resolution addressed mandates and the resolve clauses are verbatim, per REPRESENTATIVE SKAGGS' suggestions. CHAIRMAN VEZEY commented 26 states have already issued resolutions similar to HJR 60. REPRESENTATIVE G. DAVIS did not have a problem with the concept, but would like an example of the concern. He said it appeared that the federal courts were looking at ordering the imposition or increase of taxes, but when questioned the judges turned them away. CHAIRMAN VEZEY replied there are Supreme Court decisions specifically stating they have the right to impose or increase the taxes. Number 353 REPRESENTATIVE OLBERG looked to the second page of REPRESENTATIVE SKAGGS letter which states, "the Federal District Court, with the blessing of the United States Supreme Court, continues to order property tax increases..." for a specific purpose. Number 365 REPRESENTATIVE KOTT moved to pass HJR 60 from committee with individual recommendations, asking unanimous consent. CHAIRMAN VEZEY asked the committee secretary to call the roll, and HJR 60 passed unanimously from the House State Affairs Committee with individual recommendations. HB 402 - PROOF OF MOTOR VEHICLE INSURANCE CHAIRMAN VEZEY opened discussion on HB 402. The sponsor of HB 402 is the House Labor & Commerce Committee. Number 383 REPRESENTATIVE BILL HUDSON, CHAIRMAN, HOUSE LABOR & COMMERCE COMMITTEE, addressed HB 402. He stated HB 402 deals with proof of financial responsibility filings for SR-22 drivers. SR-22 filings are, in many instances, needed for those who have been convicted of driving while intoxicated or reckless driving. He thought HB 402 would provide insurance companies the necessary information that would ultimately lead to lowered premiums. All drivers would begin to be treated with some equity. He noted HB 402 essentially provides that insurance companies be informed as to what vehicles they are insuring. Presently, drivers can get insurance for inexpensive cars, drive and wreck expensive cars, and the insurance companies are being asked to pay the cost for the higher cost vehicle. HB 402 would provide a clear definition for the insurance companies as to what they are insuring. CHAIRMAN VEZEY moved to the Fairbanks teleconference site. Number 431 DENNIS BROWN, ALASKA INDEPENDENT INSURANCE AGENTS & BROKERS, testified in favor of HB 402. Presently, an offender of a crime such as driving while intoxicated must provide, to continue driving, verification of coverage by the means of an SR-22. The insurance carrier affirms that the liability coverage has been in place, and if the policy is cancelled for any reason, the Department of Financial Responsibility will be so notified. A standard family auto policy has to list their private passenger automobiles by make, year, value, etc... This policy is very specific and it does include an allowance for driving other vehicles, which meet specific requirements. MR. BROWN felt an underwriter needs to list specific vehicles on policies to give them some idea of the uses, age, and potentiality of loss. An underwriter for SR-22 relating to private passenger automobiles comes into problems when an SR-22 driver is found driving commercial heavy equipment or heavy trucks, substantially raising the rate of coverage required. The SR-22 filing requirement does not provide specific interpretation of what the driver can drive, therefore, a driver could drive a Ford Taurus or an International tractor or trailer. MR. BROWN stated HB 402 amends SR-22 statutes only to cover those autos listed in the policy, that meet the definition of a private passenger automobile. He emphasized the policies that fit these automobiles should be listed. Carriers have been getting reluctant to write SR-22 coverage in Alaska. CHAIRMAN VEZEY asked MR. BROWN to explain what an SR-22 is. MR. BROWN explained an SR-22 is a verification of coverage. For example, if an indicted driving while intoxicated offender wanted to regain his/her license, an insurance policy must be secured that the insurance carrier is willing to submit an SR-22 to the Department of Financial Responsibility that verifies the insurance is in effect. CHAIRMAN VEZEY asked if commercial vehicles had to be listed individually under current laws. MR. BROWN said yes, and most commercial auto policies require there be a listing of commercial vehicles. Number 509 CHAIRMAN VEZEY introduced HOWARD JAEGER as the next individual to testify in Juneau. Number 514 HOWARD JAEGER, SHATTUCK & GRUMMETT INSURANCE, MEMBER INDEPENDENT INSURANCE AGENTS & BROKERS OF ALASKA, testified in favor of HB 402. He pointed out, presently in the preferred auto program, the preferred driver has to specify which vehicles they want insured. If they buy another vehicle they have 30 days to notify the insurance carrier in order for coverage to apply to it. After 30 days, coverage would not apply to that car. The 1989 bill addressing SR-22 filings was broadened to include all motor vehicles owned by that person, not specifying the 30 day notice period. With HB 402, coverage would apply to all vehicles which the insured has notified the insurance company that they own. Number 534 REPRESENTATIVE SANDERS asked if HB 402 would affect the premiums an individual would pay for an SR-22 policy. Number 537 MR. JAEGER said yes. Currently, only one car has to be notified and insured with an agency, but the person could then drive other vehicles, without notifying the carrier. If the person then wrecked, the carrier would have to pay the claim even if they have not collected a premium for the other vehicles. Number 546 REPRESENTATIVE SANDERS inquired if all of the cars insured under the one driver would be at the higher SR-22 rate. Number 548 MR. JAEGER said no, only the first car would be higher. The additional cars would have to be added to the SR-22 policy though. He stated if a person had a speeding ticket and an accident the agency would only charge the surcharge on the one car. Number 555 REPRESENTATIVE SANDERS commented with the new .08 alcohol limit there will be a lot of very responsible Alaskans paying SR-22 insurance. He stated if HB 402 would make these people pay extra premiums on all their other vehicles then he would not be in favor of it. Number 562 MR. JAEGER explained individuals with SR-22 would not be able to stay in a preferred market; therefore, they would have to pay the extra premiums. SR-22 individuals would go into a substandard market, which is automatically a surcharge market on all of their cars. In terms of their driving record, the agency would charge the surcharge on their first vehicle for the DWI and the others would act as second cars on which there would not be surcharge. CHAIRMAN VEZEY clarified HB 402 would also lower the cost of an SR-22 policy for a one vehicle owner, because as it is now, multiple vehicle owners were being lumped together with single vehicle owners. Number 573 MR. JAEGER said yes, multiple vehicle owners could be mixed together with single vehicle owners without the companies knowing it. Number 575 CHAIRMAN VEZEY said the company's exposure is currently very high and they are not very willing to write SR-22 policies. He felt the competition may not be very stiff. Number 578 MR. JAEGER replied the competition is not very stiff now, but HB 402 may help encourage other companies to come into the state and offer SR-22 insurance. Number 580 REPRESENTATIVE OLBERG wondered why the old language of June 6, 1989, was not used in HB 402 which states, "applicable to all owned vehicles insured by the consignatary." He asked why the language in HB 402 is more preferable. Number 586 MR. JAEGER responded the drafters were trying to say the same thing in different language by stating, "designated by description or appropriate reference, the motor vehicle that it covers." The old law stated, "applicable to all owned vehicles insured by the insurance company." He felt HB 402 could read as it used to. Number 593 REPRESENTATIVE KOTT believed the language in HB 402 was legally the correct language of today. He asked how many SR-22's were in the state. MR. JAEGER did not know. REPRESENTATIVE SANDERS wanted to clarify the answer to his previous question. He asked if a person, who owns three cars, were to receive a DWI he/she would only have to pay that higher premium on one car, not all three. MR. JAEGER confirmed REPRESENTATIVE SANDERS. Number 607 CHAIRMAN VEZEY introduced JOHN GEORGE as the next individual to testify. JOHN GEORGE, NATIONAL ASSOCIATION OF INDEPENDENT INSURERS (NAII), testified in favor HB 402. The reason people have to have an SR-22 filing is because they have run afoul of the law; caught driving without insurance, driving while intoxicated, or involved in a serious accident. The state wants to ensure, with an SR-22, that these people are now in compliance and have automobile insurance. MR. GEORGE pointed out SR-22 is a requirement of the state. Current laws require insurance companies to verify, if an individual is driving a car, that he/she is insured. Therefore, if an individual owns ten cars and only has insured one of them with the company, but gets in a wreck in one of the other cars, the insurance company still has to pay the client's claim. He clarified HB 402 would allow the insurance companies to pay claims on any car they insure, and only the cars described on the form. Number 641 REPRESENTATIVE OLBERG asked why cars were insured, instead of drivers. Number 642 MR. GEORGE responded drivers can be insured, but not many companies offer that type of owner's policy. A problem arises when an insured driver lends his/her uninsured car to another individual. The car would only then be insured if the other driver had liability insurance. CHAIRMAN VEZEY asked the pleasure of the committee. Number 655 REPRESENTATIVE BETTYE DAVIS moved to pass HB 402 from committee with individual recommendations. Number 662 CHAIRMAN VEZEY asked the committee secretary to call the roll, and HB 402 passed unanimously from the House State Affairs Committee with individual recommendations. HB 403 - AUTOMOTIVE LIABILITY INSURANCE COVERAGE CHAIRMAN VEZEY opened HB 403 for discussion. The House Labor & Commerce Committee sponsored HB 403. Number 677 REPRESENTATIVE BILL HUDSON, CHAIRMAN HOUSE LABOR & COMMERCE, addressed HB 403. Legislation passed in 1992 requires insurance companies to offer uninsured and underinsured motorist coverage in excess of voluntarily purchased coverage by the insurer. He explained on current insurance forms there is a signed statement on the back which states one has turned down the higher limits required by law to be offered to you. He stated HB 403 was introduced to remove the mandatory offer of higher insurance limits. Alaska is the only state in the Nation which requires uninsured and underinsured motorist coverage of up to $2 million. AS 21.89.020 would be amended to require coverage that includes policy limits equal to the limit voluntarily purchased. He felt, with the passage of HB 403, there would be greater competition because companies which could not offer those higher limits would be enticed to join the market. TAPE 94-24, SIDE B Number 000 CHAIRMAN VEZEY asked any future witness to answer if there was any advantage to an individual purchasing insurance limits that exceed their net assets. CHAIRMAN VEZEY asked DENNIS BROWN if he would again like to testify on HB 403. Number 042 DENNIS BROWN, ALASKA INDEPENDENT INSURANCE AGENTS & BROKERS, testified in favor of HB 403. They would like a healthy competitive insurance market in the state to provide better prices and coverage for the consumers. HB 403 would make only minimum requirements, and the actually extension of coverage is a decision made by purchaser of insurance. He stated HB 403 would not remove the provisions for uninsured and underinsured motorists, but rather change the limits of coverage. If a purchaser decides to purchase $500,000 of insurance for third party liability, injuries or damages to others, the same limits should be available as under the underinsured and uninsured motorists. He felt the coverage should not be in excess of what the purchaser bought for liability. MR. BROWN emphasized automotive liability coverage is mandated in the state of Alaska, and as such it should be affordable and attainable. He pointed out the low population and high cost of doing business in Alaska creates a limited and secluded market for those in insurance. Alaska does not develop the large premium dollars to attract underwriters. He said Alaska is usually the last state a company enters and the first state to leave if things get bad. Number 123 REPRESENTATIVE KOTT asked if MR. BROWN could confirm that Alaska is the only state requiring coverage up to the $2 million limit. MR. BROWN replied, to the best of his knowledge, Alaska is the only state. CHAIRMAN VEZEY inquired if there was any valid reason a person would carry liability insurance that exceeds their net personal worth. Number 137 MR. BROWN responded net worth is probably the best "barometer" to use when purchasing liability insurance. He noted what is affordable to buy in the market place also weighs heavily in the decision making process. Number 157 CHAIRMAN VEZEY said, for example, his net worth was $250,000. He asked the minimum policy rate. MR. BROWN answered minimum policies are $1,500, $2,500, or $125,000 single limit as the state requires. Number 167 CHAIRMAN VEZEY questioned if there would be a valid reason for carrying liability insurance which exceed a person's net personal worth. Number 169 MR. BROWN said yes, it is what an individual may feel they would be accountable to others in the operation of that vehicle. Even if a limit exists, and the accident exceeds the limit, one would still have the potentiality of personal liabilities. CHAIRMAN VEZEY asked HOWARD JAEGER if he would join the table to testify on HB 403. Number 190 HOWARD JAEGER, SHATTUCK AND GRUMMETT INSURANCE, testified in favor of HB 403. He emphasized HB 403 would not preclude those drivers that want to buy higher uninsured limits from buying them. Companies who offer an individual $500,000 worth of liability insurance to purchase would have to provide that amount. HB 403 would provide; however, those companies which can only offer $50,000 and $100,000 bodily injury limits to only have to offer $50,000 and $100,000 uninsured motorist limits. Insurance companies can already offer high liability limits far in excess of state requirements. Therefore, HB 403 would not limit an individual's ability to still buy the higher limits after they are no longer law. MR. JAEGER explained higher limits of uninsured motorists have generally not been purchased by the consumer. Many people are buying insurance at their current liability limits, or even lower. Alaska's mandatory insurance limits currently are higher than any of the other 49 states in the Nation. Regarding young drivers, because their costs have increased and the way the law is written, they can reject uninsured motorist insurance totally. He believed the Division of Insurance had submitted information to the committee in support of HB 403. Number 243 REPRESENTATIVE HUDSON asked if Alaska was the only state with arbitrarily established top limits on insurance, and how does Alaska compare on the bottom limits. Number 249 MR. JAEGER answered Alaska's liability minimums are almost double the limits in any other state, even triple over some states. Uninsured motorist insurance, he recollected, is a mandatory offering by about half of the other states, but none of them meet the 1-2 million limits in Alaska. Number 257 REPRESENTATIVE HUDSON pointed out those who have preceded [us] have some how determined that Alaska's bottom limits should be twice as high as the next highest in the Nation. The state also determines arbitrarily that any company operating in Alaska has to offer 1-2 million limits even though other states do not. He felt HB 403 would put insurance limits back down into normal ranges. He emphasized the bottom limits would be worked on next, because young individuals are going uninsured due to Alaska's bottom limits being so high that they cannot afford it. Number 281 REPRESENTATIVE G. DAVIS asked if page 1, line 14, referred to the $125,000 bottom limit when it states,"the policy limit written may not be less than the policy limit in AS 28.20.440." Number 289 MR. JAEGER affirmed REPRESENTATIVE G. DAVIS. Liability insurance is written with "split limits," whereby each person has $50,000 maximum, $100,000 for each accident, and $25,000 property damage liability. Liability insurance can also be written with $125,000 total which includes bodily injury and property damage. MR. JAEGER addressed CHAIRMAN VEZEY's question as to why a person may want to buy higher liability limits. He felt an individual cannot judge the worth of someone they may involve in a major accident. Therefore, a judgment could come against that individual which could far exceed his/her stated liability limit. The judgment against them would be precluded by the amount of liability they have and also by the amount of assets they have. Number 316 CHAIRMAN VEZEY commented the judgment is against the person and not the insurance company. Number 317 MR. JAEGER affirmed CHAIRMAN VEZEY. Number 318 CHAIRMAN VEZEY continued a person buys insurance to protect their assets. However, in Alaska insurance is bought because it is required by law. He asked if a person could receive a judgment which not only takes their assets, but also their insurance policy. Number 328 MR. JAEGER responded if the judgment was for $150,000, and the liability insurance policy only covered $100,000, the insurance company would pay the $100,000 and leave the other $50,000 for the policyholder to come up with. Number 338 REPRESENTATIVE OLBERG explained he carries a $1 million liability on his homeowner insurance because he wants a "willing and enthusiastic partner when [he] gets in trouble." He said it only costs him $20-25 more than the minimum every month to have this type of coverage. He said he understood that if an individual is worth a $100,000 and gets a judgment against him/her for $500,000, then that individual will have to spend the rest of his/her life paying off the debt. CHAIRMAN VEZEY believed at that point the bankruptcy laws would take effect. REPRESENTATIVE OLBERG did not believe declaring bankruptcy would be the solution. Number 350 CHAIRMAN VEZEY asked JOHN GEORGE to testify next. Number 356 JOHN GEORGE, NATIONAL ASSOCIATION OF INDEPENDENT INSURERS, testified in favor of HB 403. He stated he used to be the Director of Insurance for the State of Alaska, and while in that position, the law presently being challenged by HB 403 was adopted. He pointed out the passage of that bill did lead to the loss of several insurance carriers. The reason insurance carriers cannot offer the $2 million limit is because of their reinsurance. Insurance companies lay off part of the risk to other insurers, and their contracts with these other insurers contemplates the type of business that they write. If companies write up to $500,000 worth of liability, they buy reinsurance that covers them for $400,000, in excess of the $100,000 they want to retain. With the $2 million limit, the company would have to buy $1.9 million in reinsurance to cover themselves, in excess of the $100,000 they would want to retain on account. He emphasized the $2 million limit is not economical for Alaska when there are multiple states writing policies. Reinsurers even look at Alaska's requirement and question whether or not they should even reinsure the companies because of the unusually high amount. MR. GEORGE addressed REPRESENTATIVE HUDSON'S statement about reducing the minimum requirements. He felt reducing them would be attractive, realizing there would always be the chance of getting into a major accident, the vast majority of accidents involve only $2,000-$5,000 worth of damages and some medical bills. These types of accidents could be covered by fairly minimal insurance limits. He noted if an accident is the fault of a person with low liability insurance, and the other party has a higher limit, the lower limit would cover what it could and the higher insurance of the other party would cover the difference. He emphasized people would not be disadvantaged by not being able to collect, and he agreed lowering the bottom limits would cover individuals for 99 percent of the accidents they would be in. Number 416 REPRESENTATIVE G. DAVIS moved to pass HB 403 from committee with individual recommendations, and accompanying fiscal note. Number 419 CHAIRMAN VEZEY noted the fiscal note for HB 403 was on page 3, and asked the committee secretary to call the roll. CHAIRMAN VEZEY announced HB 403 passed unanimously from the House State Affairs committee with individual recommendations. CHAIRMAN VEZEY called for a recess at 9:12 a.m. The meeting reconvened at 9:26 a.m. with REPRESENTATIVES B. DAVIS and OLBERG present. HB 345 - PRESERVATION OF PUBLIC FACILITIES CHAIRMAN VEZEY opened HB 345 for discussion under bills previously heard. Number 443 JEANNETTE JAMES, PRIME SPONSOR OF HB 345, addressed the bill. She commented since the last hearing of HB 345, the State Association of Facilities Management held a meeting to discuss HB 345 and decided they would propose a committee substitute. Number 451 CHAIRMAN VEZEY asked if the committee had received a revised fiscal note. Number 452 REPRESENTATIVE JAMES replied another fiscal note was received from the University of Alaska Fairbanks (UAF). She suspected, in looking at the two fiscal notes, that the reduction of the operating budget meant the university was not asking for operation dollars. The difference between the capital request starting in 1995 from $16 million in the Department of Transportation fiscal note, to the $11 million in the UAF fiscal note, is to just include that portion that would relate to UAF. REPRESENTATIVE JAMES stated the purpose of HB 345 is to put emphasis on the maintenance of the state's public facilities. She said the sooner these facilities are taken care of, the better off the state will be. She would like to set in statute, a formula for funding maintenance of public facilities based on a life cost basis. This formula would be used for allocating revenues that would be required for each agency. Each agency, including the Governor, would have to present their number in the budget process. She would like the legislature to be required to fund these amounts, before they could authorize the construction of new facilities. She pointed out the state has continued to fund new facilities, without any consideration for buildings the state already has. REPRESENTATIVE JAMES outlined the fiscal note as the $61 million, indicated in the total operating cost, would be the amount required in the current year's budget if the legislature were to formula fund the percentage of maintenance required for all existing facilities. Of the $61 million, about $35-36 million is included in the operating budget that has been presented by the Governor. She noted the great short fall in the operating budget, compared to what the budget has requested. The capital line is the amount that would take over a period of 15 years to catch up on the deferred maintenance the state has fallen behind on. CHAIRMAN VEZEY asked if the legislature were to authorize $75 million in bonding, how would it impact the proposed fiscal note. Number 498 REPRESENTATIVE JAMES suggested the $75 million would not address the deficit between the $35 million currently in the budget and the $61 million that would be required just to keep up. Until the state fully funds maintenance, the state will continue to fall behind. Number 509 CHAIRMAN VEZEY questioned what $31 million REPRESENTATIVE JAMES was referring to in the budget. Number 510 REPRESENTATIVE JAMES responded $31 million is spread out through the agencies' budgets. Number 511 CHAIRMAN VEZEY stated when he brought up the $75 million in bonding, he was only referring to the university. Number 512 REPRESENTATIVE JAMES was not aware of the University's operating budget for 1994. She suspected it did not address deferred maintenance and it only addresses the past deferred maintenance by the $75 million. She noted the University would continue to pick up more deferred maintenance because it was not in the budget. Number 516 CHAIRMAN VEZEY clarified the $75 million would cut in half the accrued deferred maintenance, and it would not impact the proposed fiscal note at all. Number 517 REPRESENTATIVE JAMES affirmed CHAIRMAN VEZEY. She was disappointed there was not more public input and response to HB 345. She wanted to make the public aware of the seriousness of the problem. CHAIRMAN VEZEY asked what she had meant by public. Number 525 REPRESENTATIVE JAMES answered anyone other than the legislature. (REPRESENTATIVE KOTT returned to the meeting at 9:34 a.m.) REPRESENTATIVE JAMES felt if HB 345 was an important issue people would not have to be invited, and if the desire existed they would be present. Number 536 CHAIRMAN VEZEY did not accept her reasoning because he believed those involved in maintenance were acutely aware of the problem. He thought the administrators of the state's public facilities probably feel like "it's the sword Democoles hanging over their head." He stated the majority of the average public is probably not aware that all of the state's public facilities are broken or deteriorating. CHAIRMAN VEZEY stated he felt the fiscal notes were presented in an improper manner. The University fiscal note estimates $11 million escalating at about 3-4 percent a year. He stated those capital improvements to existing facilities represent depreciation and they will accrue, whether the legislature funds them or not. Number 551 REPRESENTATIVE JAMES stated CHAIRMAN VEZEY was correct. Number 552 CHAIRMAN VEZEY looked at the DOT fiscal note and noted it included the cost of operation for the facilities. He believed they had good reason because their operating budgets had been manipulated to go to other than building maintenance, utilities, etc. Number 557 REPRESENTATIVE JAMES responded if the requirement for maintenance and repair was funded on an ongoing basis, the operating cost would be found in the operating budget, not in the capital budget. If component replacement and renewal were considered, they might be a capital expenditure. She understood general maintenance of public facilities is an operating expense. She noted only the $35 million is included in the $61 million because most of the rest of the money in the operating and maintenance is for lights and other utilities that have nothing to do with keeping the building "up to speed." Number 569 CHAIRMAN VEZEY stated DOT's fiscal note is $61 million just for operation, plus a capital improvement portion of $16-17 million. REPRESENTATIVE JAMES clarified the $16 million is to catch up the deferred maintenance that has not been done in previous years. Number 574 CHAIRMAN VEZEY stated the $61 million includes scheduled maintenance. He had believed the $61 million included operation of the building, including utilities. Number 576 REPRESENTATIVE JAMES stated the $61 million did also include operation of the buildings and utilities. She noted throughout the agency budgets $35 million has been distributed of the $61 million. She clarified this depicts that there is a deficit in the 1994 budget, which is going to contribute to the capital needs in the future. Number 584 CHAIRMAN VEZEY felt the committee may have not thoroughly reviewed their packets on HB 345 yet. Number 587 REPRESENTATIVE KOTT agreed. Number 589 REPRESENTATIVE G. DAVIS stated the fiscal note was the obvious factor which was detracting from the attractiveness of HB 345. However, he felt a mechanism did need to be found to deal with the deferred maintenance. He agreed with REPRESENTATIVE JAMES that if HB 345 would have had more public notice, every agency would have been present to indicate the need for the bill. He thought HB 345 was similar to the Executive Order from the 1993 session, which dealt with transferring all facilities to DOT so they could run a program similar to that in HB 345. In reference to his example, he felt the issue of deferred maintenance was becoming more up front and open, but solutions are not being adequately discussed. Number 615 CHAIRMAN VEZEY felt HB 345 would be more attractive if a zero fiscal note could be structured. He stated if the maintenance was not paid for, the existing buildings would depreciate at a predictable rate and would soon be uninhabitable. Number 627 REPRESENTATIVE JAMES agreed with CHAIRMAN VEZEY. She mentioned maintenance persons would be doing other things besides just maintenance in several agencies. Therefore, the state is really paying for labor which could be amassed into a definite labor position. This labor position could get maintenance done for the same dollars the state is already spending. She gave the example of maintenance people making coffee. REPRESENTATIVE JAMES felt money could be saved in the long run and the issue of deferred maintenance needs to be addressed. She would support putting maintenance in a special area where it, and the employees, would be properly utilized so the cost would be less. She believed a positive fiscal note could even be offered, if HB 345 could be revised in some way. Number 646 CHAIRMAN VEZEY believed the legislature would not have a problem approving a formula for the maintenance of it's facilities; however, it would have a problem creating another program. He did not believe the legislature would ever deny itself the right to build new facilities until maintenance was brought up to a certain level, noting one legislature cannot bind another. He felt terms would have to be defined because utilities may or may not be included, and major maintenance items would need a cost limit. He noted some administrators deliberately let maintenance deteriorate to the extent that it exceeds $25,000, so they can the have work done under capital improvements, as opposed to under their maintenance budget. Number 667 REPRESENTATIVE JAMES pointed out page 6, line 25, after it states "a legislature shall", Section 9(7), "appropriate funds for the full cost of annual maintenance and repair and periodic renewal and replacement of existing public facilities of a branch of state government...before funding construction of new public facilities or substantial addition to existing public facilities." She asked if this should be reworded to not be so strong. REPRESENTATIVE JAMES would not want to bind other legislatures, but she wants them to have to notice its existence. CHAIRMAN VEZEY commented the legislature would not pass bills that attempted to bind other legislatures. REPRESENTATIVE JAMES felt changing the language to where they would have to first identify before they go forward in new construction might be effective and not necessarily binding. Number 688 REPRESENTATIVE G. DAVIS commented deferred maintenance will continue to be a problem and the legislature should continue to talk about it as is it now. He also felt agencies should be involved to let them know there are things they can do to keep the problem on the forefront. New facilities will face the same fate as existing facilities in the future if they are not taken care of. He stated even before an agency offers a new section or service which will cost more money, they should have to look at where they could spend that money in deferred maintenance. TAPE 94-25, SIDE A Number 015 (REPRESENTATIVE OLBERG left the meeting at 9:46 a.m.) CHAIRMAN VEZEY stated he was not prepared at the time to prepare a committee substitute which would address the short-comings he has found in HB 345. Number 026 REPRESENTATIVE JAMES referred to the comments by CHAIRMAN VEZEY about the fiscal note and the attempt by HB 345 to bind other legislatures, and asked if he would be more comfortable with moving HB 345 out of committee if these two concerns were amended. CHAIRMAN VEZEY did not have a problem moving the HB 345 out of committee; however, he wanted HB 345 to be more attractive to the legislature so it would not be buried in the Finance Committee. He felt a zero fiscal note could be made if HB 345 was made into an advisory report. HB 345 may fit into HB 347, which will be heard March 10, 1994, because it deals with state long-term planning. Number 055 REPRESENTATIVE JAMES said she would support any plans for the future because historically, the state has not done it. She took CHAIRMAN VEZEY's suggestion that HB 345 be made into an advisory, as opposed to a formula program. She felt the public needed to be informed that the formula would actually work. She noted when money is authorized for construction of new buildings, fiscal notes are attached which shows the cost of maintenance for that building in the future. She offered to make the changes to HB 345 and bring it back before the committee as a sponsor substitute, so the bill would not get stalled in committee. Number 099 CHAIRMAN VEZEY thought a zero fiscal note could even be attached to the sponsor substitute if worded correctly. The bill may have to carry some cost to perhaps prepare a report on an annual basis. Number 114 REPRESENTATIVE JAMES appreciated hearing HB 345 before the committee because the issue is important and, even if it becomes an interim project, she will not let the problem go away. Number 119 CHAIRMAN VEZEY believed the legislature does not see information to the extent of regarding deteriorating public facilities. Life cycle costing has now become an important issue. HB 345 could be revised and made attractive enough to gain the support of the legislature. Number 136 REPRESENTATIVE JAMES asked, if a sponsor substitute was drafted, would the committee consider rehearing HB 345 and moving it out of committee. CHAIRMAN VEZEY replied the committee would consider rehearing HB 345 if they received a zero fiscal note. HB 345 was held in committee for reconsideration. ADJOURNMENT Hearing no more business before the committee, CHAIRMAN VEZEY adjourned the meeting at 9:55 a.m. SCHEDULED BUT NOT HEARD HB 405: "An Act establishing and relating to the Alaska Information Network Corporation; relating to the Telecommunications Information Council; and relating to the state's information industry; and providing for an effective date." SCHEDULED BUT NOT HEARD HB 347: "An Act relating to long-term plans of certain state agencies."